Midwest Airlines says concessions sufficient to avoid bankruptcy
Thursday, July 17th 2003, 12:00 am
News On 6
MILWAUKEE (AP) _ Midwest Airlines will avoid filing for bankruptcy after securing concessions from workers and agreements to reduce debt and lease payments on its airplanes, company officials said late Wednesday.
Midwest said closing the deals will allow it to move forward with efforts to obtain new financing.
The company gained contract concessions from its unionized workers Tuesday and had continued negotiations with banks and aircraft leasing companies into Wednesday.
``We are definitely out of the woods in a major, major part of re-establishing our profitability for the future,'' said Carol Skornicka, Midwest senior vice president and general counsel. ``There is now no chance at all of filing for Chapter 11. I can assure you our employees are very, very relieved.''
Midwest executives said last month the suburban Milwaukee-based company would be forced to file for Chapter 11 bankruptcy protection without concessions from its 11 aircraft lessors and three labor groups.
The airline sought $600,000 in monthly savings from employees through a combination of wage reductions, work rule changes or productivity improvements.
Two pilots groups and the flight attendants' union approved packages of concessions Tuesday. The airline's mechanics and ground crew aren't unionized.
The flight attendants' agreement includes changes in work rules and wage cuts of 1.9 percent, local union president Toni Phillips said.
The union also agreed to a voluntary six-month furlough in the fall, in which some of its members would choose to temporarily leave their jobs until the airline's finances improve. The flight attendants said their concessions will save Midwest about $5 million over the next five years.
Jerome Schnedorf, chairman of the pilots union's Midwest Airlines unit, said the deal with the 275 Midwest pilots will save the airline $30 million over five years. He said the concessions involve changes in work rules, sick leave and vacation policies, but not layoffs or furloughs.
Midwest Airlines and subsidiary Midwest Connect serve a combined 37 cities with 280 flights each weekday and an average 8,000 daily passengers. Like most airlines, Midwest has struggled because of a drop in tourism since the terrorist attacks of Sept. 11, 2001, and the weak economy.