lowecur
Well-known member
- Joined
- Sep 14, 2003
- Posts
- 2,317
Apparently the bidders are raising the ante. It's stupid for AAI to get into a bidding war with SWA. I still have to believe common sense will rule the day, and the Justice Department will see past the SWA bid. If I were AAI, I would stick to my guns and let the JD bring down the SWA bid.
I still believe all this convoluted mess will play right into B6's hand. Richard Daley are you listening?
Decision is delayed on ATA sale
Winner to be chosen Tuesday after look at improved offers.
http://www.indystar.com/images/clear.gif
By Ted Evanoff
December 15, 2004
Rival bidders AirTran Airways and Southwest Airlines considered increasing their offers Wednesday to try to win control of bankrupt ATA Airlines's Chicago Midway gates.
ATA and its creditors reviewed the two complicated bids and decided to set back to next Tuesday a hearing, originally scheduled for today, in U.S. Bankruptcy Court in Indianapolis to select a winner, said ATA bankruptcy lawyer James Carr. "There has been a lot of discussion regarding the bids and possible enhancements to the bids," said Carr. He declined to disclose details.
Indianapolis-based ATA plans to come out of bankruptcy and regroup using cash from a Midway gate sale.
AirTran and Southwest went into Wednesday's discussions after proposing dramatically different bids. Either could change the direction of 7,700-employee ATA, the nation's No. 10 airline. AirTran offered $89.9 million for ATA's 14 Midway gates. Southwest bid $117 million for six gates and a Chicago maintenance facility.
"We thought we were pretty much the leading bidder," Southwest spokesman Gary Stewart said Wednesday about the Dallas company's $117 million offer.
AirTran's Tad Hutchinson, marketing director at the Orlando airline, dismissed the notion AirTran is out of the running. "We'll be looking at everything and talking to the parties involved," Hutchinson said Wednesday.
Before leaving Indianapolis on Wednesday afternoon, Southwest Airlines Chief Executive Gary Kelly insisted the company's offer best suits ATA because it injects the most cash.
"It's a turnaround situation and the first thing they need is money," Kelly said.
Southwest's offer was reported Tuesday by The Indianapolis Star as a bid that would hand the Dallas airline almost complete control of ATA.
Kelly later described Southwest's bid as an effort to expand at Midway and also inject cash in ATA -- but not control the Indianapolis carrier. "We are not taking over ATA," Kelly said.
AirTran officials, however, drew a different conclusion.
"I don't believe it" when Southwest says they don't want control, AirTran's Hutchinson said. "From what was in that document, it looks to us like they want control."
Under the bid document proposed last Friday, Southwest would loan ATA $47 million and invest another $30 million in ATA.
The investment, in the form of non-voting senior convertible preferred equity, would amount to a 35 percent stake in ATA stock that Southwest could resell at a later date.
Although such a stake would give Southwest the single largest block of ATA stock, and-enable it to influence the board of directors, Kelly said ATA would be operated independently by its own executives and board in Indianapolis.
"It's an effort to assist ATA and not take control of ATA," Kelly said. "Anyone who put in $70 million would apply the same conditions any commercial lender would apply."
Southwest's proposal also calls for ATA creditors to name a seven-member board in consultation with Southwest. The board would also appoint executives and in the process, according to the document, consult with Southwest on filling these positions: chairman, chief executive officer, chief operating officer, chief financial officer, chief restructuring officer or co-restructuring officer.
"Because we're putting money in, we're interested in the management team," Kelly said.
Southwest, which now operates 19 Midway gates, also would be interested in ATA's strategic direction in Chicago.
The Dallas airline's proposal would funnel passengers to ATA in Chicago under a code-sharing arrangement that Kelly said could generate up to $25 million a year in new revenue for ATA.
Under code-sharing, ATA could sell tickets to passengers who fly on both ATA and Southwest on a single trip.
It's a new direction for Southwest because ATA could also sell tickets to Southwest passengers in cities such as Boston and Dallas. ATA flies to those two cities now from Midway, but Southwest does not.
Separately, Southwest rescinded a bid provision that called for a 15 percent to 20 percent reduction in labor costs at ATA.
Officials of the Air Line Pilots Association, which represents ATA's 1,100 pilots, have given tentative support to the Southwest bid.
I still believe all this convoluted mess will play right into B6's hand. Richard Daley are you listening?
Decision is delayed on ATA sale
Winner to be chosen Tuesday after look at improved offers.
http://www.indystar.com/images/clear.gif
By Ted Evanoff
December 15, 2004
Rival bidders AirTran Airways and Southwest Airlines considered increasing their offers Wednesday to try to win control of bankrupt ATA Airlines's Chicago Midway gates.
ATA and its creditors reviewed the two complicated bids and decided to set back to next Tuesday a hearing, originally scheduled for today, in U.S. Bankruptcy Court in Indianapolis to select a winner, said ATA bankruptcy lawyer James Carr. "There has been a lot of discussion regarding the bids and possible enhancements to the bids," said Carr. He declined to disclose details.
Indianapolis-based ATA plans to come out of bankruptcy and regroup using cash from a Midway gate sale.
AirTran and Southwest went into Wednesday's discussions after proposing dramatically different bids. Either could change the direction of 7,700-employee ATA, the nation's No. 10 airline. AirTran offered $89.9 million for ATA's 14 Midway gates. Southwest bid $117 million for six gates and a Chicago maintenance facility.
"We thought we were pretty much the leading bidder," Southwest spokesman Gary Stewart said Wednesday about the Dallas company's $117 million offer.
AirTran's Tad Hutchinson, marketing director at the Orlando airline, dismissed the notion AirTran is out of the running. "We'll be looking at everything and talking to the parties involved," Hutchinson said Wednesday.
Before leaving Indianapolis on Wednesday afternoon, Southwest Airlines Chief Executive Gary Kelly insisted the company's offer best suits ATA because it injects the most cash.
"It's a turnaround situation and the first thing they need is money," Kelly said.
Southwest's offer was reported Tuesday by The Indianapolis Star as a bid that would hand the Dallas airline almost complete control of ATA.
Kelly later described Southwest's bid as an effort to expand at Midway and also inject cash in ATA -- but not control the Indianapolis carrier. "We are not taking over ATA," Kelly said.
AirTran officials, however, drew a different conclusion.
"I don't believe it" when Southwest says they don't want control, AirTran's Hutchinson said. "From what was in that document, it looks to us like they want control."
Under the bid document proposed last Friday, Southwest would loan ATA $47 million and invest another $30 million in ATA.
The investment, in the form of non-voting senior convertible preferred equity, would amount to a 35 percent stake in ATA stock that Southwest could resell at a later date.
Although such a stake would give Southwest the single largest block of ATA stock, and-enable it to influence the board of directors, Kelly said ATA would be operated independently by its own executives and board in Indianapolis.
"It's an effort to assist ATA and not take control of ATA," Kelly said. "Anyone who put in $70 million would apply the same conditions any commercial lender would apply."
Southwest's proposal also calls for ATA creditors to name a seven-member board in consultation with Southwest. The board would also appoint executives and in the process, according to the document, consult with Southwest on filling these positions: chairman, chief executive officer, chief operating officer, chief financial officer, chief restructuring officer or co-restructuring officer.
"Because we're putting money in, we're interested in the management team," Kelly said.
Southwest, which now operates 19 Midway gates, also would be interested in ATA's strategic direction in Chicago.
The Dallas airline's proposal would funnel passengers to ATA in Chicago under a code-sharing arrangement that Kelly said could generate up to $25 million a year in new revenue for ATA.
Under code-sharing, ATA could sell tickets to passengers who fly on both ATA and Southwest on a single trip.
It's a new direction for Southwest because ATA could also sell tickets to Southwest passengers in cities such as Boston and Dallas. ATA flies to those two cities now from Midway, but Southwest does not.
Separately, Southwest rescinded a bid provision that called for a 15 percent to 20 percent reduction in labor costs at ATA.
Officials of the Air Line Pilots Association, which represents ATA's 1,100 pilots, have given tentative support to the Southwest bid.
