[svlug] Silicon Valley economic woes (was: Linux and hardware)

[Karsten M. Self]

on Sat, Aug 18, 2001 at 03:13:01AM -0700, Ian Kluft (ikluft at thunder.sbay.org) wrote:

> Though not based in Silicon Valley, the Chapter 11 bankruptcy filing
> by Midway Airlines is a Silicon Valley story too.  Though there were
> plenty of other problems, one big one began last November when they
> started non-stop flights from their hub at Raleigh-Durham to San Jose.
> That was for Cisco whose main East Coast site is in Raleigh.  Then the
> telecom sector tanked in December and Cisco curtailed travel in
> January.  So Midway was left flying two shiny brand-new Boeing
> 737-700's nearly empty every day.  Red Hat was still using Midway's
> non-stops, going from their headquarters in Raleigh to their Sunnyvale
> office and customers in Silicon Valley.  Even though Red Hat is
> profitable, they're not big enough to sustain an airline...
> 
> Midway's flights were the first time any airline routed its first
> service to California into San Jose.  It was touted at the time as yet
> another sign that San Jose was growing up into a real city finally.
> Oh well... :-) Now this week San Jose was on the headline of the LA
> Times, who declared us the "Capital of Almost".  Until the economy
> turns around we have nothing to answer it with.  :-(

There's more to the Midway story.

20% of Midway Airlines is held by Msrs. Goodnight and Sall.  Who they,
you ask?  The whole owners of the privately held SAS Institute, based in
Cary, NC, usually described as the sixth largest independent software
company worldwide.

Goodnight picked up Midway in large part to provide better air service
to SI, who apparently just weren't getting no respect from other
carriers.  It would make sense for their routes to follow various
hi-tech migratory patterns, as these would also be followed by SI
employees, consultants, and clients.  Not that SI could fill two 737s
itself....

Looking at insider trades on Yahoo's finance pages, it appears that
Goodnight and Sall are down > US$30m collectively, having bought in at
$5.20/share.

The incident has been leveraged by some as an excuse to utter the majick
phrase:  SAS Institute -- that's no way to run an airline.

-- 
Karsten M. Self <kmself at ix.netcom.com>          http://kmself.home.netcom.com/
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