Not so fast AirTran

[Ty Webb]

Ultrarunner . . . . you are cracking me up, dude.

There are huge tax advantages going into bankruptcy court with a "pre-packaged" deal like this . . . . tax advantages for AirTran. That's why the stock market reacted favorably to this deal- Airtran stock was up over 10% yesterday, inspite of announcing our first quarterly loss since 9/11.

AirTran is run by two of the shrewdest guys in the industry. I am glad they are calling the shots and not you. They have taken a company with only a few month's operating capital, an ancient fleet of gas-guzzling DC9's and a boatload of debt- and within only a few years, turned it into all-new airplanes, doubled the number of flights, retired most of the debt, and put $350 million in cash into the bank . . . . much of this during the owrst time in modern aviation.

So . . . . ultrarunner . . . . you can play armchair CEO all you want, but the smart money is betting with Joe L. and Bob B.

 

[ultrarunner]

I don't disagee with you regarding the tax advantages, and I certainly don't disagree Airtran has good management, but there is no free lunch.

IMO, I'm not convinced that a would-be suitor would not be in an excellent bargaining postion in front of a BK judge during Ch. 7, especially with cash-in-hand.

If I couldn't get exactly what I wanted, at the exact terms I wanted during a Ch. 11 proceeding, I'd walk and wait for Ch.7.

 

[CMonBoard]

Meanwhile, another suitor bids and takes what you think will eventually be a very profitable business. Don't forget, for AirTran, the deal is sweet because:
1. It's an entire scheduled operation
2. So many people confuse the two airlines that it will be a marketing advantage
3. The obvious tax advantages
4. An immediate workforce available through the wet-lease arrangement at lower cost than their own probably (see below).
5. Gradual hiring as AirTran jets replace the ATAH jets

Another AAI person could respond, but I thought I remember reading they have some kind of override for flying the -800. The wet lease arrangement probably allows AAI to get the flying done for less money. Bummer for AAI pilots if you ask me. A quick trip to airlinepilotpay indicates to me that the pay for ATAH pilots would be less than most of the AAI pilots with an override of say 10-15% factored in.

 

[Jim Smyth]

Ultrarunner does have valid points. I know from working for Southwest Airlines that there is "Always" opportunties around. We just wait until they materialize. I can tell you that Southwest usually pays 10 cents on the dollar (exaggeration on the dollar figure but you get the point) for stuff when it does materialize so if its chapter 11 or 7 they will make the correct decision. It is evedent that ATA is going to shrink in Chicago one way or another so there will be extra gate space available. Southwest waited until my last airline (Midway) in 1991 went chapter 7 and they made a deal with the City of Chicago and Northwest for Midways old gates for a lot less money than they were orginally going to offer.

 

[ultrarunner]

I agree with Jim...it's a buyers market right now, and you can count the buyers with cash on less than one hand.

I'd rather buy ATA at the yard sale, than make a deal now. "...ATA's stuff 'aint going anywhere..."

 

[Fly-By-Cable]

. . . . you can play armchair CEO all you want, but the smart money is betting with Joe L. and Bob B.

You're not kidding, Ty

AirTran Airways Extends CEO's Contract by Three Years



ORLANDO, Fla., Oct. 29 /PRNewswire-FirstCall/ -- The board of directors of AirTran Holdings, Inc., (NYSE: AAI) announced today that the employment agreement with Joe Leonard, chairman and chief executive officer, has been extended for three years. Joe Leonard joined AirTran Holdings, Inc., as chairman and chief executive officer on January 6, 1999, and today's announcement marks the third contract Leonard has signed with the airline. One of the few licensed pilots who also serves as CEO of an airline, Leonard recently added the Boeing 737 type rating to his private pilot's license, an accomplishment shared by fewer than one percent of all FAA licensed pilots. "We are extremely pleased that Joe Leonard will continue to lead AirTran Airways to new heights," said Jere Drummond, retired vice chairman of BellSouth Corporation and chairman of the compensation committee and a member of AirTran Holdings' board of directors. "During the past five years, Joe has provided the vision and the disciplined leadership that has allowed AirTran Airways to prosper even in challenging economic times. Our airline is stronger today because of Joe Leonard and his team, and the board knows that a strong leadership team is essential particularly in these uncertain times. This new agreement ensures continuity of management in these challenging times. " Prior to AirTran Airways, Leonard held executive positions with AlliedSignal Aerospace, Northwest Airlines, Eastern Air Lines and American Airlines. A native of Augusta, Ga., and a graduate of Auburn University, Leonard began his career as a flight test engineer at Boeing.

 

[Fly-By-Cable]

I guess if the AirTran thing doesn't work out for Joe, he (with 1000 PIC) can then apply to SWA

 

[Dave Siegel]

One thing I do know is that...management is EXTREMELY conservative and intelligent. They are not going to make an official announcement to the industry unless they are pretty darn sure it is going to happen.

Thanks for the kind words. And that's why management deserves significantly more compensation than pilots. Have you seen the new pay scale for US Airways? It's still too much money, but clearly a step in the right direction.

 

[Jim Smyth]

Wow Dave, looks like a little sour grapes there to me! Most of the Management at the Majors these days dont look like they are earning there "significantly more compensation than pilots" pay package. Maybe there pay package should be tied to profits!

 

[Jetjockey]

AirTran clears jobs hurdle

October 30, 2004

BY FRAN SPIELMAN City Hall Reporter


AirTran Airways has agreed to retain 3,200 Chicago-based employees when it acquires bankrupt ATA Airlines' local assets, Mayor Daley said Friday, paving the way for City Hall to approve the transfer of ATA's 14 gates at Midway Airport.

Daley said he received the job guarantees he was looking for -- but not in writing -- during a City Hall meeting Thursday with George Mikelsons, chairman, president and CEO of ATA Holding Corp., and Mikelsons' counterpart at AirTran.

"This will help Chicago," Daley said. "We're not gonna lose any jobs. I talked to both of them about that. We're gaining the same strength we had before. [AirTran] will do more international flights so, in the long run, it'll be a win situation both for Midway and the employees."

Earlier this week, ATA filed for bankruptcy and announced it was selling most of its Chicago operations to Orlando-based AirTran for $87.6 million.

The sale must be approved by a federal bankruptcy judge in Indianapolis, where ATA is headquartered, and by the city of Chicago, which runs Midway Airport. ATA is Midway's second-largest carrier behind flagship Southwest Airlines.

On the day after the bankruptcy filing, Daley established two pre-conditions for approving the gate transfer: That ATA's 3,200 Chicago employees would keep their jobs with AirTran and that the takeover airline would at least consider building the $100 million training center that ATA had planned near Midway.

Now that he's received those assurances, the mayor said he's prepared to approve the gate hand-over, and he's confident that Midway Airport, still basking in the glow of a $927 million reconstruction project, won't miss a beat.

Even if Chicago survives ATA's demise, Daley warned of more airline bankruptcy filings unless the federal government does something to assist an industry reeling from skyrocketing fuel prices. He suggested dipping into strategic petroleum reserves.

"This industry was created by America," the mayor said. "We can't lose this industry. This industry is too important for our country to give away."

 

[mad691]

Looks like Airtran cleared one hurdle. I have a question? Does this mean Airtran will take all employees?

AirTran clears jobs hurdle

October 30, 2004

BY FRAN SPIELMAN City Hall Reporter


AirTran Airways has agreed to retain 3,200 Chicago-based employees when it acquires bankrupt ATA Airlines' local assets, Mayor Daley said Friday, paving the way for City Hall to approve the transfer of ATA's 14 gates at Midway Airport.

Daley said he received the job guarantees he was looking for -- but not in writing -- during a City Hall meeting Thursday with George Mikelsons, chairman, president and CEO of ATA Holding Corp., and Mikelsons' counterpart at AirTran.

"This will help Chicago," Daley said. "We're not gonna lose any jobs. I talked to both of them about that. We're gaining the same strength we had before. [AirTran] will do more international flights so, in the long run, it'll be a win situation both for Midway and the employees."

Earlier this week, ATA filed for bankruptcy and announced it was selling most of its Chicago operations to Orlando-based AirTran for $87.6 million.

The sale must be approved by a federal bankruptcy judge in Indianapolis, where ATA is headquartered, and by the city of Chicago, which runs Midway Airport. ATA is Midway's second-largest carrier behind flagship Southwest Airlines.

On the day after the bankruptcy filing, Daley established two pre-conditions for approving the gate transfer: That ATA's 3,200 Chicago employees would keep their jobs with AirTran and that the takeover airline would at least consider building the $100 million training center that ATA had planned near Midway.

Now that he's received those assurances, the mayor said he's prepared to approve the gate hand-over, and he's confident that Midway Airport, still basking in the glow of a $927 million reconstruction project, won't miss a beat.

Even if Chicago survives ATA's demise, Daley warned of more airline bankruptcy filings unless the federal government does something to assist an industry reeling from skyrocketing fuel prices. He suggested dipping into strategic petroleum reserves.

"This industry was created by America," the mayor said. "We can't lose this industry. This industry is too important for our country to give away."

 

[atafan]

No matter what happens, I'm glad that the airlines talking to the court are SWA, AAI and AWA. I feel like the ATA culture is much closer to these airlines than any other airline.

I have never seen a 10 percenter yet from any of these airlines. All I ask from any of you is just do the right thing, treat others like you'd want to be treated. I and everyone I know at ATA are not interested in anything but feeding our families and being part of a unified team.

One thing I have learned from my 26 years in this business is no matter how bullet proof you might think you are, you always need friends and someday your turn in the barrel is just around the corner.

 

[mt2]

Hmmmm. Keeping 3200 employees in Chicago or keeping the same 3200 employees currently working at ATA in MDW ?? There seem to be some subtle nuances here that have me feeling a bit skeptical, especially since they wouldn't put it in writing! But no matter, GM and JL have the mayor snowed.

 

[ultrarunner]

Jobs will be lost in this deal. If ATA couldn't make it work, what the heck makes you think it's going to be profitable top keep on 3200 employees. There MUST be a reduction in capacity, and with that comes a reduction in force.

I suspect that a fair amount of people will be kept on, but there will be a RIF in Chicago, no doubt about it.

 

[Mach 80]

3200 ATA employees in Chicago? Seems like a lot.

 

[Pickle]

Mach 80 said: "3200 ATA employees in Chicago? Seems like a lot."

About 6 or 7 hundred pilots, about 11 or 12 hunder flight attendants, plus mechanics, rampers, customer service agents, etc...

I believe it.