Midwest Airlines will furlough 265 employees and send 16 planes back to Boeing in a cost-cutting move aimed at keeping the struggling airline out of bankruptcy.

Midwest agreed to contract with Republic Airways to provide and pilot 12 Embraer E170 jets. While Midwest trains its employees on the new aircraft, it will lay off 265 employees for about 8-12 months.

The airline also states it has secured $60,000,000 from the deal to keep the company afloat.

"This commitment of additional financing provides us the best opportunity to preserve what our customers and communities have always valued from our airline, while positioning us for a return to sustained profitability and future growth," Midwest CEO TIm Hoeksema said in a statement, adding that under the agreement, Northwest Airlines will continue its codeshare and frequent flyer programs with Midwest.

"We're not doing this lightly, but I think what people need to realize is this allows us to be a viable airline moving forward," said Midwest spokesman Mike Brophy.

This means that Midwest Airlines will employ around 1,500 people, less than half of the 3,400 it employed when TPG/Northwest took over the company near the end of 2007.

"This is catastrophic news for our pilot group and for all Midwest employees," said Midwest pilots' union spokesman Capt. Jay Schnedorf.

"Today marks a dark day in the history of Milwaukee, Wisconsin, as management has essentially sounded the death knell for Midwest Airlines and the reputation the employees have built for providing the 'best care in the air.'"

"We believe that their decision is to slowly dismantle the airline and outsource it to a lower cost carrier with service that won't be up to the standards that the Milwaukee community has come to expect," said colleague Greg Uselmann of the Airline Pilots Association.