Joe's confident

[lowecur]

Well in yet another comical statement, Joe Leonard feels he has this deal rapped up. I guess anything is possible, but the posturing every few days to try and influence the judges decision is a riot. By the way, Judge Lorch is an Indiana boy, so I'm sure he wants to do what's best for ATA. It will be interesting to see if the City of Chicago responds to any of this in the next few days, or they may wait to see if the judge contacts them.

AirTran confident of ATA bid

$89.3 million offer to buy 14 Midway gates is hard to beat, Atlanta airline's chairman says.
http://www.indystar.com/images/clear.gif
By Ted Evanoff

December 8, 2004


AirTran Airways Chairman Joseph Leonard expressed confidence Tuesday that his company will emerge the winner when the bankruptcy auction of Indianapolis-based ATA Airlines concludes next week.

"We think we've thought this through very carefully," Leonard said Tuesday in an interview in Indianapolis. "We've structured this so it's hard to beat."

Friday is the deadline for carriers seeking part or all of 7,700-employee ATA to submit bids to the U.S. Bankruptcy Court in Indianapolis. Bids will be opened Monday, and a winner will be identified Dec. 16.

AirTran and ATA have worked out a proposal for the Orlando company to take control of ATA's 14 gates at Chicago Midway for $89.3 million.

ATA then would restructure as a regional carrier, focusing on Indianapolis and forming a business relationship with AirTran. AirTran also would have exclusive use of ATA's slots at New York LaGuardia and Reagan Washington airports.

No other proposals had been submitted Tuesday. ATA's other possible suitors include America West Airlines of Tempe, Ariz., and Dallas-based Southwest Airlines.

U.S. Bankruptcy Judge Basil Lorch III, with input from creditors owed money by ATA, will decide the ultimate winner.

Even if America West makes a bid for all of ATA, Leonard said, the Arizona company is short on cash and most likely would have to use its own stock to complete the deal.

AirTran's proposal would look better because it is in cash, injects money into ATA and keeps the ATA headquarters in Indianapolis, he said.

"We think $90 million is going to be very tough to match," Leonard said. "We don't think those guys (at America West) can come up with very much cash."

"We're definitely out gathering intelligence, talking to stakeholders," said Elise Eberwein, America West vice president. "Our proposed bid, if we make one, is going to be more complex than AirTran's."

Southwest has said it may bid on as many as seven of ATA's Midway gates.

But Leonard said he doubts Chicago would allow Southwest to amass what he called a "near monopoly" at city-owned Midway.

The city must approve any change in control of the gates, with the first hearing scheduled today on the AirTran-ATA proposal. Southwest, the dominant carrier at Midway, has 19 gates there now.

If Southwest bids for ATA gates, Leonard said, the Dallas company might be intent on "trying to minimize the amount of competition coming in" to Midway.

"They're just trying to get anything they can get to muck up this deal," Leonard said.

A Southwest spokesperson could not be reached for comment Tuesday.

Leonard has been looking for another hub since he joined AirTran in 1999.

He wants to branch out so the airline doesn't have to rely mainly on its Atlanta hub.

 

[FlyBoeingJets]

I can't imagine that Chicago won't give at least 1 or 2 gates to Southwest. Even more that Southwest, America West should get a few too.

But I've seen stranger things than Airtran getting all 14 gates. I wouldn't bet on the outcome of this one.

Does anyone know if any of the above airlines are currently contributing or promising money to the City/political machine??? Are they doing things for the local South Chicago community?? That could be the kicker, if its defensible in an anti-trust challenge.

Will Chicago politics or Indy politics play bigger here? I wouldn't rule out ATA secretly supporting the America West offer if it is sweet enough. ATA management could then let the Indy politicos know they prefer the AWA offer more than the Airtran offer and stress how it would be better for Indy.

 

[lowecur]

Downgrade clips AirTran

Well it looks like one analcyst thinks AirTran has been bouyed by the supposed liquidation of UAIR. He now thinks that may be unlikely (like I said). Sounds to me like Joe is getting desperate. If this is the case Joe, I kinda hope you get the gates, but it sure looks like the balance sheet is gonna look pretty bad in 6 months or so if it does go through. I've sold my shares, and will sit on the sidelines till this MDW deal plays out.

Downgrade Clips AirTran
By Ross Snel
TheStreet.com Staff Reporter
[font=arial, helvetica]12/8/2004 10:33 AM EST[/font]


AirTran (AAI:NYSE) shares slid Wednesday after Goldman Sachs analyst Glenn Engel downgraded them to underperform from in line.

The analyst said in a research note that an oversupply of East Coast flights is causing Orlando, Fla.-based AirTran's unit revenue to fall faster than the industry's. (Goldman does and seeks to do business with companies covered in its research reports.)

"Florida represents 45% of AirTran's capacity," Engel wrote. "Second half 2004 capacity to Florida is 12% higher than in 2003, and first quarter 2005 capacity to Florida is 12% above 2004 levels and 27% higher than in 2003. Consequently, AirTran's unit revenue declines have averaged 10% in the second half of 2004, and their margins have dropped more than any other carrier under our coverage. ... We don't see any reason why AirTran's relative performance should improve in the first half of 2005."

In reaction, AirTran shares were off 27 cents, or 2.3%, to $11.45. The Amex Airline Index was up 0.4%.

The analyst added that AirTran shares have been buoyed by the potential for a 2005 liquidation of US Airways (UAIRQ.OB:OTC BB) , which would eliminate some industry capacity.


Engel contends that potential is diminishing, however, as US Airways has been able to secure some labor concessions and strike a deal with General Electric (GE:NYSE) giving the airline near-term liquidity.

 

[whoknows]

Well in yet another comical statement from lowcur. The posturing every few days to try and influence his ego is a riot.

By the way, Judge Lorch is an Indiana boy. Lowcur, master of the obvious, Who would-a-thunk that an "Indiana boy" would be presiding over an Indiana court. Your insight amazes me!

 

[Metro752]

I heard Air Tran got the shaft from Dickhead Daley, and AWE is getting a lot of ATAs birds.

I thought everyone came to the conclusion that Lowecurd was the analcyst?

 

[Ty Webb]

Lowturd, you crack me up. You missed the important stuff in that story:


1) Leonard is now talking about a "partnership" with ATA for gates/slots/codeshare . . . that should keep JetBlue from whining about the LGA/DCA slots, since AirTran will be doing those flights as a codeshare- just like Eagle flys under American slots, or CHQ under Delta's. They won't have any legal basis to fight that argument.

2) AWA is now saying "if" they make an offer, it will be "more complex". Big change from a few weeks ago.

3) If you really sold shares based on a Goldman Sachs downgrade (pfff!) and your fears about our Balance Sheet, you are even more foolish than I thought. This deal does not take much cash from us in the beginning. Only $40. mil or so, while generating immediate revenue from the codeshare with ATA. That flying, by the way, will greatly reduce our Florida exposure, and our North-South exposure to Q1 and Q3 slow periods. When that happens, that same clod from Sachs will be touting AirTran stock, and charging you a commission when you buy your shares back. Sheesh.

4) Those gates aren't "in play" until ATA surrenders them, so even if we just do the deal as a codeshare, the gates aren't even necessarily available for SWA or anyone else. Maybe all parties will agree to set a couple of gates aside for SWA, and everyone will be happy.

Who knows? Not me and definitely not you.

 

[737dude]

Here's Gary Kelly's take on it.
1-877-IFLY-737

 

[Cactus73]

My guess is that AWA has financing that wasn't previously discussed.

One of the largest shareholders of AWA is TPG (Texas Pacific Group). They have a lot of influence at the company. It is possible that they are putting up some of the money or backing for the deal.

I hate to agree with Lowcur, but I think Joe is worried about the deal.

His deal offers nothing to the aircraft leasors or many other vendors that are standing in line for their money. The $90 million offer is substantial but what is ATA going to do with the money? After paying off some immediate accounts payable, they will not have that much left. They are going to retreat to INDY and become what? Between NW putting the pressure on them there and the lack of significant O&D traffic, setting up a "new" hub at IND is probably not a great business plan.

Then you have the issue of the employees. There are a lot of promises from Air Tran about empoyment, but there are NO job offers. If I were the judge or an employee I would look at the Air Tran deal as a big zero from an employment perspective. How would you like to be a pilot at ATA with a mortgage, three kids, and car payments and be 45 years old? What does the Air Tran deal do for this type of guy?

I'm biased, no doubt about it. I also have a lot to lose being on the bottom of the AWA seniority list. But in the long term, I think the AWA/ATA deal is the best option for the employees of both companies, for the creditors, and the cities served by both airlines.

My guess....If AWA submits an offer, it will win. I also think Southwest and some other airlines will get a some prizes.

This all of course is just the opinion of a dumb airline pilot.

 

[75M]

Will Chicago politics or Indy politics play bigger here? I wouldn't rule out ATA secretly supporting the America West offer if it is sweet enough. ATA management could then let the Indy politicos know they prefer the AWA offer more than the Airtran offer and stress how it would be better for Indy.

OK, first, George probably supports the FL deal because (a) it puts cash in his pocket (b) preserves a chance for him to rebuild something of an airline and (c) he agreed to it.

Second, Indianapolis probably supports the FL deal because (a) "The New ATA" promises to focus on Indiana and (b) FL agreed to payback the $15M ATA borrowed from INDOT.

Although I get the point that lots of ATA pilots are hoping for the America West deal, they shouldn't, because:

(a) The FL deal preserves an independent ATA that may grow and become profitable and provide a better long term option than AWA can offer.

(b) The FL deal has ATA keeping the Carribbean, Mexico and HI.

(c) The TZ airplanes used to support the FL flying WILL BE reallocated to charter flying as the wet lease agreement expires (trust me ATA turns down charter business everyday because they don't have the planes).

(d) The net result is that ATA won't be as small in the future as many predict. It will be much better for the ATA employees to preserve their own company than it will be for them to show up on the doorway of AWA with their hats in their hands.

 

[Metro752]

Here's Gary Kelly's take on it.
1-877-IFLY-737

cool!!