ATA Airlines files for Bankruptcy
ATA Holdings Corp., owner of struggling low-cost carrier ATA Airlines, filed for Chapter 11 bankruptcy protection Monday.
The tenth-largest US airline is midst of a fare war just as the airline industry is struggling with soaring fuel costs, low season travel demand, and problems with multiple Florida hurricanes.
ATA will maintain its “flight schedule, operations, customer service and travel rewards programs” during the bankruptcy proceeding.
Subject to bankruptcy court approval ATA also stated that AirTran Airways will pay $87.5 million to assume ATA’s flight operations, gates lease and routes in Chicago, New York and Washington.
America West, another low-fare company, said it was interested in bidding for all of ATA. The two airlines had discussed a possible merger in the weeks before ATA’s bankruptcy filing yesterday. Industry experts expect other airlines, particularly Southwest Airlines, to jump in with their own offers for all or part of ATA.
ATA bankruptcy could be followed by bankruptcy filing as soon as Tuesday by Delta Air Lines, which has warned it could seek Chapter 11 protection, if pilots do not grant its bid for $1 billion in wage and benefit cuts.
“Excess capacity, extremely high fuel prices, which continue to escalate, and declining fares have necessitated that all airlines, including ATA, re-examine their business,” George Mikelsons, CEO of ATA Holdings, said in a statement.
ATA, based in Indianapolis has over 7,200 employees. It carries more than 10 million passengers annually, providing service to over 400 destinations. The airline is the largest serving Chicago’s Midway International Airport.
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