Airline passengers ‘real winners’
Southwest Airlines’ effort to rapidly expand its presence at Chicago’s Midway Airport is finding clear skies with the airline winning court approval to acquire six new gates from bankrupt ATA Airlines.
The Dallas-based Southwest will pay ATA $30 million in return for a 27.5% stake in the airline. Southwest will pay another $40 million for the gates and maintenance center.
Southwest will also provide ATA with a $40 million short-term loan.
ATA intends to come out of its bankruptcy operating eight of its 14 gates at Chicago Midway. A code-share agreement will funnel Southwest passengers to nine ATA flights at Midway.
“The real winners here … are the customers traveling in and out of Chicago Midway Airport, who will get a lot of low-fare flights to many destinations from both airlines,” said Southwest CEO Gary Kelly.
AirTran had previously signed an agreement with ATA to acquire all 14 of ATA’s Midway gates and set up a code-sharing arrangement. But in a 16 December statement, AirTran CEO Joe Leonard backed out, saying:
“We saw Midway Airport expansion as a good opportunity, but we were not going to overpay for those assets.”
ATA is set to file a bankruptcy reorganization by the end of February.
Report by David Wilkening
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