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ATA struggles to survive:

December 26, 2005

ATA Airlines in 2005 was gutted into a shell of its former glory.

On the upside, it ended the year with a $100 commitment from New York finance firm MatlinPatterson Global Opportunities Partners. That could set the stage for the company to emerge from Chapter 11 bankruptcy in February, 16 months after it filed.

But the price of restructuring was high for Indianapolis. The company, which just a year ago was the busiest carrier at Indianapolis International Airport, will discontinue all scheduled service here next month. Only a few charter flights will remain.

It's also slashed much of its service at Chicago Midway airport and has returned at least 40 of its 76 aircraft to lessors.

ATA also dismissed 350 mechanics and 100 call-center employees at its airport campus. Many cubicles at its corporate offices are bare. ATA used to employ 2,200 here; it's now closer to 1,000. Many who remain, including pilots, have agreed to give up tens of millions of dollars in pay and benefits.

Forced to retire during the year was founder and CEO J. George Mikelsons-whose majority stake in the company is now virtually worthless. The departure of the Latvian immigrant long admired in Indianapolis will go down as a sad chapter in ATA's and Indianapolis' corporate history.

Also gone from ATA is Ambassadair Travel Club, the leisure charter company Mikelsons founded in 1973 that later spawned ATA. Indianapolis-based Grueninger Travel snapped it up in bankruptcy court. A short time before that sale, Mikelsons' longtime sidekick, Ambassadair President Sally Brown, quit to pursue charitable work.

Analysts say ATA may not be out of the woods yet. Its turnaround plan, at least in the short term, is predicated on continued revenue from its military charter business.

ATA also hopes to further exploit its niche in scheduled service from Chicago Midway to New York and Washington, D.C. Ditto for flights from Western states to Hawaii. But much of its remaining scheduled service business is viable only because of a code-share agreement it has with Dallas-based Southwest Airlines.

At least it beats liquidation.


Under CEO John Denison, the airline has dropped scheduled service in Indianapolis.
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