Thursday, September 13, 2001

Midway Airlines closes permanently

1,700 people immediately unemployed

The Associated Press

        RALEIGH, N.C. — Midway Airlines, already staggered by financial problems, Wednesday said it will go out of business rather than try to rebuild in the emotional fallout from this week's terrorist hijackings.

        About 1,700 employees were immediately put out of work, on top of 700 who were laid off when the airline filed for Chapter 11 bankruptcy Aug. 13.

        The company said in a statement that the action was being taken “with the recognition that, following the recent terrorist attacks, demand for air transportation is expected to decline sharply.”

        Four hijacked planes crashed Tuesday in New York, Washington and Pennsylvania, prompting a nationwide shutdown of air travel that continued Wednesday.

        “It just became clear as we went through the day yesterday that people weren't booking air travel,” said Midway spokeswoman Karen Wing. “The calls just stopped in the travel center for reservations, and the people who did call wanted a refund because they didn't want to be on an airplane for a little while.”

        The airline's primary hub, Raleigh-Durham International Airport, was closed to the public Wednesday. Calls to its managers were not returned.

        Midway is based at the airport in Morrisville, N.C., and accounts for about a third of its traffic.

        Ms. Wing said workers were immediately sent home from the company's headquarters. About 100 employees will remain for a couple of weeks to shut down the company, some of them to arrange refunds for ticket holders or rebook them onto other airlines.

        At the time it declared bankruptcy, Midway served 28 destinations across the country with 74 aircraft.

        Midway said it would begin returning aircraft to their lessors and will try to sell other assets to help pay its debts.

        “There's still money in the bank at this point. This is more of a future-looking thing,” Ms. Wing said. “We really need to protect our employees and pay them their last wages, and do the right thing for our passengers.”

        The airline blamed its financial problems on a sudden fall in business travel and increased competition. The airline had also purchased new airplanes and expanded its routes.

        In its bankruptcy filing, Midway listed assets of $318 million and liabilities of $232 million. The company posted losses of $15 million in 2000 and another $15 million in the first six months of this year.

        Midway won a bankruptcy court judge's permission to borrow as much as $15 million to keep operating and pay the 700 employees who had already been laid off.

        Ms. Wing said $7 million of that had been spent as of Wednesday.

        Midway had targeted business travelers since moving from Chicago in 1995 to pick up flights dropped by American Airlines when it dismantled its hub at the Raleigh airport. But ticket sales plummeted along with the economy.

        The airline posted losses in four of the past five quarters because of high fuel prices; competition from Southwest Airlines, one of the nation's most successful low-fare carriers; and a sluggish economy that caused local companies to slice their corporate travel budgets.

        “The bigger effect was, once operations got going again, that there would be pretty few people out there who wanted to get on an airplane,” Ms. Wing said.


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