This is about the best summary of what has transpired (according to the press)...lots of earlier articles were incomplete but as more details come out this has some of the corrected info. Some is already know but there is some new info I thought was interesting.
_____________
ATA sees Southwest as a savior
Bankrupt airline would get fresh start, powerful partner
J. George Mikelsons (left) and Southwest Airlines' Gary Kelly discuss the agreement between ATA Airlines and Southwest at The Indianapolis Star. -- Matt Detrich / The Star
Related content
• ATA Holdings Corp stock quote
• ATA Holdings Corp company information
The deal
Southwest will pay $117 million. The breakdown:
• $40 million for six ATA gates at Midway and a maintenance facility
• $40 million as a short-term loan
• $7 million as a Midway construction loan guarantee
• $30 million as a form of convertible shares
Bankruptcy process
ATA will ask the U.S. Bankruptcy Court in Indianapolis to approve the Southwest deal on Tuesday.
During the next year: ATA will give back certain planes to owners, draft a new business plan, acquire regional jets, elect a new board of directors, hire new executives and code-share flights with Southwest.
Indianapolis expansion
ATA Airlines founder J. George Mikelsons said ATA's plans to bring more flights to Indianapolis would advance.
Ownership
ATA will reorganize next year, essentially becoming a new company and issuing new stock. Here's who will get it: investors holding ATA bonds, about 53 percent; Southwest Airlines, 27.5 percent; other unsecured creditors, about 10 percent; Mikelsons and executive incentives, about 10 percent.
Consequences
What ATA's proposed deal with Southwest Airlines means to key stakeholders:
• ATA passengers: Fliers will be able to buy a ticket good for either airline on certain flights from Midway and, eventually, other cities. Might improve service and quality standards.
• ATA employees: Up to 1,500 might lose their jobs, mainly in Chicago and Indianapolis; Southwest will put them on a preferential hiring list.
• ATA shareholders: Shares eventually will be canceled and all value lost. New shares will be given to Southwest, ATA creditors and others, but not to shareholders.
• Indianapolis International Airport: Most current ATA flights will continue. Some shorter flights to the Midwest will be added next year.
• ATA: Gains a powerful partner that will bring it cash, passengers and expertise in cost savings and customer service.
• Southwest: Adds gates at Chicago Midway to expand in a key market.
Sources: Southwest executives, ATA, Indianapolis Star research
Southwest Airlines
• History: Thirty-two years ago in Texas, Rollin Kin and Herb Kelleher began Southwest as "a different kind of airline." It flew primarily between Texas cities, but by 1982, it had added New Orleans, San Francisco, Phoenix and other cities. Began service at Chicago Midway in 1985. Received great customer-satisfaction ratings and continued to add new cities through the 1990s.
• Airplanes: Southwest flies only one type of plane -- the Boeing 737 -- and has 415 of them.
• Airports: Serves 59 cities; has no international flights.
• Headquarters: Dallas
• Sales: $5.93 billion in 2003
• Key competitors: American, Delta, JetBlue
• Employees: 32,847, including 1,000 married couples. In 2003, the airline received 202,357 resumes and hired 908 employees.
• Known for: Friendly, wisecracking flight attendants and staff, who tell jokes, sing and otherwise entertain passengers and themselves. No assigned seats, no meals. Making money when no other airlines do. Its New York Stock Exchange symbol is LUV, which means Dallas Love Field.
ATA Airlines
• History: Founded in 1972 as a charter airline by J. George Mikelsons, ATA started scheduled flights in 1986. Filed for Chapter 11 bankruptcy reorganization in October.
• Headquarters: Indianapolis
• Airports: Main operations are at Chicago Midway and Indianapolis International
• Sales: $1.5 billion in 2003
• Employees: 7,700, though the number could drop below 6,000
• Aircraft: 61 Boeing 757s, Saab 340 regional jets and others
• Known for: Flying hundreds of military personnel around the world and running the Ambassadair Travel Club
What is code sharing?
The code-sharing agreement between ATA and Southwest is a boon for passengers who fly both airlines.
Code-sharing pacts allow passengers (and their luggage) to transfer seamlessly from one airline to another using a single ticket.
Under the agreement, air travelers will be able to book a trip through either ATA or Southwest by drawing on the flights and airports of both airlines.
Initially, the code sharing will be available on nine nonstop flights from Chicago Midway, but Southwest Chief Executive Gary Kelly said the two airlines hope to add five more "connection points" and possibly some international flights in coming months.
With code sharing, Southwest could bring 500,000 more passengers a year to ATA at Midway, Kelly said in an interview with The Indianapolis Star.
By Ted Evanoff
[email protected]
December 17, 2004
ATA Airlines founder J. George Mikelsons was driving to Chicago from Indianapolis when the life-saving phone call came through for his troubled airline.
Longtime acquaintance Herb Kelleher, chairman of Southwest Airlines, called to ask, "Mind if I throw my hat in the ring and perhaps make a better offer?" Mikelsons remembered.
That call a few weeks ago led to the deal confirmed Thursday in which Southwest won the bankruptcy auction of ATA gates at busy Chicago Midway.
By selling Southwest six of the 14 gates as part of a $117 million package, bankrupt ATA gets a fresh start -- and a powerful partner that carries more passengers than any other airline.
Indianapolis gets to hold on to a hometown airline regarded as an economic asset for its low-fare flights, particularly to Florida and the Caribbean. ATA stakeholders welcomed the deal, and investors sent its shares soaring by more than 25 percent.
"We expect to be in a significantly stronger position," Mikelsons said Thursday during a meeting with The Indianapolis Star editorial board.
The transaction, scheduled for a hearing Tuesday in U.S. Bankruptcy Court in Indianapolis, would inject much-needed cash into ATA but won't come without pain for Indianapolis.
ATA would shrink its airline fleet to about 50 jets from 61 now. As the planes depart next year, ATA's 7,700-member work force would fall by as many as 1,500 jobs, with Chicago and Indianapolis taking the most losses. The company employs 2,300 in Indianapolis.
Still, ATA's employees should fare better with Southwest than under a bid from AirTran Airways. It called for selling all 14 Chicago gates, which would have cut ATA's size by nearly half.
The AirTran deal included about $40 million in cash to tide over ATA in bankruptcy. Southwest's bid includes a $40 million loan and a capital injection in the form of a $30 million investment, giving it a 27.5 percent stake in ATA.
ATA's shares gained 26 percent Thursday, or 35 cents, to close at $1.70 a share, even though ATA officials acknowledged Thursday they likely would lose all of their value in the bankruptcy reorganization.
The Southwest deal enthused state officials, who made an emergency bailout loan to ATA in October when AirTran was the leading bidder.
"We're not just talking about preserving jobs anymore," said Mark Moore, chairman of the Indiana Transportation Finance Authority. "With Southwest in the picture, we're talking about creating more jobs."
The authority and the city of Indianapolis teamed last month on the $15.5 million emergency loan.
(continued)
_____________
ATA sees Southwest as a savior
Bankrupt airline would get fresh start, powerful partner
J. George Mikelsons (left) and Southwest Airlines' Gary Kelly discuss the agreement between ATA Airlines and Southwest at The Indianapolis Star. -- Matt Detrich / The Star
Related content
• ATA Holdings Corp stock quote
• ATA Holdings Corp company information
The deal
Southwest will pay $117 million. The breakdown:
• $40 million for six ATA gates at Midway and a maintenance facility
• $40 million as a short-term loan
• $7 million as a Midway construction loan guarantee
• $30 million as a form of convertible shares
Bankruptcy process
ATA will ask the U.S. Bankruptcy Court in Indianapolis to approve the Southwest deal on Tuesday.
During the next year: ATA will give back certain planes to owners, draft a new business plan, acquire regional jets, elect a new board of directors, hire new executives and code-share flights with Southwest.
Indianapolis expansion
ATA Airlines founder J. George Mikelsons said ATA's plans to bring more flights to Indianapolis would advance.
Ownership
ATA will reorganize next year, essentially becoming a new company and issuing new stock. Here's who will get it: investors holding ATA bonds, about 53 percent; Southwest Airlines, 27.5 percent; other unsecured creditors, about 10 percent; Mikelsons and executive incentives, about 10 percent.
Consequences
What ATA's proposed deal with Southwest Airlines means to key stakeholders:
• ATA passengers: Fliers will be able to buy a ticket good for either airline on certain flights from Midway and, eventually, other cities. Might improve service and quality standards.
• ATA employees: Up to 1,500 might lose their jobs, mainly in Chicago and Indianapolis; Southwest will put them on a preferential hiring list.
• ATA shareholders: Shares eventually will be canceled and all value lost. New shares will be given to Southwest, ATA creditors and others, but not to shareholders.
• Indianapolis International Airport: Most current ATA flights will continue. Some shorter flights to the Midwest will be added next year.
• ATA: Gains a powerful partner that will bring it cash, passengers and expertise in cost savings and customer service.
• Southwest: Adds gates at Chicago Midway to expand in a key market.
Sources: Southwest executives, ATA, Indianapolis Star research
Southwest Airlines
• History: Thirty-two years ago in Texas, Rollin Kin and Herb Kelleher began Southwest as "a different kind of airline." It flew primarily between Texas cities, but by 1982, it had added New Orleans, San Francisco, Phoenix and other cities. Began service at Chicago Midway in 1985. Received great customer-satisfaction ratings and continued to add new cities through the 1990s.
• Airplanes: Southwest flies only one type of plane -- the Boeing 737 -- and has 415 of them.
• Airports: Serves 59 cities; has no international flights.
• Headquarters: Dallas
• Sales: $5.93 billion in 2003
• Key competitors: American, Delta, JetBlue
• Employees: 32,847, including 1,000 married couples. In 2003, the airline received 202,357 resumes and hired 908 employees.
• Known for: Friendly, wisecracking flight attendants and staff, who tell jokes, sing and otherwise entertain passengers and themselves. No assigned seats, no meals. Making money when no other airlines do. Its New York Stock Exchange symbol is LUV, which means Dallas Love Field.
ATA Airlines
• History: Founded in 1972 as a charter airline by J. George Mikelsons, ATA started scheduled flights in 1986. Filed for Chapter 11 bankruptcy reorganization in October.
• Headquarters: Indianapolis
• Airports: Main operations are at Chicago Midway and Indianapolis International
• Sales: $1.5 billion in 2003
• Employees: 7,700, though the number could drop below 6,000
• Aircraft: 61 Boeing 757s, Saab 340 regional jets and others
• Known for: Flying hundreds of military personnel around the world and running the Ambassadair Travel Club
What is code sharing?
The code-sharing agreement between ATA and Southwest is a boon for passengers who fly both airlines.
Code-sharing pacts allow passengers (and their luggage) to transfer seamlessly from one airline to another using a single ticket.
Under the agreement, air travelers will be able to book a trip through either ATA or Southwest by drawing on the flights and airports of both airlines.
Initially, the code sharing will be available on nine nonstop flights from Chicago Midway, but Southwest Chief Executive Gary Kelly said the two airlines hope to add five more "connection points" and possibly some international flights in coming months.
With code sharing, Southwest could bring 500,000 more passengers a year to ATA at Midway, Kelly said in an interview with The Indianapolis Star.
By Ted Evanoff
[email protected]
December 17, 2004
ATA Airlines founder J. George Mikelsons was driving to Chicago from Indianapolis when the life-saving phone call came through for his troubled airline.
Longtime acquaintance Herb Kelleher, chairman of Southwest Airlines, called to ask, "Mind if I throw my hat in the ring and perhaps make a better offer?" Mikelsons remembered.
That call a few weeks ago led to the deal confirmed Thursday in which Southwest won the bankruptcy auction of ATA gates at busy Chicago Midway.
By selling Southwest six of the 14 gates as part of a $117 million package, bankrupt ATA gets a fresh start -- and a powerful partner that carries more passengers than any other airline.
Indianapolis gets to hold on to a hometown airline regarded as an economic asset for its low-fare flights, particularly to Florida and the Caribbean. ATA stakeholders welcomed the deal, and investors sent its shares soaring by more than 25 percent.
"We expect to be in a significantly stronger position," Mikelsons said Thursday during a meeting with The Indianapolis Star editorial board.
The transaction, scheduled for a hearing Tuesday in U.S. Bankruptcy Court in Indianapolis, would inject much-needed cash into ATA but won't come without pain for Indianapolis.
ATA would shrink its airline fleet to about 50 jets from 61 now. As the planes depart next year, ATA's 7,700-member work force would fall by as many as 1,500 jobs, with Chicago and Indianapolis taking the most losses. The company employs 2,300 in Indianapolis.
Still, ATA's employees should fare better with Southwest than under a bid from AirTran Airways. It called for selling all 14 Chicago gates, which would have cut ATA's size by nearly half.
The AirTran deal included about $40 million in cash to tide over ATA in bankruptcy. Southwest's bid includes a $40 million loan and a capital injection in the form of a $30 million investment, giving it a 27.5 percent stake in ATA.
ATA's shares gained 26 percent Thursday, or 35 cents, to close at $1.70 a share, even though ATA officials acknowledged Thursday they likely would lose all of their value in the bankruptcy reorganization.
The Southwest deal enthused state officials, who made an emergency bailout loan to ATA in October when AirTran was the leading bidder.
"We're not just talking about preserving jobs anymore," said Mark Moore, chairman of the Indiana Transportation Finance Authority. "With Southwest in the picture, we're talking about creating more jobs."
The authority and the city of Indianapolis teamed last month on the $15.5 million emergency loan.
(continued)