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Midway's Middling Performance

Also, our columnist schmoozes with the big guys at the International Airline Symposium in Phoenix.

Oh, my goodness. It is Friday already. Time for our weekly rundown of informational tidbits we know you just cannot live without. We just returned from a wonderful time at the

8th Annual International Airline Symposium

in Phoenix, where we were a guest presenter. And we were in some very lofty company.

Check out our Traveling With Wings column in the weekend edition of

for a rundown of the symposium; the topic was foreign ownership and control of airlines. Interesting -- by the time the conference was over, it was more or less a given that currently existing restrictions to ownership and to capital in the industry will be removed. The only question is how best to accomplish the task.

And who can beat three days at the


? I tell you what: If you ever want to be reminded of the heydey of the 1980s, a little sojourn out to

Charles Keating's

last hurrah -- built at the base of Camelback Mountain in Scottsdale -- will do the job.

I just wish I could have brought back with me the shower in my hotel room: solid marble and about seven feet tall. (I know those of you who are tall will appreciate the description.)

Midway Reports Earnings

We wrote a somewhat cautionary column on

Midway Airlines'


earnings the week before last and had a number of follow-up emails this week.

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On the surface, the results looked pretty good. The airline beat consensus expectations by 2 cents, posting an EPS of 47 cents a share, compared with 39 cents a share a year ago. However, the company beat the Street because it enjoyed a lower tax rate -- and also because it benefited from a lower diluted share count. The airline did post an 8.3% increase in operating income and a 6.3% increase in yield, coupled with an 8.6% increase in unit revenue, which was exceptionally good.

However, as we mentioned in our previous column, Midway has been hit hard by pilot defections; those will continue to hurt the airline for at least another month. Not only has this problem increased costs -- cost per available seat mile rose a whopping 5.6% on the quarter -- it has also affected revenue; the airline confirmed that regularly scheduled flights have been canceled and charter opportunities have been lost.

Peter Gallagher, analyst with

Lazard Freres

, has a buy rating on the stock but also estimates that the airline will lose about 4 cents a share this quarter as a result of the pilot issue.

Gallagher maintains a buy rating based largely on the fact that the airline is now trading at a P/E ratio of less than six times the firm's current fiscal year 1999 EPS. He feels Midway provides a greater-than-50% opportunity for intermediate return.

We still feel that, unless Midway can hook up a major codeshare partner (can you say


American Airlines

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?), the airline is going to have some strong fare pressure when both

Southwest Airlines

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US Airways

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get their operations in Raleigh-Durham up to speed over the summer.

Bottom line? The airline came in around where we thought it would, although its unit revenue figures were higher than we expected.

Mesa/CCAIR Merger Update

We also had breakfast with

Mesa Airlines

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CEO Jonathan Ornstein last Monday in Phoenix. Ornstein had all kinds of good things say about improvements taking place at the airline that used to be called "Mesa Mess" in some quarters.

First, the airline currently has about 55% of its flights under contract. And under contract at good, acceptable rates. Secondly, Monday the airline came to terms with its flight attendants on a new contract. And finally, Mesa continues to post good on-time performance statistics, which is no small deal. The airline has not been known for its punctuality and reliability in the past, and Ornstein is keenly aware of this -- and its importance in terms of keeping both passengers and Mesa's codeshare partners happy.

And speaking of on-time performance statistics, we'd like to point out that Mesa is now the only small regional carrier to report its numbers. The

Department of Transportation

only requires the 10 major airlines to do so, but we applaud Mesa and challenge other smaller airlines to follow its lead.

And we can't forget about the merger with



. Mesa announced today that there will be a double shareholders meeting on June 8th, when shareholders of CCAIR will be asked to approve the merger with Mesa, and Mesa shareholders will be asked to approve to issuance of Mesa common stock in connection with the transaction.

Another Possible Strike Looms for Northwest



will finally start sending out strike authorization ballots to

Northwest Airlines'


flight attendants next week. The flight attendants will have 30 days to return the ballots. This one is a no-brainer. We expect an authorization to strike.

Holly Hegeman, based in Dallas, pilots the Wing Tips and Traveling With Wings columns for At time of publication, Hegeman was long Southwest Airlines, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. You can usually find Hegeman, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at While she cannot provide investment advice or recommendations, she welcomes your feedback at