ATA Airlines and Airlines and Bankruptcy and Banking & Finance and Transportation, Distribution & Logistics

Twice-bankrupt ATA finally folds

December 29, 2008
Any hopes that hometown airline ATA would make a comeback and eventually resume scheduled service from Indianapolis were dashed April 2, when it filed for bankruptcy and ceased operations.

The 35-year-old carrier was never the same following its first Chapter 11 filing in 2004 that brought new, private owners who jettisoned founder J. George Mikelsons and thousands of employees.

Much of its scheduled routes were eliminated, including those from Indianapolis International Airport, where as recently as four years ago ATA was the busiest carrier. Global Aero Logistics, the Atlanta-based parent of ATA, abruptly pulled the plug on the airline after losing a contract to fly troops for the U.S. military.

The decision was controversial because the contract was not to expire until the end of this year. Pilots said they had offered to make concessions to keep ATA alive. ATA sued FedEx, which had decided not to keep ATA on its military flying team as a subcontractor.

Meanwhile, as part of its liquidation process, ATA sold to Southwest Airlines its operating certificate, which came with valuable landing slots at New York's LaGuardia Airport. The price was $7.5 million.

Southwest had provided financial assistance to ATA during the 2004 bankruptcy and had a code-sharing agreement with ATA that flew Southwest passengers to cities the Dallas carrier did not serve, including LaGuardia.

ATA had embarked on massive fleet expansion just before the 2001 terrorist attacks that sent the industry into a tailspin for years to come. In that atmosphere, ATA struggled to make steep lease payments for its new aircraft negotiated before the attacks.

ATA once employed more than 7,000 people, including 2,300 in Indianapolis. 
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