The sky's the limit.

• Author: Noland, Terrance
• Position: Midway Airlines Inc.

Midway Airlines is barely off the ground, but it hopes to soar by going public.

When John Selvaggio left American Airlines in 1994 to run upstart Midway Airlines, he flew to Dallas to tell American's fiery chairman, Bob Crandall, in person. "It was very emotional," recalls Selvaggio, who had been with American 26 years, rising to president of one of its commuter airlines. He told Crandall he would always have American's red-white-and-blue in his blood, but running his own company was too good an opportunity to pass up.

Crandall's reply? "We hate to see you go. But since you've decided to go into business to compete against us, be prepared for the consequences."

Selvaggio was stunned. With five planes to American's 600, he hardly considered Midway competition. "I thought, my God, American Airlines wants to squash Midway like a bug."

As it's turned out, his Durham-based airline has been a godsend to American. When it moved its hub to Raleigh-Durham International Airport last year, it provided a graceful way for American to bail out of its money-losing base there. By leasing Midway 12 of its 25 gates, American saved both face and funds.

But don't think Selvaggio, Midway's president and CEO, was just doing his cronies at American a favor. He insists the move was critical to getting his fledgling airline off the ground. It was stifled at its crowded namesake, Midway Airport in Chicago, where it had only two gates. RDU offered room to grow.

And grow it has. Midway's fleet is up to 17 planes, all sporting the trademark blue-script "M" over bright yellow on their tails. It has stepped up its flights out of RDU from 22 a day to 48, nearly twice as many as any other airline there. (It serves 19 cities, mostly in the Northeast and Florida.) Sales have soared from $32 million in 1994 to what Selvaggio estimates was $127 million last year. Most encouraging, it has been profitable since coming to RDU. Now the 1,100-employee airline is gearing up for an initial public offering this year to fund more growth.

Still, Midway, which shares only a name with the Midway Airlines that went bankrupt in 1991, has its share of turbulence. In early January, its numbers were too close to break-even for Selvaggio to say for sure whether the company would post a profit for 1995. And some analysts wonder whether the move to RDU was a mistake that will come back to haunt him.

"The last two things the Deep South needs are another visit by General Sherman and another connecting hub," says Michael Boyd, president of Golden, Colo.-based Aviation Systems Research Corp. "If American, with all its marketing power, wasn't able to make [RDU] work, it's going to be difficult for a start-up airline to pull it off."

Midway's survival - and perhaps the airport's - rests squarely in the hands of the cocky Selvaggio. The irony is that he was the guy who set up American's hub at RDU in 1987. He'll have to learn from American's mistakes, and his own, if he's going to make it work this time around.

Truth be told, Selvaggio, 49 and an accomplished trumpeter, would rather be making a living in smoky jazz clubs than bustling airports. Born in New York City and raised in upstate New York, he was the son of a professional jazz pianist, Stephen Selvaggio, whose own father immigrated from Italy.

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