ATA Pay Cuts Loom

[RJP]

Press Release
Source: Air Line Pilots Association, International


ATA Airlines ALPA MEC Chairman Statement on Contractual Relief Talks
Thursday August 19, 8:00 pm ET

CHICAGO, Aug. 19 /PRNewswire/ -- The following statement was released today by Capt. Erik Engdahl, chairman of the ATA Airlines Master Executive Council (MEC) crewmembers unit of the Air Line Pilots Association, International (ALPA) regarding discussions on contractual relief.

"The ATA MEC adopted a resolution today that directs our negotiating committee to engage in discussions with ATA management to determine what contractual relief might be needed and how that need could be met. We gave much thought to this subject and looked at the options available to us. We feel that this is the best course of action available to us and look forward to productive meetings. We believe in our airline, and we believe in its continued success."

ALPA, the world's oldest and largest pilots union, represents 64,000 airline pilots at 42 airlines in the U.S. and Canada. Its website is http://www.alpa.org.

 

[Boz]

Well I hope you have more success then UAL-ALPA MEC has had at negotiating concessions.

They tell us one thing and then have these closed door meetings that lead to more doom and gloom news that lead to terminating pensions, giving back more money and redoing the work rules.

Just get the facts before you vote on any givebacks

 

[mach zero]

At this point, I don't think the membership would ratify further concessions as it would not save the ship.

 

[Humty72]

From PlaneBusiness.com:

In other news, last week I talked about the deteriorating financial situation at ATA. Again.

This week, I can confirm that the airline is, indeed, actively trying to shed some of its assets.

It appears that the airline's overall plan to survive centers around shedding most of its domestic operation, including its large presence at Midway.

The airline's goal is to retain its profitable charter operations. In addition, the airline intends to use whatever money it gains from the sale of assets to keep itself afloat, and hopefully put together some kind of low-fare trans-Atlantic service, a concept the airline has touted for several years.

However, all is not moving smoothly with the plan, from what I understand. In fact, the most recent negotiations blew apart last week, according to those close to the negotiations.

It doesn't take much to figure out who one of the major players is in this situation. As one industry observer said to me on Monday, "This one is easy. Follow the money."

Boeing is the major player here, as the company not only has aircraft placed with the airline, but it has aircraft at the airline financed through its Boeing Capital division as well. General Electric Capital Aviation Services is another major lessor.

Boeing also has a piece of equity in the airline, part of the aircraft financing deal the airline entered into with Boeing a number of years ago.

Our sources tell us that the airline is seeking to sell not only aircraft, but the bulk of its gate allocation at Midway Airport in Chicago as well.

Remember that if the airline substantially curtails its domestic operation, it would not require the number of gates it currently has at Midway, and the airline's headquarters is based in Indianapolis, not Chicago.

Now, let's follow the money again.

If you look at the likely buyers in this scenario I think you'll come up with two logical suspects: AirTran and Southwest.

And, interestingly enough, Boeing is closely tied to both of these airlines.

Anyone taking bets?

Meanwhile, ATA announced second quarter earnings Monday.

Or, rather, the airline filed its second quarter earnings as part of an SEC filing.

The airline issued no press release.

I found this rather odd, especially since the airline recently signed up the high-powered Boston-based WPP Group's Hill & Knowlton firm to handle their PR.

So... where's the press release?

Did the dog eat it?

If he did, I'm sure he now has indigestion, as the numbers were pretty unsettling.

But here's a lesson in PR 101. The fact that the airline did not issue an earnings release received much more attention than had the airline simply issued one -- no matter how bad the news was. This certainly proved to be the case with subscribers, as a number of you were quick to drop me a note -- commenting on the airline's rather glaring omission.

For the second quarter, the airline reported that it lost $26 million, with first half losses totaling $90.7 million.

Last year for the second quarter, the airline reported a profit of $40.8 million.

At the end of the second quarter, the airline reported that it had $150 million in cash on hand. However, the airline reported in its SEC filing that the bank handling its credit card charges has begun to retain the entire ticket amount, until the flight occurs -- rather than sending a portion of the ticket price directly to the airline when the tickets are purchased.

This will, going forward, result in a loss of approximately $20 million in cash to the airline.

Finally, the airline said in the filing, "Under current operating assumptions and absent any changes to existing aircraft lease obligations, the company does not expect to have sufficient cash to meet its cash obligations in the first quarter of 2005."

One last reminder about the corporate set-up of ATA. Remember that ATA Airlines is part of a holding company -- ATA Holdings. When you purchase stock in ATAH, you are purchasing stock in that holding company. There are six other companies, besides the main airline unit, in the holding company.

As a result, if ATA Airlines declares bankruptcy, it would not mean that the parent company ATAH will necessarily declare bankruptcy.

An interesting twist -- and one that will, I am sure, become more important in the next few weeks.

 

[tz800ca]

Cash On Hand......

Actually increased from $130 million +/- to $150 million +/-.

 

[Boeingman]

Last week before all this news hit I had heard rumors of CAL looking at your 738's

Any truth to this now?

 

[tz800ca]

nope. Have not heard that one.

 

[Falcon Jet 1]

On another forum Gary Kelly was qouted saying this week to a class of upgrades that ATA gates and other assests are for sale.

 

[tz800ca]

I would imagine that statement is true. The only problem is that George is greedy and will not pull the trigger until he gets what he wants or his hand gets forced.

 

[tz800ca]

At this point, I don't think the membership would ratify further concessions as it would not save the ship.

You want to put some money on that statement?

Sad to say, I would not put anything past this group.

 

[mach zero]

You want to put some money on that statement?

Sad to say, I would not put anything past this group.

This is a sad commentary on this group. From the feedback that I heard one of our reps getting from the membership, a vast majority were opposed to further concessions...whether they vote that way is another matter. No, I will not put money on that issue as I don't trust this group would put their money where their mouth is. Right now though, there is alot of negative feedback.