BostonHerald.com
Tuesday, August 14, 2001

Midway Airlines files for bankruptcy
Reuters

CHICAGO - Midway Airlines Corp. said on Tuesday it filed for bankruptcy
protection and halved its work force, becoming the first victim of a plunge
in business traffic and of regional jet competition from giant American
Airlines.

The Durham, North Carolina-based carrier said it will cut 700 jobs,
discontinue service to nine cities and shed 17 aircraft, including all of
its Fokker 100s.

Midway, founded in 1993, said a dramatic slowing of traffic growth at the
technology-rich Raleigh-Durham International Airport area from which it
operates has exacerbated the "calamitous" drop in business traffic. Other
factors include lower fares and "stubbornly" high prices of jet fuel.

"Their entire business model has fallen apart in the last few months,"
Credit Suisse First Boston analyst Jim Higgins said. "They didn't expand all
that rapidly, but they never got critical mass and their tie to American
just fell apart."

AMERICAN DROPS PARTNERSHIP, BRINGS IN REGIONAL JETS

The company represented an attempt at recovery from the original Midway
Airlines based in Chicago. In the early 1990s, when business travel was also
in the dumps, Midway filed for bankruptcy here. It then moved to
Raleigh/Durham in 1995.

"In hindsight, that may have been a mistake," said ABN AMRO analyst Ray
Neidl. "There's just a lot of competition all up and down the Eastern
seaboard." Carriers like American, Southwest Airlines and others will
immediately take up passengers from routes Midway is cutting.

Midway had forged a AAdvantage frequent flier partnership with AMR Corp's
American Airlines, but pilots at the world's largest airline balked, and
American recently refused to renew the arrangement, Higgins said. The deal
ended on April 30.

American has also begun regional jet service with 25 planes from
Raleigh/Durham, biting into Midway's turf.

Another analyst said Midway also had an Achilles' heel in its fleet of
Fokker 100 jets, which he called "prohibitively expensive to operate" and
repair.

As of June 30, Midway said, it had total assets of $318 million and
liabilities of $232 million. A company spokesman was not available to detail
where the bankruptcy petition was filed or to list major creditors.

Midway said it will honor all tickets for flight or refund, in accordance
with appropriate tariffs.

President and Chief Executive Robert Ferguson said the company is confident
it will return to profitability by reorganizing and cutting its routes to
those that have been "traditionally profitable."

The work force cuts are effective immediately and include 183 pilots, 99
flight attendants, 91 customer service agents, 126 fleet service agents and
201 other personnel.

MAINTAINING SOME FLIGHTS

Midway will cease operating all four of its Fokker F-100 aircraft and 13 of
its 24 Canadian Regional Jets, but will continue to operate its 12 Boeing
737-700 series aircraft.

Effective immediately, the company will discontinue service to Buffalo and
Rochester, New York; Dayton, Ohio; Pittsburgh; and Dulles airport, which
serves Washington.

Midway will eliminate service to Los Angeles on Sunday; to Birmingham,
Alabama, on Monday; and to Providence, Rhode Island, and San Jose,
California, on Aug. 31.

The company will maintain its five daily round-trip flights to Ronald Reagan
Washington National airport, but is trimming the number of round-trip
flights it runs to 18 other U.S. airports.

Midway said code-share flights offered by Corporate Airlines to Norfolk,
Virginia; New Bern and Wilmington North Carolina; and Myrtle Beach,
Charleston, Columbia, and Greenville-Spartanburg in South Carolina will all
operate on existing schedules.

The company posted net losses of $7 million for the second quarter and $15
million for the year to date.

In Monday Nasdaq trading, Midway shares closed at $2.75, down 1.28 percent
and hovering near a 52-week low of $2.65.


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