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ATA seeks bankruptcy protection

AirTran Holdings Inc. of Orlando buys $87.6-million of the airline's assets.

INDIANAPOLIS - ATA Airlines, the nation's 10th-largest airline, filed for bankruptcy protection Tuesday and sold off airport slots and other assets to AirTran Airways Inc. for $87.6-million, to become the latest U.S. airline tripped up by rising fuel costs and fare wars.

AirTran Holdings Inc. of Orlando will assume ATA's flight operations, gate leases and routes at Chicago Midway Airport and arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport.

"We will recreate ATA as a formidable, low-cost carrier," ATA founder and chief executive George Mikelsons said.

ATA flies half of the passengers using St. Petersburg-Clearwater International Airport. The airline makes six nonstop flights daily from St. Pete-Clearwater - three to Chicago Midway, two to Indianapolis and one to Las Vegas.

ATA owes the airport about $45,000, which is about 30 days of charges, airport director Noah Lagos said Tuesday.

"My understanding is that ATA would continue operations in some form," he said.

St. Petersburg-Clearwater caters to low-cost carriers, but the major discounters, including AirTran, fly into Tampa International Airport.

Lagos said he thought growth from other carriers at the airport eventually would make up any loss in passengers.

"If those kinds of things shake out, we're in pretty good shape," he said.

ATA's announcement came amid speculation that Delta Air Lines Inc., the nation's third-largest airline, would win $1-billion in concessions from its pilots and avoid bankruptcy. The airline is expected to decide by today whether to seek bankruptcy protection.

ATA on Monday chose an executive to oversee the restructuring of the carrier's debt.

The filing under Chapter 11 of the federal bankruptcy code came as the Indianapolis airline, whose parent company is ATA Holdings Corp., faces soaring fuel costs, an industry fare war and lower demand for military charter flights.

ATA also is saddled with millions of dollars in debt from new aircraft purchases.

The value of the company plummeted 36 percent Tuesday, its stock closing at 93 cents a share, down 53 cents, on the Nasdaq stock exchange. The stock had hit a 52-week high of $13.31 on Feb. 2.

The Air Transportation Stabilization Board said it planned to work with the airline through the bankruptcy process to ensure taxpayers' interests were protected.

The board, which was set up after the 2001 terrorist attacks to administer a $10-billion government loan guarantee program for the airlines, issued ATA a $148.5-million loan guarantee in September 2002.

"The proposed sale of assets will be closely scrutinized by the board to mitigate any additional risks the transaction may pose to taxpayers," the board said.

In its filing, ATA seeks bankruptcy protection for eight different corporate entities from more than 1,000 creditors. The filing listed assets of about $745.1-million and debts of $940.5-million.

In recent weeks ATA has announced plans to cut more than 300 jobs, including 150 flight attendants. ATA pilots and flight attendants this year have accepted nearly $70-million in concessions.

In an SEC filing last week, ATA said its finances have worsened since Aug. 16, when it reported it had lost $90.7-million during the first half of 2004.

ATA is the nation's 10th-largest U.S. carrier based on revenue passenger miles. Over the first nine months of this year, ATA flew 7.8-million passengers, up 11 percent over the same period in 2003.

It is the largest North American operator of commercial and military charters. ATA operates hubs at Midway, where it has 14 gates, and Indianapolis International Airport.

Indianapolis will remain ATA's headquarters and primary hub, company officials said. Dennis Rosebrough, a spokesman for Indianapolis International Airport, said the bankruptcy filing likely would have minimal effect on passenger service at the airport.

ATA, which was founded in 1973 in Indianapolis as American Trans Air, has 7,900 employees, including 2,500 in Indianapolis.

On Monday, ATA Holdings Corp. said it had appointed Gilbert Viets, a retired Arthur Andersen accountant, the company's chief restructuring officer.

Viets took over as ATA's chief financial officer after the June resignation of David Wing.

Times staff writer Steve Huettel contributed to this report.

ATA says it plans to honor tickets and maintain its full flight schedule. Tuesday's deal is subject to approval by the bankruptcy court and other entities and is expected to take effect by early next year, ATA officials said.