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Grounded Midway Asks Court to Complete Deal With Northwest

November 18, 1991

CHICAGO (AP) _ Midway Airlines on Monday asked a federal judge to force Northwest Airlines to proceed with a buyout that would have kept grounded Midway in the air.

Midway attorneys contend Northwest breached a contract between the airlines by withdrawing from the $178 million buyout last week. They allege Northwest defrauded Midway with misrepresentations about its intentions.

The lawsuit, filed in U.S. Bankruptcy Court, also contends Northwest infringed on Midway’s rights by making a bid that drove Dallas-based Southwest Airlines away from buyout negotiations.

The complaint seeks compensatory damages and an order compelling Northwest to complete the deal.

Northwest, in a statement, said it was ″outraged and offended″ by the lawsuit and planned within days to file a countersuit against Midway. That suit will contend the failed carrier intentionally misled Northwest during the negotiations.

Judge John Squires said he would hold a hearing on the matter Dec. 2.

Meanwhile, Squires granted a request that temporarily prevents Northwest from auctioning the lease rights to gates it acquired at Midway Airport.

Northwest, which met Monday with representatives from American, Continental, Southwest, Trans World, USAir and United airlines, discussed sale prices but will not complete any deals until the next hearing on Midway’s complaint, said Northwest spokesman Mark Abels.

″All Northwest seeks today is to come away from this transaction with what we had initially invested,″ $24.7 million, Abels said. ″We think this is both reasonable and generous. Northwest Airlines is outraged and offended by this lawsuit.″

Midway stopped flying Thursday after Northwest called off the proposed buyout, leaving 4,300 employees in limbo. The airline, 12th largest in the nation at the end of last year, had been in bankruptcy proceedings since March. It had nearly 200 flights a day to 41 destinations.

Talks between Midway and Northwest had led to Northwest’s $178 million buyout offer last month. The two-part proposal included a $20 million purchase of lease rights to 21 gates at Midway Airport in Chicago and assumption of some Midway debt.

The city of Chicago, which owns the gates, announced after the shutdown that it had agreed to let Southwest use eight of the gates.

Northwest responded by announcing it was willing to sell 20 of the gates and scheduled Monday’s meeting with interested airlines. It is unclear who actually has control over the gates.

Andrea Swearingen, a spokeswoman for the city’s law department, said the city has the right to decide what to do with the gates.

But ″I think it is a question that is still going to remain for the courts to decide at this point,″ she said. ″Our interest is that Midway continues to operate as an airport.″

Northwest has seven days to respond to Midway’s complaint. In the meantime, Abels said the Eagan, Minn.-based airline is preparing a lawsuit of its own that contends Midway presented inaccurate traffic and revenue data during the buyout talks.

Midway spokeswoman Sandra Allen called the Northwest response ″replete with inaccuracies and misstatements. We at Midway believe the suit speaks for itself and that’s all we have to say.″

At the hearing, Northwest attorney Daniel Murray agreed to Midway’s request not to reveal any ″trade secrets″ learned during its dealings with the carrier.