lowecur
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Well SWA said it has a tentative nod from the City on their deal for ATA. The City says, not so fast. I guess the City is studying the bid before issuing their final blessing, but I'm beginning to believe that they will give it on Dec 21st.
As for Jetblue, I guess they could eventually get a shot at some of the 8 that ATA has at present if their operation finally folds out of Midway. I really don't see that happening for quite a few years with the code share support of SWA. If I were the City, I would demand that 4 of those gates be turned back in for General Usage in order to get their endorsement. We'll see what happens.
Mike Boyd, an aviation consultant in Evergreen, Colo., said Southwest needs to expand over the next two years, because its fuel hedge, which allows it to keep low oil prices during a high-price time, will expire. The airline also could face higher labor costs.
"They didn't want ATA. They wanted those gates, and they wanted those gates to preclude another airline from putting in another hub," Boyd said. "It was worth it for them to build a wall around Midway."
Southwest wins bid for six ATA gates at Midway
ATA would cut, not eliminate, service at airport; judge, city must OK deal
Friday, December 17, 2004
By Mike Nolan
Business writer
Bankrupt ATA Airlines will shrink its operations at Midway Airport, and Southwest Airlines would gain six of ATA's gates under a $117 million deal announced Thursday.
Controlling 25 of Midway's 43 gates, Southwest would become the dominant carrier at the Southwest Side airport. ATA would keep eight gates and would scale back the number of flights and cities it serves.
By maintaining a hub at Midway, ATA would have to cut fewer Chicago-based employees than originally planned. When it filed for bankruptcy on Oct. 26, ATA said it would virtually eliminate scheduled service at Midway.
The airlines hope to have the plan approved Tuesday by the judge overseeing ATA's bankruptcy case. Chicago's Department of Aviation, which owns Midway's gates, would have to approve the gate transfer.
A Southwest spokeswoman said city officials have given a tentative nod to the deal, but Annette Martinez, an aviation department spokeswoman, denied that.
"The city hasn't given its OK to anything yet," she said. "It's still premature for the city to say that we have made a final decision on the gates."
Under the agreement — approved late Wednesday by ATA and its creditors — Southwest would pay $40 million for the gates and a maintenance hangar at Midway and provide ATA with another $40 million to finance its operations while it reorganizes under bankruptcy. Once ATA emerges from bankruptcy, Southwest would make a $30 million equity investment in the airline.
Indianapolis-based ATA and Southwest also agreed to a code-sharing program that would allow passengers to buy one ticket and fly on either carrier. That agreement would initially cover a limited number of flights from Midway but would later expand to include other airports, Southwest said.
Southwest said the code-sharing agreement could generate $25 million to $50 million in revenue each year for both airlines.
AirTran Holdings Inc., the parent company of AirTran Airways, had bid $90 million for all ATA gates at Midway. AirTran said it was "disappointed" that its bid lost out to Southwest.
Orlando, Fla.-based AirTran had hoped to establish a hub at Midway, where it currently has limited service and shares a gate.
"We saw Midway Airport expansion as a good opportunity, but we were not going to overpay for those assets," Joe Leonard, AirTran Airways' chairman and chief executive, said in a statement.
AirTran would still get a breakup fee of about $3 million from ATA, said Tad Hutcheson, an AirTran spokesman.
America West Airlines also had considered bidding for all of ATA but bowed out at the last minute after it failed to renegotiate lease terms for ATA's jets.
While Southwest would become the "kingpin" at Midway, ATA's strength at the airport would wane, said Joseph Schwieterman, an airline industry analyst and DePaul University professor.
"It's questionable whether the scaled-back ATA hub can ultimately survive," he said. "With eight gates, they may not have the critical mass they need."
ATA hasn't worked out details of its reduced flight schedule at Midway or how many employees it will need, but "the number of jobs that we would be eliminating would be fewer" than previously expected, ATA spokeswoman Roxanne Butler said.
ATA has about 90 daily departures from Midway, while its commuter airline, ATA Connection, has nearly 80 flights. ATA has said it will halt service to five cities from Midway — Charlotte; Des Moines; Madison, Wis.; Miami and Springfield, Ill.
Southwest said it hasn't agreed to hire any ATA workers who would lose their jobs but would give "priority interviews" to ATA employees.
Southwest has about 2,700 employees based in Chicago while ATA has a bit more than 3,000 stationed at Midway. ATA has begun the laying off workers as it downsizes at the airport.
Last month, ATA warned unions representing its employees that as many as 700 pilots and other cockpit crew members could be furloughed along with about 900 flight attendants.
"We still anticipate that pilots will be furloughed, but not as many will be furloughed," said Rusty Ayers, spokesman for the ATA unit of the Air Line Pilots Association. "(ATA is) an airline that's going to be restructured and is going to be smaller."
Southwest, on the other hand, will be growing substantially.
The Dallas-based airline has 145 daily departures from Midway, but that will jump to 170 by early April. The airline didn't say how many more flights it would add using the new gates, but Southwest has said previously that it can operate a maximum of 10 departures per gate per day.
"This (ATA agreement) allows Southwest to grow our Chicago presence, and it will provide ATA and its employees with much-needed liquidity," said Gary Kelly, Southwest's chief executive.
Southwest launched service from Midway in March 1985 with seven daily flights. It's now the airline's fourth-largest operation.
ATA began offering scheduled service at Midway in December 1992. Two years ago, the carrier had nine gates but significantly expanded its operations as part of the Midway redevelopment project.
In agreeing to buy the ATA gates, Southwest also would repay the city of Chicago a $7 million construction loan owed by ATA in connection with ATA's expansion at Midway.
Because of its bankruptcy, ATA is unlikely to proceed with plans announced in 2001 to build a training center near Midway, Butler said. Along with cutting back its flight schedule and unloading some aircraft, ATA hopes to reduce labor costs through its reorganization. The airline and the pilots union have been discussing wage and benefit concessions since shortly after ATA filed for bankruptcy, and Ayers said those talks will resume Monday.
As for Jetblue, I guess they could eventually get a shot at some of the 8 that ATA has at present if their operation finally folds out of Midway. I really don't see that happening for quite a few years with the code share support of SWA. If I were the City, I would demand that 4 of those gates be turned back in for General Usage in order to get their endorsement. We'll see what happens.
Mike Boyd, an aviation consultant in Evergreen, Colo., said Southwest needs to expand over the next two years, because its fuel hedge, which allows it to keep low oil prices during a high-price time, will expire. The airline also could face higher labor costs.
"They didn't want ATA. They wanted those gates, and they wanted those gates to preclude another airline from putting in another hub," Boyd said. "It was worth it for them to build a wall around Midway."
Southwest wins bid for six ATA gates at Midway
ATA would cut, not eliminate, service at airport; judge, city must OK deal
Friday, December 17, 2004
By Mike Nolan
Business writer
Bankrupt ATA Airlines will shrink its operations at Midway Airport, and Southwest Airlines would gain six of ATA's gates under a $117 million deal announced Thursday.
Controlling 25 of Midway's 43 gates, Southwest would become the dominant carrier at the Southwest Side airport. ATA would keep eight gates and would scale back the number of flights and cities it serves.
By maintaining a hub at Midway, ATA would have to cut fewer Chicago-based employees than originally planned. When it filed for bankruptcy on Oct. 26, ATA said it would virtually eliminate scheduled service at Midway.
The airlines hope to have the plan approved Tuesday by the judge overseeing ATA's bankruptcy case. Chicago's Department of Aviation, which owns Midway's gates, would have to approve the gate transfer.
A Southwest spokeswoman said city officials have given a tentative nod to the deal, but Annette Martinez, an aviation department spokeswoman, denied that.
"The city hasn't given its OK to anything yet," she said. "It's still premature for the city to say that we have made a final decision on the gates."
Under the agreement — approved late Wednesday by ATA and its creditors — Southwest would pay $40 million for the gates and a maintenance hangar at Midway and provide ATA with another $40 million to finance its operations while it reorganizes under bankruptcy. Once ATA emerges from bankruptcy, Southwest would make a $30 million equity investment in the airline.
Indianapolis-based ATA and Southwest also agreed to a code-sharing program that would allow passengers to buy one ticket and fly on either carrier. That agreement would initially cover a limited number of flights from Midway but would later expand to include other airports, Southwest said.
Southwest said the code-sharing agreement could generate $25 million to $50 million in revenue each year for both airlines.
AirTran Holdings Inc., the parent company of AirTran Airways, had bid $90 million for all ATA gates at Midway. AirTran said it was "disappointed" that its bid lost out to Southwest.
Orlando, Fla.-based AirTran had hoped to establish a hub at Midway, where it currently has limited service and shares a gate.
"We saw Midway Airport expansion as a good opportunity, but we were not going to overpay for those assets," Joe Leonard, AirTran Airways' chairman and chief executive, said in a statement.
AirTran would still get a breakup fee of about $3 million from ATA, said Tad Hutcheson, an AirTran spokesman.
America West Airlines also had considered bidding for all of ATA but bowed out at the last minute after it failed to renegotiate lease terms for ATA's jets.
While Southwest would become the "kingpin" at Midway, ATA's strength at the airport would wane, said Joseph Schwieterman, an airline industry analyst and DePaul University professor.
"It's questionable whether the scaled-back ATA hub can ultimately survive," he said. "With eight gates, they may not have the critical mass they need."
ATA hasn't worked out details of its reduced flight schedule at Midway or how many employees it will need, but "the number of jobs that we would be eliminating would be fewer" than previously expected, ATA spokeswoman Roxanne Butler said.
ATA has about 90 daily departures from Midway, while its commuter airline, ATA Connection, has nearly 80 flights. ATA has said it will halt service to five cities from Midway — Charlotte; Des Moines; Madison, Wis.; Miami and Springfield, Ill.
Southwest said it hasn't agreed to hire any ATA workers who would lose their jobs but would give "priority interviews" to ATA employees.
Southwest has about 2,700 employees based in Chicago while ATA has a bit more than 3,000 stationed at Midway. ATA has begun the laying off workers as it downsizes at the airport.
Last month, ATA warned unions representing its employees that as many as 700 pilots and other cockpit crew members could be furloughed along with about 900 flight attendants.
"We still anticipate that pilots will be furloughed, but not as many will be furloughed," said Rusty Ayers, spokesman for the ATA unit of the Air Line Pilots Association. "(ATA is) an airline that's going to be restructured and is going to be smaller."
Southwest, on the other hand, will be growing substantially.
The Dallas-based airline has 145 daily departures from Midway, but that will jump to 170 by early April. The airline didn't say how many more flights it would add using the new gates, but Southwest has said previously that it can operate a maximum of 10 departures per gate per day.
"This (ATA agreement) allows Southwest to grow our Chicago presence, and it will provide ATA and its employees with much-needed liquidity," said Gary Kelly, Southwest's chief executive.
Southwest launched service from Midway in March 1985 with seven daily flights. It's now the airline's fourth-largest operation.
ATA began offering scheduled service at Midway in December 1992. Two years ago, the carrier had nine gates but significantly expanded its operations as part of the Midway redevelopment project.
In agreeing to buy the ATA gates, Southwest also would repay the city of Chicago a $7 million construction loan owed by ATA in connection with ATA's expansion at Midway.
Because of its bankruptcy, ATA is unlikely to proceed with plans announced in 2001 to build a training center near Midway, Butler said. Along with cutting back its flight schedule and unloading some aircraft, ATA hopes to reduce labor costs through its reorganization. The airline and the pilots union have been discussing wage and benefit concessions since shortly after ATA filed for bankruptcy, and Ayers said those talks will resume Monday.
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