Judge Approves Bid for Midway

A bankruptcy court judge Tuesday approved a $170-million bid by Northwest Airlines for assets of struggling Midway Airlines Inc.

On Monday, Southwest Airlines Co. had submitted a competing bid but Midway argued that the offer from the St. Paul, Minn.-based Northwest was the most beneficial.

Midway, operating under bankruptcy court protection since March, is seriously low on cash, a lawyer for the carrier said.

The lawyer told the bankruptcy court that the airline’s shutdown was imminent without an immediate decision. He said that as of Friday, Midway will have used up $38.5 million of a $40-million credit line from Continental Bank Corp.

Midway’s assets, concentrated at Midway Airport, should prove a boon to Northwest because Chicago’s other major airport, O’Hare, is extremely congested and facilities are hard to come by.

The nation’s top two carriers, United Airlines and American Airlines, dominate O’Hare, leaving competitors virtually no way to expand in Chicago except at Midway Airport.

Northwest’s $170-million package includes $20 million in cash for 21 gates at Midway Airport and another $95 million in cash and assumed liabilities, including assumption of the bank loan.

Northwest had also agreed to take on most of Midway’s 4,300 employees, but Southwest did not.

Southwest, which is Midway’s major competitor at the airport on Chicago’s southwest side, Tuesday increased its offer to $109.5 million, including $28 million cash for 21 gates at Midway and $25.15 million for assets such as engines, hangars and slots.

USAIR Group Inc. was part of that offer, a lawyer for Dallas-based Southwest said. A source said USAir wanted Midway’s gates at LaGuardia and National Airports in return for assuming some of its ticket liabilities.

Southwest Chairman Herb Kelleher said acquiring Midway gates had been “a desirable opportunity for Southwest Airlines, but we have other opportunities.”