November 5, 2004 Friday
SECTION: BANKRUPTCY; M and A Auctions
LENGTH: 334 words
HEADLINE: ATA sets terms for Ch. 11 auction
BYLINE: by Lou Whiteman
HIGHLIGHT:
The airline also reaches a deal to sell its Midway Airport operation in Chicago.
BODY:
ATA Holdings Inc. has filed the procedures for parties wishing to bid on its gates at Chicago's Midway Airport at what could be a competitive Dec. 1 auction of the bankrupt airline's assets.
The Indianapolis-based carrier filed for Chapter 11 protection in late October in the U.S. Bankruptcy Court for the Southern District of Indiana. ATA said at the time it had reached a deal to sell its Midway operation, along with gates and landing slots in Washington and New York, to Orlando, Fla.-based AirTran Airways Inc.for $87.5 million in cash.
ATA in the filing said that "consummation of the AirTran transaction is a significant and important step" in the company's reorganization, and it urged the court to approve the procedures.
But analysts said to expect several other airlines to at least consider bidding on ATA's assets. The company was negotiating with the parent of America West Airlines Inc. before declaring bankruptcy, and officials at that Tempe, Ariz.-based carrier have expressed interest in pursuing all or part of the company.
Southwest Airlines Inc., ATA's chief rival at Midway, also could consider buying some of ATA's gates in Chicago. And New York-based JetBlue Airways Inc.might tender a bid for ATA's landing rights at LaGuardia Airport, analysts said.
ATA also disclosed new details of its agreement with AirTran, which gives AirTran the option to subtract up to $8 million from the price to repay a debt to the city of Chicago for jetway expansion at Midway. AirTran also may back away from the deal if fuel prices rise above $2 per gallon or if Chicago rejects the gate swap.
ATA filed for bankruptcy on Oct. 27, citing high fuel prices and intense competition from Southwest and other low-fare airlines The company hopes to reorganize around its large military charter operation and its scheduled service from its Indianapolis hub.
AirTran has said acquiring the ATA assets would help it expand deeper into the Midwest, allowing the company to diversify from its primary hub in Atlanta.
URL:
http://www.TheDeal.com