Midwest and Delta deepen ties

By Lori Ranson

As privately-held Midwest Airlines continues its restructuring, it has entered into a wide-ranging alliance with Delta Air Lines that includes reciprocity of their respective frequent flyer programmes and a new codeshare.

The pact is an extension of a long-standing relationship between Midwest and Northwest Airlines. Northwest was acquired by Delta in late 2008 through their merger. Earlier that year Northwest closed on a deal with partner TPG to acquire Midwest, with Northwest contributing 47% - $213 million - of the purchase price.

Since then Midwest has undertaken an effort to overhaul its operations, shedding 16 Boeing 717s from its fleet and brokering a deal with Republic Airways Holdings entailing the regional operator flying 12 Embraer E-170s on behalf of Midwest. Republic also agreed to loan Midwest $15 million. The one-year loan from Republic was part of a $60 million financing package Midwest received in September 2008 from its new regional partner and TPG.

During a recent earnings discussion Republic CEO Bryan Bedford supplied his company's assessment of Midwest's situation: "We're probably a little more intimate with their restructuring than what we might be with other partners. I can tell you they are having terrific success in the restructuring process and we believe Midwest is going to be on the aviation landscape for years to come."

Delta and Midwest expect to put their new codeshare into effect in June 2009, and estimate that with the addition of Delta's route system to the Northwest network that 379 frequent flyer destinations will be available to Midwest customers. The frequent flyer portion will "go into effect later this year", say the partners.

A phase-out of the current Midwest-Northwest tie-up is planned, and will be replaced by the new Delta agreement.