ATA Holdings files for Chapter 11

By Jeff Pines

Washington, Oct. 26 - Financially troubled ATA Holdings Corp. is the latest airline to file for Chapter 11, joining United Air Lines and U.S. Airways - among others - in bankruptcy.

ATA Holdings filed for protection Tuesday with the U.S. Bankruptcy Court for the Southern District of Indiana.

The Indianapolis-based company listed its total assets as $745.16 million and its total liabilities as $940.52 million.

ATA has $163 million of 13% senior notes due Feb. 1, 2009, $110 million of 12 1/8% senior notes due June 15, 2010, and $20 million of 9 5/8% senior notes due Dec. 15, 2005

"Excess capacity, extremely high fuel prices, which continue to escalate, and declining fares have necessitated that all airlines, including ATA, re-examine their business," said George Mikelsons, ATA Holdings' chairman, president and chief executive officer, in a news release.

ATA said it is in discussions with potential debtor-in-possession lenders, but in the interim it said it has Air Transportation Stabilization Board approval to use cash collateral.

ATA also said AirTran Airways Inc. will pay $87.6 million to take over ATA's flight operations, gate leases and routes in Chicago's Midway Airport as well as arrival and departure slots at Ronald Reagan National Airport in Washington and LaGuardia Airport in New York.

The agreement is subject to the approval of the city of Chicago and the bankruptcy court.

AirTran and ATA plan to establish co-marketing programs and code share agreements for flights operating into and out of Chicago Midway.

A transition plan is in place for ATA to outsource to AirTran servicing of Chicago flights over a specified period. The transition arrangements with AirTran will allow ATA a gradual, measured exit from Chicago, as well as provide ATA time and flexibility to develop and execute its reorganization plan, ATA said.

Mikelsons said the company's reorganization would focus on better use of its fleet and concentrating on commercial flights routed through its Indianapolis hub, flights to Hawaii and military and other charter service.

ATA's Chapter 11 case number is 04-19866.

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