Wednesday, August 4, 2004

New carrier may join Delta

Midwest Air Group would fly regional jets

By James Pilcher
Enquirer staff writer

Erlanger-based Comair could have a new Delta Connection sibling as soon as this month, with Milwaukee-based Midwest Air Group in final negotiations to start flying regional jets for Delta Air Lines.

Midwest, which operates a regional subsidiary called Skyway/Midwest Express, is hoping to take control of 30 Fairchild Dornier 328JET, 32-seat regional jets from Atlantic Coast Airlines. ACA now flies those planes for Atlanta-based Delta.

That could mean the creation of a new pilot base here, with eight to 10 new pilots possibly needed per plane.

"We feel we are very close to getting closure on the deal," Midwest spokeswoman Carol Skornicka said Tuesday. "We are looking forward to this, since it will be a major expansion for us and a pretty big variation from our current business model."

The planes are based out of the Cincinnati/Northern Kentucky International Airport, Comair's home base and Delta's second-largest hub overall, and will continue to feed regional traffic into the hub, no matter who flies them.

Midwest came to the verge of bankruptcy last summer, but recovered. Its stock closed at $3.32 Tuesday, and the company lost just $2.9 million in the second quarter. The separately branded Skyway/Midwest Express once operated two daily flights from Cincinnati to Milwaukee, but shut down those routes this summer.

Comair officials said Tuesday that they had turned in a bid to fly the planes, and were still awaiting a decision.

Delta officials said they are hoping to have an announcement within two weeks.

Midwest would be the second addition to the Delta Connection lineup in the past two years, but would keep the total number of airlines in the network to five because Atlantic Coast is dropping out.

The other members are fellow Delta subsidiary Atlantic Southeast Airlines; Utah-based Skywest; and Indianapolis-based Chautauqua.

The shuffling began earlier this year, when Atlantic Coast started its own low-cost carrier called Independence Air.

The new carrier is based out of Dulles airport near Washington, thereby voiding Atlantic Coast's contracts with Delta and United.

Tuesday was its last day to fly regional flights on behalf of United. Atlantic Coast spokesman Rick DeLisi said the Dornier jets should be turned back over to Delta by November.

He added that there are no plans for Independence to fly to Cincinnati, but flights between Dulles and Indianapolis, Dayton and Columbus start Aug. 15.

Delta controls the Dornier planes, and has been looking for a new operator for them. In an interview last month, the executive who runs Delta's regional flying network said that the airline had discussed turning the planes over to wholly-owned subsidiaries such as Comair as well as to Midwest.

"But even though Comair is a first-class airline, it would be hard to take on an entire new airplane type, especially one with the maintenance issues that these planes have," said Fred Buttrell, president and chief executive officer of Delta Connection Inc. "Midwest already flies these and is ready to take over."

Atlantic Coast officials acknowledged that the Dornier jets had repeated engine problems that caused frequent engine replacements. They also said maintenance was expensive since the plane's manufacturer had gone bankrupt.

But Midwest spokeswoman Skornicka said officials at that airline "loved the plane. We think it is very user friendly."

She also said that her company is being careful to make sure any contracts include protections, in case Delta files for Chapter 11 bankruptcy protection, but declined to discuss specifics.

Delta officials also declined to talk about specifics of the negotiation. The airline has lost more than $5 billion since the 9/11 attacks.


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