ATA Airlines and Airlines and Headquarters and Relocation and Transportation, Distribution & Logistics

ATA parent shifts HQ to Georgia

November 5, 2007

The writing has been on the wall that Indianapolis might lose the headquarters for ATA Airlines and/or parent Global Aero Logistics ever since April, when Global said it was buying Georgia-based World Air Holdings.

Now, the writing is on paper: Indianapolis has lost another headquarters.

"Our principal executive office is located at HLH Building, 101 World Drive, Peachtree City, Georgia," states a registration Global Aero filed Oct. 26 with the Securities and Exchange Commission. Previous SEC filings identified Indianapolis as the headquarters.

The filing outlines a plan to sell $50 million in stock on behalf of Global Aero's owner, the New York investment firm MatlinPatterson.

As recently as Oct. 15, Indianapolis was the dateline on Global Aero's press releases.

Global Aero said its largest subsidiary, ATA Airlines, remains based in Indianapolis.

"ATA--let me be very clear--will operate out of Indianapolis," said Global Aero spokeswoman Maya Wagle.

She also emphasized that only one Global Aero executive--President and CEO Subodh Karnik--has moved to the home of the holding company and of World Airways Inc., the No. 2 Global subsidiary behind ATA. Still, Karnik is the CEO of Global Aero--not an insignificant position. He's also the one who quarterbacked ATA's exit from bankruptcy last year.

Karnik was a longtime Atlanta resident, as a former senior officer of Delta Air Lines. "His family is from there," Wagle said. Remaining in Indianapolis are other Global Aero executives, including human resources chief Richard W. Meyer Jr., and Chief Integration Officer Doug Yakola. Also remaining in Indianapolis is Global Aero's chief strategy officer, Josef Loew.

Besides the Global Aero officers remaining in Indianapolis is the headquarters and support staff for ATA--a combined 635 people.

"Human resources are the most important resources that we have. Are we going to move 600 people? That would not be economically feasible," Wagle said.

ATA and former parent ATA Holdings had more than 2,300 local employees here before their 2004 Chapter 11 bankruptcy filing.

ATA was to have shuttered its Indianapolis aircraft repair base by Nov. 1, which once employed 400 mechanics and other staff.

In September, it closed its Indianapolis pilot base and reassigned the flight deck crews to other cities.

ATA hasn't flown a scheduled flight from Indianapolis International Airport--where it once was the busiest carrier--for nearly two years. Chicago's Midway Airport remains ATA's closest scheduled service location.

"They're winding down operations here. The impact has really already been felt," said Mike Wells, a longtime board member of the Indianapolis Airport Authority. "In my mind, they were gone a long time ago."

Wells said he wasn't surprised to hear that Global Aero's offices would be focused in Georgia. ATA still has a lease with the airport on its 7337 W. Washington St. headquarters, though it expires in 2010.

Though the personnel impact on Indianapolis from moving Global's HQ to Georgia appears negligible, the holding company has moved flight-scheduling responsibilities for its airlines there. More integration appears forthcoming, at least based on Global Aero's Oct. 26 SEC filing.

"We also continue to seek opportunities to streamline our operations and cost structure. As we execute the integration of the World Air Holdings acquisition, we plan to reduce our costs through rationalization of back-office and other functions and leveraging the commonality in our newly combined fleet," the filing said.

Global Aero Logistics posted a loss of $46 million in the first half of 2007, according to SEC filings. Most of that was blamed on a handful of unprofitable routes on the East Coast where competition is fierce.

Karnik said previously that ATA was doing well otherwise, including flights to Hawaii it flies under a code-sharing agreement with Dallas-based Southwest Airlines.

ATA plans to expand its agreement with Southwest in 2009, flying to many "near-international" markets, including Canada, the Caribbean, Mexico and Central America.

But ATA's discontinuation of scheduled service here in January 2006 has made the Indianapolis location all but irrelevant for the operation of the airline--other than that the city is home to a number of longtime ATA employees.

Global Aero has a financial incentive to move operations to Georgia.

New subsidiary World Air has received more than $2 million in tax credits since 2003 under the Georgia Headquarters Job Tax Credit.

If the company continues to meet statutory requirements for each year it is eligible, "total potential future net estimated benefits could be in excess of $1.4 million on a pre-tax basis," Global Aero states in its stock offering registration.

ATA remains the largest of Global Aero's three carriers--employing 2,500 nationwide. World Air, which is mostly a military charter carrier, has 1,500 workers. Its sister airline, Jamaica, N.Y.-based North American Airlines, employs about 600.

Global Aero CEO Karnik said previously there are practical reasons to keep the airlines separate, including the ability to better compete for contracts with the military to fly its troops. But officials from the Air Line Pilots Association and Teamsters union, which represent flight crews, have said they cannot envision an airline not aggressively combining units to improve efficiencies and profits.

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