Can Bankruptcy Keep Midway Airborne?
On Mar. 26, cash-strapped Midway Airlines became the third airline in three months to seek bankruptcy court protection. Midway says it filed for Chapter 11 to obtain a badly needed $40 million loan from Continental Bank. The bank insisted on debtor-in-possession financing, which gives Continental a first claim on Midway assets. The Chicago-based company expects the filing to help it renegotiate loan and aircraft lease rates with creditors.
The bank loan, together with recent record bookings, may temporarily ease the cash squeeze. Still, the carrier owes creditors over $50 million and expects a sizable loss in the first quarter. If the filing makes travelers shy away from the carrier, Midway could crash.