America West, AirTran in consolidation race for ATA

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[storminpilot]

[font=Arial,Helvetica][font=Arial,Helvetica][size=-1]America West, AirTran in consolidation race[/size][/font]
[font=Arial,Helvetica][size=-1]Efforts to be first to consolidate the US low-cost airline sector intensified on Thursday as America West and AirTran continued last-minute talks with ATA, as it prepared for an imminent bankruptcy filing.

[/size][/font][/font]http://news.ft.com/cms/s/69e2f430-23c7-11d9-aee5-00000e2511c8.html

Anybody got some copy from ft.com or some other source? I found the link but hate signing up for these news websites but would like to know what's the plan with ATA! This seems like a big deal to me, I cant believe there's no thread running on this story.

Rumor out here is HP & Air Tran just want the ETOPS birds to start Hawaii service (back up).

Click Here
http://forums.flightinfo.com/showthread.php?t=41672

 

[mt2]

Should be an interesting week at ATA

 

[mt2]

More....

US low-cost carrier on verge of bankruptcy
By Caroline Daniel in London
Published: October 25 2004 00:02

The problems facing even low-cost carriers in the US are set to be underlined this week with the bankruptcy of ATA, which could come as soon as Monday, and a warning from Independence Air on Wednesday about its deteriorating financial position.

According to a person familiar with the filing, ATA, the tenth largest airline in the US could file for bankruptcy on Monay in Indianapolis. Its financial distress has already attracted a number of interested parties who have been holding discussions in the last few weeks and over the weekend about the airline’s assets.

Discussions involving AirTran are currently the most advanced. It is interested in ATA’s operations at Midway airport in Chicago, and may seek to wet-lease its 737 Boeing aircraft. It could file a separate plan with the bankruptcy court, alongside the ATA filing.

AirTran has also been holding talks with Hawaiian Airlines, which is understood to be interested in taking over ATA’s Hawaiian routes, which use 757 aircraft and are based on the West Coast and Phoenix, according to someone familiar with the talks.

Those routes were also of interest to America West, which has also sought to consolidate the low cost sector, and currently has a central hub in Phoenix. However, it could re-emerge as a potential bidder for ATA once the airline files for bankruptcy. Southwest, which currently dominates Midway airport, could also emerge as a bidder.

Cerebrus, a private equity group, which has also invested in Air Canada, has held discussions with ATA about providing debtor-in-possession financing to fund a bankruptcy. It could provide $35m in initial cash, and up to a further $40m in funding if the carrier meets certain performance targets. However, discussions about the DIP were ongoing this weekend.

ATA is not the only airline to discover that low costs are not enough to protect it from the current high fuel environment and brutal domestic competiton. Independence Air, which reinvented itself from a regional airline, this year, has seen its cash balances erode fast, and reported several months in which its planes have been less than half full.

Independence Air’s board is expected to meet on Monday to discuss the airline’s problems and on Wednesday the carrier will report its results. One senior private equity executive predicted that the airline could run out of cash by February.

Last Wednesday ATA warned that its cash problems had worsened since its filing on August 16th. “These cash problems continue to be very serious. The ten per cent wage concession approved by ATA Airlines’ flight attendants, in and of itself, will not be enough cost-savings to satisfy these liquidity concerns,” it said.

Boeing Capital, which has significant exposure to ATA because of the number of aircraft it leases to the airline, has also been involved in the talks. It has already written off some of its equity stake in the carrier.

Considerable risks remain for both America West and AirTran in pursuing a deal. Both would be increasing their exposure to Southwest, because of its position at Midway. In the first half ATA lost $91m on revenues of $778m.

There are also concerns that all three airlines are losing money. America West has more than $300m in debt due to the Airline Transportation Stabilisation Board, which oversees loan guarantees. It would need to seek ATSB permission to pursue a deal and would also need to show that a merger would not lead to a credit downgrade.