Midwest Air says bankruptcy possible by mid-July

[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]

 



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

[Index of Archives]         [NTSB]     [NASA KSC]     [Yosemite]     [Steve's Art]     [Deep Creek Hot Springs]     [NTSB]     [STB]     [Share Photos]     [Yosemite Campsites]