Ata Airlines

On October 23, 2004 ATA Airlines filed for bankruptcy. The Indianapolis-based carrier also said it has agreed to sell its hub at Chicago’s Midway Airport to AirTran, one of its major competitors, for $87.5 million dollars. Like other airlines operating in bankruptcy, AirTran said it will maintain its full flight schedule and honor its frequent-flier commitments. The tenth-largest U.S. airline by traffic, ATA joins United, US Airways and Hawaiian Airlines in bankruptcy.

ATA is the first major low-coﴱᄃst airline to seek bankruptcy protection. It has long been having difficulties by its costly leases, estimated to be about $100 million dollars per year over prevailing market rates. ATA will turn over its slots at New York’s LaGuardia and Washington Reagan National Airport to AirTran and will fly fifteen of its aircraft on AirTran behalf for six months.

ATA has not arranged financing during bankruptcy but Chairman J. George Mikelsone said the AirTran deal would provide immediate cash infusion while he lines up financing elsewhere. ATA lost $90 million dollars in the first half of this year on revenue of $778 million dollars.

ATA Airlines is trying everything they can to have their company. But they are going to have to wait it out. Some of their opinions is to reorganize, return to profitability, settle their debts, and be released from bankruptcy; or they could go out of business and have their assets auctioned off under court supervision to pay as many of their remaining debts as possible.

They say that the bankruptcy could probably go on for many months, perhaps for years. Some airlines, such as Continental Airlines and American West, have reorganized under bankruptcy protection, and are still operating. Several others in the USA, and more in other parts of the world, have gone out of business,