A judge in North Carolina has warned bankruptcy-protected Midway Airlines that it faces liquidation if it does not provide evidence of a viable restructuring plan by 24 September, writes Darren Shannon.

The judge's comments follow Midway's 28 August admission before the bankruptcy court that it had failed to sign a planned $20 million deal with Beta Capital that would have helped the airline repay its debts.

The deal was fundamental to Midway's restructuring plans to emerge from Chapter 11 bankruptcy protection, which it entered over two years ago, blaming the drop in business traffic and high operating expenses. The deal was also pivotal in Midway's plans to meet a court-ordered 8 September deadline to prove its ability to emerge from bankruptcy protection.

Midway president and chief executive Robert Ferguson says he plans to broker a concessions deal with the Air Line Pilots Association union. This, in turn, would gain Midway leverage to extend the term of a $12 million loan from US Airways past its current 31 October conclusion, a factor the bankruptcy judge has pointed to if Midway is to stave off liquidation.

Midway operates services for US Airways under the US Airways Express brand, but passengers would be rebooked on US Airways or other flights in the event of liquidation.

Midwest Express has extended its credit facility until 26 November to allow it more time to seek and obtain long-term financing, while maintaining existing letters of credit. The airline says it is seeking new credit to assist its five-year restructuring plan, which includes increased charter services, a new low-fares carrier, and the launch of Midwest Vacations, a partnership with Mark Travel, in 2004.

Source: Flight International