ATA Holdings Corp. Chairman J. George Mikelsons has sold his $4.95 million yacht and has been handed a regal bill for its crew's pay and benefits-the latest blow to the fortunes of the bankrupt airline's founder.
"When pilots get together, one of the things that always comes up is, 'Why does George still have his boats?' People still complain," said Rusty Ayers of the Air Line Pilots Association, in Chicago.
"We used to joke that if they ever got furloughed, they could be a cabin boy aboard George's boat."
Not anymore. Mikelsons may well need the cash from selling the 125-foot yacht Orion to help pay the $653,225 he owes ATA for wages and salaries of its crew, according to a filing with the Securities and Exchange Commission.
That amount is roughly equivalent to Mikelsons' annual salary.
The Orion was ranked by Power & Motoryacht magazine as the nation's 170th-largest yacht. Florida yacht brokers say the Dutchbuilt Feadship was sold recently, although details were sketchy.
The Orion was listed as recently as May 10 with an asking price of $4.95 million.
Mikelsons' downsizing likely will garner little sympathy from the 1,100 of the airline's 8,000 employees who were jettisoned since ATA filed Chapter 11 reorganization last year. They include about 170 pilots and other flight crew officers.
The Air Line Pilots Association has agreed to more than $54 million in wage and retirement concessions over the last year to help keep ATA aloft.
Mikelsons, 67, declined comment.
ATA was weighed down by expensive leases on aircraft too large to fill on many of its routes. An industry fare war and soaring fuel prices hastened the bankruptcy filing Oct. 26.
That day was doubly somber for Mikelsons; he also signed an agreement to reimburse the Indianapolis airline $653,225 for the portion of the Orion crew's time spent for his personal use.
The reimbursement also goes to
the crew of Orion's Little Dipper, a 52-foot boat Mikelsons used for fishing from the Caribbean to Maine to Mexico.
Last year, as the Dipper was being towed by the Orion about 20 miles off Cape Hatteras, a storm swamped the smaller ship in 140 feet of water. After resting on the bottom for a month, the Dipper was raised. Beaufort, N.C.-based Jarrett Bay Boatworks later rebuilt it.
The seven-person crew manning both vessels earned a combined salary of $320,100, including $100,000 for the captain of the Orion, according to a document ATA filed with the SEC.
Mikelsons said the ships were used to entertain clients and business partners of ATA, which was the nation's 10th-largest airline before Chapter 11 and a subsequent route-slashing at Indianapolis International Airport and elsewhere.
In January, Mikelsons paid to ATA his first quarterly installment of $19,403, at an interest rate of 3.6 percent a year through Oct. 26, 2009, when the remainder of the balance is due.
He previously reimbursed the company for boat crew devoted to his personal use, but on an "inconsistent" basis, according to ATA. The airline last year paid Mikelsons $236,000 toward crew costs when it used the Orion for entertaining ATA clients.
Earlier this year, Latvia native Mikelsons listed for sale his 12,005-square-foot home along West 79th Street for $1.75 million. He's retreated to his other home in Brown County.
Meanwhile, Mikelsons is out nearly $180,000 he claims ATA owes him in rent for a Jet Ranger III helicopter his Betaco Inc. leased the airline. ATA used the helicopter for third-party charter flying.
Although Mikelsons has enjoyed public support as a scrappy immigrant who built an airline that tweaked the noses of the big carriers, some current and former employees have grumbled at his personal business ventures involving ATA.
But any income he received from those ventures pales in comparison to his biggest financial blow. His ATA stock holdings were rendered virtually worthless by the bankruptcy. His 8.2 million shares were worth $105 million in early 2004; today, only about $7 million-and that's assuming he could find a buyer.
It's unknown what other assets or investments Mikelsons may hold. But a longtime associate said his wealth was tied up in ATA.
"Everything he had was in that company. He really fell on his sword," said the associate, who asked not to be identified.
He said Mikelsons, like many top executives of public companies, was limited in the amount of stock he could sell, noting the negative reaction typical of the market if execs dump large stakes.
Mikelsons in recent years has earned a salary of about $687,000, although he received no bonus or stock options.
In the 40-percent tax bracket, Mikelsons "lives on about $350,000 a year. You try to maintain a yacht and a house and kids at Park Tudor [School] ... It's not that much when you look at it," said Mikelsons' associate.
At least not to live in the lifestyle Mikelsons came to enjoy since his humble beginnings in the 1970s.
His travel club that later became ATA was essentially a one-man operation. Mikelsons handled passengers' luggage and drove them on a bus to his awaiting Boeing 720 aircraft. Then, to the horror of some passengers who didn't know he was the pilot, he donned a captain's hat, headed for the cockpit and flew the plane.
Though it's unlikely he'll reprise that role, the scrappy entrepreneur appears to be returning to his origins just as is his Ambassadair Travel Club.
In a "return to clubbiness," the ATA subsidiary last month began a trip to Paris by stationing at the ticket counter an employee costumed as Marie Antoinette. It's the cornball sort of thing Mikelsons used to relish in his early days.
Both Ambassadair and Mikelsons appear to be going separate ways from ATA, however. In May, Ambassadair hired a firm to seek a buyer for the club. It also ditched ATA as its charter carrier for Atlanta-based TransMeridian Airlines.
A number of analysts see Mikelsons bowing out of ATA, now that Southwest Airlines has agreed to $47 million in shortterm financing and has pledged to put $30 million into ATA for a 27.5-percent stake, after ATA emerges from Chapter 11.
Already, Southwest recruited a former senior executive of the Dallas carrier, John Denision, as ATA's CEO. As it is, Denison is not operating under the shadow of Mikelsons, but of a bevy of outside turnaround consultants.
Southwest made the investment to grab six of ATA's gates at Chicago Midway Airport and now keeps ATA on life support through a code-sharing agreement in which the carriers share passengers and revenue on some of their routes.
In the end, Mikelsons may wind up with a consulting agreement with Southwest for a couple of years, said his associate.