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Midway Airlines Shuts Down; Employees, Passengers Left Scrambling With AM-Midway Glance

November 15, 1991

CHICAGO (AP) _ Midway Airlines employees and others who depended on it for their livelihoods scrambled to find a new beginning Thursday after the surprise whirlwind collapse of the carrier that once symbolized growth and success.

Midway officials promised legal action against their would-be suitor, Northwest Airlines, and the City of Chicago headed to court to force Midway back in the air.

But the city may back off the court action under a deal announced late Thursday to have Dallas-based Southwest Airlines begin using eight of the gates left open by Midway at Chicago’s Midway Airport.

Southwest also would put up $20 million to revitalize the airport and would honor Midway tickets on a space-available basis, said Mayor Richard M. Daley and John Denison, Southwest’s executive vice president of corporate services.

Northwest paid Midway $20 million last month for lease rights to 21 gates at Midway Airport, but hasn’t announced plans for the gates. City officials said they were exercising their right to let another airline use gates if an airline leasing them doesn’t offer a minimum number of flights from each gate.

Northwest spokesman Mark Abels said the airline was considering what action to take. He said Northwest is open to selling the gates, but hasn’t been contacted about the Southwest deal.

Idle planes, empty ticket counters and vacant employee lockers marked the home of Midway, which only 24 hours earlier was alive and carrying thousands of passengers.

Midway grew from humble beginnings in 1979 to become the nation’s 12th largest airline, serving 41 cities. Its demise marked the first time an airline formed after the industry was deregulated in 1978 has ceased operations.

The shutdown at 12:01 a.m. Thursday came hours after Northwest Airlines announced it was pulling out of a previously announced merger agreement.

Northwest accused Midway, which had filed for bankruptcy protection back in March, of misleading it by overstating 1990 revenues. Midway said it had been straightforward and called Northwest’s action ″shameful.″

Passengers and Midway’s 4,300 employees were left in limbo.

″I’m a single parent with a 13-year-old boy,″ said Midway flight attendant Judy Carlson as she arrived at Midway Airport on the airline’s last flight from Los Angeles. ″You tell him why he can’t get braces for a Christmas present this year.″

Hundreds of Midway passengers scrambled to reshuffle their travel plans. Several airlines, including the nation’s two largest, United and American, said they would honor Midway tickets with certain restrictions.

″I woke up late and didn’t hear the news,″ said Francoise Strauss, who arrived at the airport Thursday morning for a flight that no longer existed. ″We were going to Atlanta to look at colleges for my daughter.″

An inconvenience for travelers, the shutdown proved much worse for the airline’s employees, who found themselves suddenly jobless in an industry where thousands of others already have been laid off.

″It hurts - it really hurts,″ said Kevin Augle, a Midway baggage handler. ″I don’t know what I’m doing. I’ve got a house. I’ve got to make my living somehow - whether I’m flipping hamburgers or delivering pizzas.″

Midway employees on Thursday received instructions on how to file for unemployment benefits and how the shutdown affected their employee benefits. Most workers will be without health insurance by the end of the month, said airline spokeswoman Laura Podlesny.

Podlesny said the airline planned legal action against Northwest amid speculation that Northwest had been more interested in Midway’s airport gates than in Midway itself.

″That’s absolutely not true,″ said Northwest spokeswoman Amy Spreeman. ″We found out too late that Midway was in much sicker health than we thought. We were forced to walk away from the deal.″

Before the Southwest Airlines expansion was announced, Andrea Swearingen, a spokeswoman for the city’s Law Department, said the city had asked the bankruptcy court to force the airline back into business.

Midway flew on a shoestring at its birth in 1979, offering penny-a-mile fares on its three-airplane fleet during its first promotion. Midway reached high, buying now-defunct Eastern Airlines’ gates and jets in Philadelphia for $206.5 million in November 1989.

Less than a hear later and mired in debt, Midway sold the gates, valued at $100 million, at a loss of more than $30 million.

In March, Midway cited rising fuel prices and declining passenger volume as it filed for bankruptcy protection.

Last month, the bankruptcy court approved Northwest’s $153 million offer for Midway and a merger seemed likely until Wednesday, when the deal collapsed.

Midway was responsible for about 60 percent of the business at its namesake airport on the city’s southwest side. City officials said Thursday they feared a ripple effect could idle workers at the airport and hurt motels and other auxiliary businesses nearby.

″Midway Airport is the economic engine for the southwest side,″ Daley said at a news conference. ″It is critical that we keep this airport operating.″

It could be several months before Southwest adds any new departures to the 44 it already has daily from Midway, Denison said. Within three or four years, Southwest hopes to have more than 100 departures a day, he said.

Midway used 21 gates at the airport.

About a hundred Midway workers gathered outside the airport, many sporting signs protesting Northwest’s decision to withdraw. ″Scrooged by Northwest: Can Santa still come?″ read one sign. ″All I want for Christmas is a job,″ read another.

15EST

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