MKE Pawn

This morning the Milwaukee Journal Sentinel reported that Northwest has written off its investment of Midwest Airlines. One could argue, as Northwest's spokesman does, that this is simply Northwest following the simple rules of conservative accounting. However, it is more than likely another sign of Midwest's impending demise (this has been coming since the end of June).

When this is all said and done, the MJS story goes on, Northwest will have spent a bit over $200 million to protect Milwaukee from AirTran. From a network perspective, it is probably better for the MKE traveler that Northwest felt compelled to defend this territory.

Midwest Update

Earlier this week I wrote about Midwest Airlines cutting 40% of its capacity by eliminating its MD-80s. Yesterday the Milwaukee Journal Sentinel posted a comprehensive roundup of the continuing restructuring talks. Highlights include:

• Aside from the 12 MD-80s, Midwest will also pull at least 5 of its Boeing 717s. Collectively, this is a 50% fleet reduction.
• In connection with this service reduction, pilot and flight attendant staff will be cut by about 50% also.
• One restructuring scenario calls for junior captains to be demoted to first officer. The resulting pay decrease would be about $90k, from $120k to $30k.

As Midwest continues to tumble three likely scenarios exist:

1. Midwest files for bankruptcy.
2. Midwest is absorbed by the Northwest/Delta merger.
3. Midwest succeeds in its restructuring.

I think #3 is the least likely. For me, it is a coin toss between bankruptcy and the Northwest/Delta merger. Sadly, this spells the end for our favorite cookie baker.

Midwest Kicks the MD-80 to the Curb (Aka trimming capacity by 40%)

Once upon a time Midwest quietly flew the best product in the sky between Milwaukee, Kansas City and a select lucky cities. The ticket price was competitive, the employees were happy, the wine and steak were plentiful, and you could eat as many cookies as you wanted too because you were lounging in giant seats. All of this took place on Midwest's workhorse, the MD-80.

Midwest started peeling away the service years ago. Now the plane is gone. Late Friday the company broke the news (without a press release) that it would be quickly grounding its 12 MD-80s. It now will be left with 25 717s. So, the quick math on that is about 1/3 of its fleet. But, when you factor in the seat differential between the two aircraft, the move knocks out a whopping 40% of Midwest's capacity.

In a recorded message to employees the "CEO Mr. Hoeksema said Midwest Airlines put together a good plan to cope with $115 oil two months ago. 'That was a good plan for the situation.'" But, he goes on to say, that the game has changed entirely too quickly.

The blunt remarks are telling and I encourage everyone to check them out (via the Dallas Morning News Blog).