AIRLINE Judge plans to order liquidation of Midway

Midway had trouble reaching a cost-cutting agreement with its pilots.
RALEIGH, N.C. (AP) -- A federal bankruptcy judge said Thursday he would order the liquidation of the assets of Midway Airlines, a regional carrier for US Airways that had fought to stay in business since filing more than two years ago for court protection from its creditors.
"Sometimes despite the best efforts, reorganization efforts don't work out," Judge A. Thomas Small said. He did not say when he would issue the order.
Gerald Jeutter Jr., an attorney representing Midway Airlines, said the carrier had been unable to reach an agreement with its 85 pilots and was converting its attempted bankruptcy reorganization into a liquidation plan. Midway had 188 employees, including the pilots.
"Midway surrenders," Jeutter said. The airline filed court papers converting the airline's reorganization effort into a liquidation before the hearing, Jeutter said.
Running out of funds
Jack Butler, an attorney representing US Airways, said the company had loaned Midway $8.6 million since December to keep Midway flying as a commuter feeder airline for US Airways. But Midway is running out of money and has been unable to operate its entire flight schedule in the past month, Butler said.
Midway, which flew 30 daily round trips, parked its eight aircraft Wednesday night, pending the bankruptcy hearing. Customers were being rerouted onto other flights, US Airways spokesman David Castelveter said Thursday.
"We will accommodate customers on other US Airways flights or those of other airlines," he said. "There are other options for customers to get to their destinations."
Midway chief executive Robert Ferguson said the airline's remaining assets total almost $50 million, primarily two jets owned by Midway and spare parts.
He said he expected the assets to be sold within three or four months.
Employees will receive distributions from their 401(k) retirement plans, Ferguson said. The bankruptcy trustee appointed to oversee the liquidation will decide whether workers receive any continuing health-care coverage, he said.
"It's unfortunate after all this time and all the effort the parties have spent that we're in this position now," said Bruce Levine, an attorney representing the Air Line Pilots Association.
In a required monthly report to the bankruptcy court, Midway said it lost $144,000 in September as a result of $269,000 in interest and reorganization expenses.
The airline formerly had a 40-plane fleet and 130 daily departures from Raleigh-Durham International Airport.
Midway filed for bankruptcy protection in August 2001, listing 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 2001.