Here is the latest article from the Raleigh News and Observer
Midway gets lift from bailout
By DUDLEY PRICE, Staff Writer
MORRISVILLE - Midway Airlines will return to the sky by Christmas, courtesy of a grant of about $12.5 million from the federal airline bailout package.
Midway, formerly the Triangle's busiest carrier but
grounded since it shut down Sept. 12, was notified
Friday morning that it would get the money.
The company, which declared bankruptcy in August,
now plans to resume service at Raleigh-Durham International Airport with about 25 daily flights to about a half dozen destinations on the East Coast, said Robert Ferguson, the president and chief executive officer. Flights should resume shortly before Christmas, he said.
"It means we're going to fly airplanes again, and we'll be doing that hopefully sooner than later," Ferguson said. "We're reasonably thrilled."
News about the bailout was met with applause from some of the 75 Midway employees still working at
company headquarters in Morrisville. Midway plans to hire another 75 workers before it resumes flying, Ferguson said.
The federal bailout money tosses the bankrupt carrier a lifeline at a time when it faced potential liquidation in U.S. Bankruptcy Court.
But numbers of airline passengers have declined nationally since the terrorist attacks Sept. 11 and amid a severe economic slowdown. Some aviation experts doubted Midway's comeback will be a success.
"I rank this right up there with the $600 hammer," said Mike Boyd, president of The Boyd Group, an aviation consulting firm in Evergreen, Colo. "I can see this [comeback] happening along with the Easter Bunny coming on Dec. 25."
Midway will get 85 percent of the money now and the rest by the first quarter of 2002. The grant must be used to resume flights and cannot go to creditors.
Still, the resumption of service will be good news to many Triangle passengers who liked Midway's customer service.
Ferguson said that he wanted to begin flights "by Christmas or a little before" and declined to name destinations. But in the past, Ferguson has said destinations could include Philadelphia; Boston; New York City; Tampa, Orlando, Fort Lauderdale and West Palm Beach, Fla.; Washington, D.C., and Newark, N.J.
Reps. Bob Etheridge, a Democrat from Lillington, and David Price, a Democrat from Chapel Hill, said Friday that they expect Midway back in the air by Dec. 19.
A schedule will be announced when Midway is ready to sell tickets, Ferguson said. Midway plans to use up to four leased Boeing 737s initially and possibly add another two jetliners by March, Ferguson said.
By the time the flights begin, ramp workers, flight attendants and pilots will be hired, bringing Midway's employment to about 150 people. Ferguson said a handful of workers might be hired as soon as next week. Midway expects to have slightly more than 400 employees by next March, according to documents filed this week in bankruptcy court.
The recast Midway will be a fraction of its former size. Before Midway filed for Chapter 11 protection on Aug. 13, it had about 2,700 employees, 40 jetliners and 130 daily departures from RDU to 28 destinations.
Midway grounded 43 percent of its planes and laid off 700 workers after filing for bankruptcy but continued flying an abbreviated schedule until the terrorist attacks caused it to cease operations and lay off 1,700 employees. The rest have been laid off in the intervening two months.
Since then, Midway has been waiting to see whether it qualified for bailout money to get back in the air. A Connecticut venture capital company had loaned Midway $8.5 million, but the carrier needed additional money to resume operations.
The approval Friday followed intense lobbying by the state's congressional delegation. Fergusonsaid in September that he hoped to get up to $40 million in bailout grants and loan guarantees. The $15 billion program provides $5 billion in grants for airlines and $10 billion in guaranteed loans.
Besides grants, Ferguson hoped to get $28 million in loan guarantees. But Ferguson said Friday that he no longer planned to seek loan guarantees because it would take months to have the applications processed.
Ferguson declined to say how long $12.5 million might last Midway, which must now begin a marketing program for its revamped schedule and line up travel agencies to sell tickets.
He also declined to say how much cash the airline has in hand. When it filed for bankruptcy, Midway listed $318 million in assets and $232 million in liabilities. The airline had seen losses in four of its last five quarters because of higher fuel prices, increasing competition and a decline in business travel.
Morten Beyer, chairman of Morten Beyer and Agnew, an aviation consulting firm in Alexandria, Va., estimated the $12 million grant would last several months.
He said that each airliner needs to generate about $2 million in revenue per month "to stay alive" and that the local market will determine whether Midway succeeds.
"If they got the money, I guess they can do that [resume flights], but how long they can do it remains to be seen," Beyer said. "The key is attracting passengers in the current climate. They can't afford to advertise in New York or the other markets, so they're really depending on the local market.
Staff writer Dudley Price can be reached at 829-4525 or [email protected]
I really hope they do great, because they were a great airline to fly on, although this is an up hill battle. I wish them luck regardless.