lowecur
Well-known member
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- Sep 14, 2003
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Well we are beginning to see more clarity from the city as the BK decision gets closer. They are in essence throwing cold water on the judge's decision and threatening to sue if they don't agree. They are specific that any airline wishing to take over those gates should be in formal discussions with the City. The City has said they have received no proposals from SWA or AWA. We know they have received a formal proposal from AirTran, so they are in the game. Since Jetblue was not mentioned, they have not been eliminated and it's my guess they are submitting a formal proposal. It's interesting Chicago says they will insist on 1000 seats offered per gate for minimum utilization. AirTran says they cannot offer that until 2006, nor could Jetblue. An AWA deal could. The city also said competition at the airport is very important in any decision. This in essence would throw out a SWA deal.
City says it rules gates at Midway
Chicago demands approval over ATA's successor
Mark Skertic
Tribune staff reporter
November 25, 2004
Chicago aviation officials are insisting that they have final say over who gets control of 14 ATA Airlines gates at Midway Airport, not the airline nor the bankruptcy court judge overseeing the sale of its assets.
Furthermore, the city has threatened legal action if the judge ignores Chicago's request to OK who ultimately can use the gates.
The tussle for Midway's gates, which is being monitored closely by other airlines, potentially could slow ATA's efforts to emerge from bankruptcy.
When it filed for Chapter 11 protection last month, ATA secured an $89.5 million deal with Orlando-based AirTran Airways that includes rights to Midway gates as well as landing rights at other airports.
But in a recent filing with the U.S. Bankruptcy Court in Indianapolis, Chicago made clear that any deal that includes the gates rights needs the city's blessing.
"The right to use the 14 gates and facilities at Midway cannot be simply assigned to just any entity that has sufficiently deep pockets," the city said in its court filing.
Unlike gates at O'Hare airport, which belong to airlines, Midway's gates are owned by the City of Chicago. The city wants the court to require bidders to negotiate with Chicago aviation officials.
"Failure to do so may result in costly litigation and delay," the city warned in its filing.
The city's threats to slow the bankruptcy proceedings come as it seeks to ensure significantly more capacity--and ultimately more revenue--at Midway.
Specifically, aviation officials want an airline that will spur growth at the South Side airport, which handles more than 17 million passengers annually.
The next tenant at ATA's gates will be required to meet what the city calls Midway's general utilization rate--1,000 scheduled departing seats per day for each gate, the court filing revealed.
That would be a substantial increase from the minimums ATA was required to meet since 1998, when it received "grandfathered gate status," the filing stated. At the time, Midway was undergoing a massive renovation that expanded the airport and gave it a much-needed facelift.
Currently, ATA is required to fly only a single daily flight, with at least 69 seats, at 12 of its 14 gates.
Details on the exact number of departing seats per gate for ATA were not available from the city on Wednesday. An Aviation Department spokeswoman said ATA has averaged six flights a day at each of its Midway gates.
The Boeing jets ATA flies have at least 175 seats, which would have enabled the airline to meet Midway's utilization standard.
Curbing interest in gates
Chicago's enforcement of the utilization rate will limit the ability of some airlines to bid on ATA's gate leases, said Aaron Gellman, a professor at the Transportation Center in Northwestern University's Kellogg School of Management.
"It will chill the interest of some airlines to take over those gates," Gellman said. "They wouldn't be able to do it. A thousand seats a day per gate is a lot."
Indianapolis-based ATA filed for bankruptcy in October. At the same time, the carrier announced it had reached its deal with AirTran.
The gate deal prompted an executive at JetBlue Airways, a rival low-cost carrier, to scoff that ATA was trying to sell something it didn't own. JetBlue has said it has inquired about Midway gates, but it will not enter the bidding for ATA's assets.
Southwest and America West Airlines have filed notices with the bankruptcy court that they are interested in bidding on some of ATA's assets.
The city has not disputed that ATA's Midway use agreements are valuable assets that can be bid on, but aviation officials want to ensure that the eventual owner of the gates has worked out a new deal with the city.
"The bottom line is that the ATA use agreement is different from other commercial agreements, where performance and rent are usually the only relevant considerations," the city said in its filing. "The determination of which airlines to lease gates to involves numerous considerations other than the ability to pay rent."
The city also must consider whether airlines are able to meet state and federal regulations and ensure competition for passengers continues, Aviation Department spokeswoman Annette Martinez said.
Neither Southwest nor America West have submitted proposals to the city, she said.
Southwest could be in a position to strengthen its dominant position at the airport. It controls 19 of Midway's 43 gates. America West, which has said it might be interested in acquiring all of ATA, could establish a significant Chicago presence with one move.
AirTran would be able to meet Midway's utilization rate by 2006, said Richard P. Magurno, senior vice president, general counsel and secretary.
"We're actively working with the city in connection with this transaction," Magurno said.
Debt payment obligation
The deal the two airlines have struck includes a $7 million payment by AirTran to the City of Chicago to retire debts owed by ATA for construction of a jet bridge and two expansion gates.
While the bankruptcy moves forward, ATA met with union leaders this week to inform them that 600 to 700 pilots and up to 800 flight attendants could be laid off if AirTran takes over the Midway operation.
The ATA-AirTran agreement "only calls for preferential interviews for AirTran pilots," said Rusty Ayers, spokesman for the Air Line Pilots Association.
"And depending on the way you read it, it's preferential interviews only for employees who are residents of the city [of Chicago]--not preferential interviews for everyone. So, there's no guarantee AirTran will pick up a single ATA pilot."
- - -
Midway Airport gates
Southwest Airlines: 19
ATA Airlines: 14
Continental Airlines: 3
Northwest Airlines: 2
Other carriers share: 5
Copyright © 2004, Chicago Tribune
City says it rules gates at Midway
Chicago demands approval over ATA's successor
Mark Skertic
Tribune staff reporter
November 25, 2004
Chicago aviation officials are insisting that they have final say over who gets control of 14 ATA Airlines gates at Midway Airport, not the airline nor the bankruptcy court judge overseeing the sale of its assets.
Furthermore, the city has threatened legal action if the judge ignores Chicago's request to OK who ultimately can use the gates.
The tussle for Midway's gates, which is being monitored closely by other airlines, potentially could slow ATA's efforts to emerge from bankruptcy.
When it filed for Chapter 11 protection last month, ATA secured an $89.5 million deal with Orlando-based AirTran Airways that includes rights to Midway gates as well as landing rights at other airports.
But in a recent filing with the U.S. Bankruptcy Court in Indianapolis, Chicago made clear that any deal that includes the gates rights needs the city's blessing.
"The right to use the 14 gates and facilities at Midway cannot be simply assigned to just any entity that has sufficiently deep pockets," the city said in its court filing.
Unlike gates at O'Hare airport, which belong to airlines, Midway's gates are owned by the City of Chicago. The city wants the court to require bidders to negotiate with Chicago aviation officials.
"Failure to do so may result in costly litigation and delay," the city warned in its filing.
The city's threats to slow the bankruptcy proceedings come as it seeks to ensure significantly more capacity--and ultimately more revenue--at Midway.
Specifically, aviation officials want an airline that will spur growth at the South Side airport, which handles more than 17 million passengers annually.
The next tenant at ATA's gates will be required to meet what the city calls Midway's general utilization rate--1,000 scheduled departing seats per day for each gate, the court filing revealed.
That would be a substantial increase from the minimums ATA was required to meet since 1998, when it received "grandfathered gate status," the filing stated. At the time, Midway was undergoing a massive renovation that expanded the airport and gave it a much-needed facelift.
Currently, ATA is required to fly only a single daily flight, with at least 69 seats, at 12 of its 14 gates.
Details on the exact number of departing seats per gate for ATA were not available from the city on Wednesday. An Aviation Department spokeswoman said ATA has averaged six flights a day at each of its Midway gates.
The Boeing jets ATA flies have at least 175 seats, which would have enabled the airline to meet Midway's utilization standard.
Curbing interest in gates
Chicago's enforcement of the utilization rate will limit the ability of some airlines to bid on ATA's gate leases, said Aaron Gellman, a professor at the Transportation Center in Northwestern University's Kellogg School of Management.
"It will chill the interest of some airlines to take over those gates," Gellman said. "They wouldn't be able to do it. A thousand seats a day per gate is a lot."
Indianapolis-based ATA filed for bankruptcy in October. At the same time, the carrier announced it had reached its deal with AirTran.
The gate deal prompted an executive at JetBlue Airways, a rival low-cost carrier, to scoff that ATA was trying to sell something it didn't own. JetBlue has said it has inquired about Midway gates, but it will not enter the bidding for ATA's assets.
Southwest and America West Airlines have filed notices with the bankruptcy court that they are interested in bidding on some of ATA's assets.
The city has not disputed that ATA's Midway use agreements are valuable assets that can be bid on, but aviation officials want to ensure that the eventual owner of the gates has worked out a new deal with the city.
"The bottom line is that the ATA use agreement is different from other commercial agreements, where performance and rent are usually the only relevant considerations," the city said in its filing. "The determination of which airlines to lease gates to involves numerous considerations other than the ability to pay rent."
The city also must consider whether airlines are able to meet state and federal regulations and ensure competition for passengers continues, Aviation Department spokeswoman Annette Martinez said.
Neither Southwest nor America West have submitted proposals to the city, she said.
Southwest could be in a position to strengthen its dominant position at the airport. It controls 19 of Midway's 43 gates. America West, which has said it might be interested in acquiring all of ATA, could establish a significant Chicago presence with one move.
AirTran would be able to meet Midway's utilization rate by 2006, said Richard P. Magurno, senior vice president, general counsel and secretary.
"We're actively working with the city in connection with this transaction," Magurno said.
Debt payment obligation
The deal the two airlines have struck includes a $7 million payment by AirTran to the City of Chicago to retire debts owed by ATA for construction of a jet bridge and two expansion gates.
While the bankruptcy moves forward, ATA met with union leaders this week to inform them that 600 to 700 pilots and up to 800 flight attendants could be laid off if AirTran takes over the Midway operation.
The ATA-AirTran agreement "only calls for preferential interviews for AirTran pilots," said Rusty Ayers, spokesman for the Air Line Pilots Association.
"And depending on the way you read it, it's preferential interviews only for employees who are residents of the city [of Chicago]--not preferential interviews for everyone. So, there's no guarantee AirTran will pick up a single ATA pilot."
- - -
Midway Airport gates
Southwest Airlines: 19
ATA Airlines: 14
Continental Airlines: 3
Northwest Airlines: 2
Other carriers share: 5
Copyright © 2004, Chicago Tribune
