ATA717Pilot
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- Jun 22, 2004
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ATA: White Knight Revealed; AWA Plan May Not Be As Crazy As It Seems; Key Players Behind the Scenes
If an airline wants to make a bid for ATA, or assets that it controls, that plan will have to be filed with the bankruptcy court no later than this Friday.
While you may think you know the major players in this story, and how the current deals shape up, you may be in for a surprise. Read on.
White Knight Comes Out of the Closet: Surprise!
Last week we talked about how reports from a number of ATA sources had management at the airline intimating to employees that a "White Knight" had emerged in the ongoing potential acquisition of the airline. As I understood it, this new deal would keep the bulk of the airline intact -- and would also see the airline losing only some of its gates at Chicago.
Okay. Sitting down?
The White Knight is Southwest Airlines.
Let me explain.
From the get-go, all indications have been that Southwest was going to make a bid to take over gates at Midway ONLY. The word was that the proposed deal from the airline would seek roughly 7-8 gates. No employees. No aircraft. No nothing.
Yes, well, from what I understand, that bid proposal has now changed.
Reports I hear say that the new deal from Southwest will offer more cash than the original $90 million AirTran deal.
No surprise.
The deal would also have Southwest taking control of 5-6 gates at Midway.
Again, no surprise.
What is the surprise is that apparently Southwest has also offered to enter into a marketing/codeshare agreement of some type with ATA, one that would allow the airline to continue with a portion of its operations out of Midway.
In other words, the Southwest deal that we should see opened up next week in bankruptcy court should look more like the AirTran deal that is now on the table.Only better. (That is, if you are George Mikelsons. It will look much worse, needless to say, if you are Joe Leonard.)
As a result, from what I understand, George Mikelsons is very happy with this prospect, as it would allow him to continue running much of his airline, and it would more or less put him in business with Southwest. Employees are going to be happy as well, as, unlike the AirTran deal, it sounds to me like this revised plan would assure more employees of continued employment.
However, bankruptcies are never simple, and this proposed deal is no exception.
Southwest: Eye on the Big Picture
Why would Southwest risk doing such a move -- a move that seems so unlike Southwest?
I think you only need to look down the road to get the answer. In other words, Southwest is willing to put up DIP financing for ATA, and let the airline continue to operate in a limited sense for only one reason. It assumes that longer term ATA will not succeed.
And when that happens, then Southwest would be in the driver's seat at Midway.
And AirTran and America West would both have been blocked from gaining a bigger presence at Midway.
Pretty slick.
Now, let's look at the revised deal from the viewpoint of ATA management. Or rather, George Mikelsons, as I really don't think any of the top executives at the airline have much to say in any of this. George runs the ship. Stem to stern.
So -- from what I understand, George likes this deal.
But what George either does not know -- or refuses to acknowledge-- is this: Not everyone on the creditor's committee thinks that he should continue at the helm.
In other words, from what I understand, there are those involved in the process who think that whatever is left of ATA as part of the Southwest deal should be led by someone other than George.
George -- do you know this? ...
If an airline wants to make a bid for ATA, or assets that it controls, that plan will have to be filed with the bankruptcy court no later than this Friday.
While you may think you know the major players in this story, and how the current deals shape up, you may be in for a surprise. Read on.
White Knight Comes Out of the Closet: Surprise!
Last week we talked about how reports from a number of ATA sources had management at the airline intimating to employees that a "White Knight" had emerged in the ongoing potential acquisition of the airline. As I understood it, this new deal would keep the bulk of the airline intact -- and would also see the airline losing only some of its gates at Chicago.
Okay. Sitting down?
The White Knight is Southwest Airlines.
Let me explain.
From the get-go, all indications have been that Southwest was going to make a bid to take over gates at Midway ONLY. The word was that the proposed deal from the airline would seek roughly 7-8 gates. No employees. No aircraft. No nothing.
Yes, well, from what I understand, that bid proposal has now changed.
Reports I hear say that the new deal from Southwest will offer more cash than the original $90 million AirTran deal.
No surprise.
The deal would also have Southwest taking control of 5-6 gates at Midway.
Again, no surprise.
What is the surprise is that apparently Southwest has also offered to enter into a marketing/codeshare agreement of some type with ATA, one that would allow the airline to continue with a portion of its operations out of Midway.
In other words, the Southwest deal that we should see opened up next week in bankruptcy court should look more like the AirTran deal that is now on the table.Only better. (That is, if you are George Mikelsons. It will look much worse, needless to say, if you are Joe Leonard.)
As a result, from what I understand, George Mikelsons is very happy with this prospect, as it would allow him to continue running much of his airline, and it would more or less put him in business with Southwest. Employees are going to be happy as well, as, unlike the AirTran deal, it sounds to me like this revised plan would assure more employees of continued employment.
However, bankruptcies are never simple, and this proposed deal is no exception.
Southwest: Eye on the Big Picture
Why would Southwest risk doing such a move -- a move that seems so unlike Southwest?
I think you only need to look down the road to get the answer. In other words, Southwest is willing to put up DIP financing for ATA, and let the airline continue to operate in a limited sense for only one reason. It assumes that longer term ATA will not succeed.
And when that happens, then Southwest would be in the driver's seat at Midway.
And AirTran and America West would both have been blocked from gaining a bigger presence at Midway.
Pretty slick.
Now, let's look at the revised deal from the viewpoint of ATA management. Or rather, George Mikelsons, as I really don't think any of the top executives at the airline have much to say in any of this. George runs the ship. Stem to stern.
So -- from what I understand, George likes this deal.
But what George either does not know -- or refuses to acknowledge-- is this: Not everyone on the creditor's committee thinks that he should continue at the helm.
In other words, from what I understand, there are those involved in the process who think that whatever is left of ATA as part of the Southwest deal should be led by someone other than George.
George -- do you know this? ...
