Sports Business

Industry veteran at helm as ATA exits bankruptcy: After months of tumult, Karnik ready for 'boring' year

February 20, 2006

Subodh Karnik slowly backed up to his chair at ATA Airlines Inc. and slumped into it.

His 46-year-old back was killing him. One of his elementary-age sons back home in Atlanta used him like a trampoline over the weekend. The injury got worse when Karnick ran through the airport, like O.J. Simpson in an old Hertz commercial, to catch a flight back to Indianapolis.

"I was born a masochist," said Karnik, a 6-foot-4-inch native of Mumbai, India, who sports a poker face that would confound even Dr. Laura.

This day in the life of ATA's chief operating officer resembles the airline's last 1-1/2 years in Chapter 11 bankruptcy reorganization. Blow after blow in the industry crippled at least two of the carrier's turnaround plans in short order.

With ATA planning to emerge from bankruptcy "on or about Feb. 28," Karnik and company are eager to dull the pain with something in the form of a normal routine.

"It's now time for the company to slowly transition to a restructured operating business," said Karnik, who joined ATA last June. He's commuting from Atlanta, where he most recently worked as a senior vice president at Delta Air Lines and at a consulting firm. The commute will end when his family finds a house here.

Even a bureaucracy looks good right now to Karnik, in the sense that management has predictable performance targets to meet.

"This year, I hope, is sort of one of the most boring years in ATA history. ... Now is just about pulling it off," he said of the new strategy. "Boring is good."

That strategy in a nutshell: Generate more than half of revenue from military and commercial charter flights, expand a code-sharing agreement with Southwest Airlines, grow scheduled service to Hawaii, and milk mainland routes served by fewer competitors.

Starting in April, ATA will expand service to Hawaii from Oakland International Airport, near San Francisco, and from Ontario International, east of Los Angeles.

Karnik's team likes oddball locales, such as the Hawaiian city of Hilo. Besides being a secondary tourist destination, it has business links to the mainland that are underserved.

Karnick also sniffed out opportunities left by American Airlines' drawback from Hobby Airport in Houston. ATA will fly from there to LaGuardia Airport-giving Southwest passengers a connection to New York, under the code-sharing deal.

"If all I can do is take traffic that was coming to American and get a few others, I think we'll be able to make a couple of bucks here," Karnik told the Houston Business Journal last month.

Karnik likes airports like LaGuardia, where the number of slots allotted to carriers is limited-keeping carnivorous competitors at bay. One thing appears certain: ATA doesn't have an infidel's chance in Iran when it comes to directly facing big airlines on prime routes.

Under restructuring, the 33 year-old ATA has gone from the nation's 10th largest scheduled-service airline to something now visible only under an electron microscope.

Just two years ago, it was the No. 1 carrier at Chicago Midway Airport; now it has access to only two gates. And once the busiest carrier at Indianapolis International Airport, it ended scheduled service here last month.

Initially, ATA planned to expand at Indianapolis. Later, the strategy was to fall back on its Midway hub with service to secondary routes using smaller jets. But jet fuel prices soared. ATA couldn't get smaller planes as quickly as expected. Revenue wasn't flowing in fast enough. Even under Chapter 11's umbrella, ATA ran out of time, Karnik said.

ATA also lacked the debtor-in-possession financing of other bankrupt carriers. United Airlines had access to billions while ATA had only about $30 million.

"We didn't go into bankruptcy with a massive war chest," he said.

Karnik won't elaborate about his role in redirecting ATA's strategy.

"He is a tireless worker with a brilliant strategic mind who we are very fortunate to have with us," said ATA CEO and former Southwest CFO John Denison.

Denison credits Karnik for being a "significant part" of the teams that hammered out a code-share alliance between Northwest Airlines and Dutch airline KLM, as well as a three-way alliance among Northwest, Continental and Delta.

"While at Air Micronesia in the [CFO] role, he helped that company right itself financially after going through very difficult economic times in that part of the world," Denison added.

In 2006, "my goal absolutely and totally is, at the minimum, positive cash flow," Karnik said.
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