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ATA Airlines latest carrier in bankruptcy

By RICK CALLAHAN
The Associated Press

MICHAEL CONROY / AP An ATA agent checks in a passenger at Indianapolis International Airport. The airline filed for bankruptcy protection yesterday.

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INDIANAPOLIS — ATA Airlines, the nation's 10th-largest, filed for bankruptcy protection yesterday, becoming the latest U.S. carrier tripped up by rising fuel costs and fare wars.

In its filing, the Indianapolis-based airline seeks bankruptcy protection for eight different corporate entities from more than 1,000 creditors. The filing lists assets of about $745.1 million and debts of $940.5 million.

Boeing Capital is one of those creditors. ATA is Boeing Capital's fourth-largest customer and becomes the third of its top five clients to fall into Chapter 11, joining United and Hawaiian. ATA represented $722 million, or 7.2 percent, of Boeing Capital's portfolio as of June 30.

A year ago, Boeing Capital agreed to extend payment terms for a dozen 757s operated by ATA; more recently, its $50 million stake in ATA preferred stock was written down to $21 million.

ATA carried 1.6 percent of passengers arriving at Seattle-Tacoma International Airport in the first nine months of 2004 and ranks 13th among airlines in the number of landings, according to Port of Seattle statistics. But unlike most airlines, which expanded their flights at Sea-Tac little or not at all during the past year, ATA increased its landings by almost 50 percent.

ATA sold off airport slots and other assets to AirTran for $87.6 million but said it plans to honor tickets and maintain its full flight schedule.

AirTran will assume ATA's flight operations, gate leases and routes at Chicago Midway Airport and arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport.

The deal is subject to approvals by the bankruptcy court and other entities and is expected to take effect by early next year, ATA officials said.

"We will recreate ATA as a formidable, low-cost carrier," founder and Chief Executive George Mikelsons said yesterday.
 
ATA's announcement came amid speculation that Delta Air Lines, the nation's third-largest airline, would win $1 billion in concessions from its pilots and avoid bankruptcy. Delta is expected to decide by today whether to seek Chapter 11 bankruptcy protection.

The value of ATA plummeted 36 percent yesterday, its stock closing at 93 cents a share, down 53 cents. The stock had hit a 52-week high of $13.31 on Feb. 2.

In Washington, D.C., the Air Transportation Stabilization Board said it planned to work with the airline through the bankruptcy process to make sure taxpayers' interests are protected.

The board, created after the 2001 attacks to administer a $10 billion government loan-guarantee program for airlines, issued ATA a $148.5 million loan guarantee in September 2002.

Seattle Times business staff provided information on Boeing Capital and the Port of Seattle