I use Midnight Commander. I noticed that Alt-s and similar functions don't work - instead, ordinary letter s is sent to the tty.

I went to Edit->Preferences->Shortcuts and deleted all Fn definitions (since mc uses F1-10 and I don't want Terminal to intercept them). I also ticked "[X] disable all menu access keys" and "[X] Disable menu shortcut keys" checkboxes, for the same reason. I did it before I noticed that Alt-<letter> doesn't work, meaning: I don't know whether Alt-<letter> used to work correctly before I did that.

I verified that it's not a mc problem: I installed good old xterm and there Alt-<letter> works as expected:

$ hexdump -C
   <--------------------- I'm pressing Alt-s, then Ctrl-D several times
^[s00000000  1b 73                       |.s|
$

whereas in bare Terminal (no mc) it does not:

$ hexdump -C
   <--------------------- I'm pressing Alt-s, then Ctrl-D several times
s00000000  73                            |s|
$

I also tested it in Linux VT and Alt-s works there.