REBECCA RAYKO / FLORIDA
A US equity firm known for its penchant for financially troubled airlines has come to the aid of Midway Airlines and is believed to have offered similar assistance to National Airlines.
Wexford Management, which last week provided $15 million in financing to Midway, has reportedly been eyeing a buyout of Las Vegas-based National Airlines according to Flight International's sister online publication Air Transport Intelligence.
The financier already owns regional carrier Chautauqua Airlines and owns four of its Embraer ER-J145 regional jets through its leasing subsidiary Solitair.
Raleigh/Durham-based Midway borrowed $10 million from Wexford earlier this month to keep the airline operational. A federal bankruptcy judge will allow Midway to access another $5 million from Wexford pending a court hearing on 6 September.
Midway chief executive Robert Ferguson said the $10 million will give the airline enough cash to continue operating until the hearing.
In return for the cash, Midway has agreed to allow Wexford a say in future negotiations possibly to sell the troubled airline, said executive vice president Steven Westburg. Midway must consider selling the airline as part of the loan deal. If a company other than Wexford buys the airline, Midway has to pay Wexford $500,000, according to the loan papers.
Midway lists total assets of $318 million and debts of $232 million, according to documents filed in the US Bankruptcy Court last week. The carrier operates a fleet of Boeing 737-700s, Bombardier CRJ200s and Fokker 100s.
Wexford has not publicly commented on its plans for Midway, although analysts have expressed concern about the carrier's future.
"Midway is in a tight spot in its present location. Not only has American Eagle moved back into the Raleigh/Durham market with an increased regional jet presence, low-fare carrier Southwest Airlines is adding to the competitive pressure in the region," says George Hamlin of AvStat Associates in Washington DC.
Meanwhile, National Airlines chief executive Michael Conway says he plans to announce a restructuring plan for the bankrupt carrier by mid-October. Sources quoted by ATI say Wexford has been in talks with National forseveral months.
National had been negotiating with International Lease Finance and financier Carl Icahn for a possible buyout. In the interim, National says it has maintained support from all its aircraft lessors and major creditors in its restructuring efforts. National has operated its full schedule without interruption but it has lost more than $23 million since entering bankruptcy proceedings last December.
Source: Flight International
