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!!

 

[lowecur]

Lowecur, you crack me up. I know. 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. This sounds like slight of hand to me.

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

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. Why? This deal does not take much cash from us in the beginning. You only have $338M on 9/30, and my estimate is you lose $16M this Q, and $25M next Q. Only $40. mil or so, that will leave you with around $260M at the end of the 1st Q not counting what losses from the integration of MDW operation from ATA all the while generating immediate revenue from the codeshare with ATA. But Joe said you wouldn't break even for a year. 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. Too much speculation for my blood at this price.

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. More slight of hand. Good luck!

Who knows? Not me and definitely not you.

NANANANANNANANANNANANNANANA, NUNUNUNUNUNUNUNUNUNUNUNUNU. Remember, even a broken clock is right twice a day!

 

[B73av8r]

I believe TY said lowturd! ..........And I would have to agree with him.

 

[PHXFLYR]

If I were an ATA employee,I wouldn't look at an AWA offer as your salvation. This outfit has a rather long history of trying to get something for nothing as witnessed by AWA VP Eliese Eberwain statment a few posts back eluding to the fact that any offer for ATA will be "very complex"; corporate-ese for "we ain't got no money,honey......." My guess is any offer made by AWA will be laughed right out of the court room by all concerned,as it should be...after all "money talks and "Bea Es" walks and the only one showing up at the dance with any greenbacks is Air Tran.



PHXFLYR

 

[IAHERJ]

I think all the CEO's involved in this deal are trying to sway public opinion in their direction as much as Lowcur is. Of course Joe is going to be confident about the deal in the press. Gary Kelley is going to voice his opinion and concerns as he sees fit as well. AWA, in my opinion is going to submit a deal at the last minute and it will be backed by Bonderman. Who knows what will become of all of this. All I know is that I have a frined who I'd like to get on at AirTran before ATA starts to park planes, if that ends up being the case. Good luck to all and I hope all of us at AirTran, AWA, JetBlue etc. keep in mind that this could be any of our companies hurting like ATA in the future. Growth is nice if you have a plan to do it profitably. We pilots can only hope our management teams have a clear plan for our futures.

IAHERJ

 

[lowecur]

I believe TY said lowecur! ..........And I would have to agree with him.

Absolutely correct, Sir! Now go have another drink, but remember you will be removed from the cockpit if you get past security.

 

[Lindy]

City of Chicago

I think the majority of individuals are missing the wild card -- Mayor Daley and the City of Chicago. It is a daily occurrence (pun intended, of course) for a statement to be issued from the city about the gates, ATA, etc.

Legally, the gates belong to the city of Chicago. The City controls who will or will not be a lessee. Now, if you listen to the statements, Daley is concerned about the loss of aviation employment in Chicago (including ORD) and he does not want to have another "Midway" of years past (re: Midway Airlines and their bankruptcy).

This would leave me to believe that SWA will recieve less gates than what they desire, say 2 or 3 more; if AWA has the "sweetest" deal for Chicago residents, I could see the City deciding to lease 8 or 9 of the remaining gates to them; of course, AirTran will receive 2 or 3 also. As for jetBlue, if they aren't going to offer the City of Chicago much in the way of hiring and other committments, I don't see them being much of a player.

Waiting to see what the City of Chicago attorneys challenge to the sale/auction next week.

Note: Until ATA surrenders the gates back to the City of Chicago, they have rights to the gates. It would be interesting to see if Mickelson would go head-to-head with Daley, i.e., not surrending the gates to Chicago to force [insert "deal" of your choice].

Obviously, there is more to the sale/purchase/liquidation than MDW gates, however, legally, that will be the stickler in this process.

 

[lowecur]

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!

You idiot, quit stealing my signature style. Yes, Judge Lorch was raised in Indiana. Now there are quite a few other US Bankruptcy Court judges that did not grow up in their respective jurisdictions. My point is politically he will look out for Indiana's interests before Illinois. Of course his main concern is the creditors of ATA, right?

 

[xanderman]

I just can't be that mean so... Deleted.

 

[Cactus73]

If I were an ATA employee,I wouldn't look at an AWA offer as your salvation. This outfit has a rather long history of trying to get something for nothing as witnessed by AWA VP Eliese Eberwain statment a few posts back eluding to the fact that any offer for ATA will be "very complex"; corporate-ese for "we ain't got no money,honey......." My guess is any offer made by AWA will be laughed right out of the court room by all concerned,as it should be...after all "money talks and "Bea Es" walks and the only one showing up at the dance with any greenbacks is Air Tran.
PHXFLYR

I could disagree with you more.

1. Why should we put up a lot of cash? Creditors in BK cases know to expect a very small percentage on the dollar. If the AAI deal goes through the aircraft lessors are left holding the bag. The airplanes go to the desert and they get stuck with the payments. The talk on here that ATA could use the airplanes is not quite true considering they are looking to lay-off almost half their pilots and FA's once the AAI deal is inked.

2. It's a complex deal.......because it's a complex deal. AWA would have to negotiate new terms with almost every creditor and get them to go along with it. They would have to present a business plan with clear revenue targets and goals. They would have to figure out how to shed the L1011 charter side of the business and get someone to step-up to the plate and continue to fill contractual terms with the government. Both airlines have ATSB loans that have to be contended with. Then you have the city of Chicago and the gate issue. I somehow doubt that Daley would stand in the way of a deal that protects the most amount of jobs.

3. Money doesn't always talk in BK court. The judge has to look at who is getting the $87 million offered by Airtran, what's it going to be used for, and the welfare of the employees of the company. The IND hub plan is a joke and most see right through it. I would seriously doubt that AWA would keep much going in IND other than the MX base and a few select flights.

4. I don't want my company paying too much. If someone wants to offer more than we think it is worth...let them. In the end, AWA can walk away and let the highest bidder enjoy their new toy.

5. If we are going to get laughed right of court, then why would the ATA MEC bother meeting with our management and MEC fairly often during the last few weeks? Why would Parker be spending so much time in IND and Kirby in Chicago?

6. People are talking as if Air Tran is in so much better financial shape compared to AWA. Last time I looked both airlines are losing money. Both have about the same relative cash positions. AWA does have a high interest ATSB loan. Air Tran has a very expensive aircraft order for 737's and they need places to put them. Air Tran was just downgraded to underperform due to their Florida markets. It seems Air Tran needs this deal more than AWA, hence the large cash offer. If Air Tran doesn't get the deal they need to start shopping for another hub. If AWA doesn't get the deal it really is no big deal since they don't have many airplanes on order with no place to park them.


I stand by my opinion that this is a good deal for AWA, ATA, and the creditors.

We can speculate all we want but until the bids are in on Friday and the court decides next Thursday....this is all a moot discussion.


My gut tells me the Air Tran deal is a bad thing for the ATA pilots. I know one very well and he is hoping really bad that the AWA deal can be worked out.

 

[lowecur]

I just can't be that mean so... Deleted.

Thanks, Xand!