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Carrier ATA
files bankruptcy
The airline has been
expanding in Hawaii
INDIANAPOLIS » The new ATA that emerges from bankruptcy months from now may look more like the airline that began as a travel club three decades ago than the nation's 10th-largest passenger carrier.
ATA Airlines filed for bankruptcy protection yesterday, becoming the latest U.S. airline snared by rising fuel costs and fare wars over declining passenger business following the 2001 terrorist attacks.
The carrier, which has been expanding its presence in Hawaii, does roughly 5 percent of its business in the state.
The filing by ATA Holdings Corp. in ATA's hometown of Indianapolis came one day before Delta Air Lines Inc., the nation's third-largest airline, was expected to make its own bankruptcy decision. Delta was negotiating with pilots in hopes of winning $1 billion in concessions from its pilots so it could avoid Chapter 11.
In September, US Airways Group Inc., the nation's seventh-largest airline, filed for bankruptcy protection for the second time in two years. United Airlines, part of UAL Corp., also is struggling to emerge from bankruptcy.
ATA founder and chief executive George Mikelsons, who returned from semi-retirement in 2002 to lead the troubled airline, said ATA will sell off most of its operations at Chicago Midway Airport to AirTran Airways Inc. and make Indianapolis its primary hub.
Orlando, Fla.-based AirTran Holdings Inc. will assume ATA's flight operations, gate leases and routes at Midway and arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport in an $87.6 million transaction, ATA officials said.
Other than that, "We're not looking for monstrous changes," Mikelsons told reporters at a news conference. ATA plans to honor tickets and maintain its full flight schedule.
To passengers, Mikelsons said, the transition likely would appear seamless.
The AirTran deal is subject to approvals by the bankruptcy court and other entities and is expected to take effect by early 2005, ATA officials said.
Mikelsons said he expects the airline to emerge from bankruptcy within a few months as a formidable, low-cost carrier.
ATA does not plan to shed its most profitable assets -- Ambassadair Travel Club, which Mikelsons founded with a single airplane in 1973 and later spawned ATA's other subsidiaries.
"Ambassadair, I don't think has lost a penny since the day it started," Mikelsons said. "It has been the highlight of Indianapolis and it's certainly been my pride and joy. Ambassadair is very healthy and will continue to grow and prosper."
The same cannot be said for all of ATA's business. Demand for ATA's military charter flights -- once a booming revenue stream -- has dropped. ATA also is saddled with millions of dollars in debt from buying new planes and reported a loss of more than $90 million for the first half of 2004.
The bankruptcy filing listed total assets of about $745.1 million and total debts of $940.5 million.
