Midwest Air says bankruptcy possible by mid-July = = = = Wednesday June 25, 6:36 PM EDT = By David Bailey CHICAGO, June 25 (Reuters) - Midwest Express Holdings Inc. (MEH), parent = of Midwest Airlines, said on Wednesday it has told employees it may have = to file for bankruptcy as soon as mid-July if it cannot restructure deals= with workers, lenders and other creditors. Midwest Express, a Milwaukee-based air carrier known for business class s= eating and food, has been hit hard by the travel downturn following the S= ept. 11, 2001, hijack attacks and the drop in business travelers because = of a weak economy. In a July 19 memo to employees that was obtained by Reuters, Midwest Expr= ess said it has cut costs by about $7 million per month since fall 2002, = but it needs to find more savings to restore profitability. = "While we continue to work for an out-of-court restructuring, we need to = be prepared to seek the assistance of the bankruptcy court to complete ou= r work," the memo said. Shares of Midwest Express fell 27 cents, or 9.9 percent, to $2.45 Wednesd= ay on the New York Stock Exchange. Midwest Express has sought to renegotiate union contracts and to cut plan= e lease payments so that it can replace a line of credit that expires on = August 30. The replacement of that line of credit is critical to maintain= ing cash flow. The restructuring needs to be completed at least six weeks before the lin= e of credit expires to provide enough time to arrange for a new line of c= redit, the memo said. A bankruptcy filing would be highly unlikely if Midwest Express restructu= res its agreements, but not foreclosed. "If we choose to file Chapter 11, it would not be far off," the memo said= =2E "We have a small window of opportunity to complete the restructuring = we began in February." Midwest Express also needs to have sufficient cash on hand to weather a f= iling, and its additional costs, and has had more cash flowing out than f= lowing in for months, the memo said. The air carrier's cash position has gradually deteriorated, but Midwest E= xpress believes it has sufficient cash to file for bankruptcy and emerge = successfully if it chooses that avenue, spokeswoman Carol Skornicka said.= Midwest Express previously announced layoffs, capacity cuts and temporary= wage cuts. It said it needs $600,000 per month in wage cuts or work rule= changes from union workers to help it avoid bankruptcy. It plans to star= t low-fare service in weeks. The air carrier wants to cut payments on nearly 40 older planes, about tw= o-thirds of its fleet, to reflect a decline in value since the attacks. I= t stopped making payments on the airplanes more than three months ago. = =A92003 Reuters Limited. = Roger EWROPS