ATA closes operations, files Chapter 11
Tom Murphy, AP, Yahoo.com, 4/3/2008 (excerpted)
ATA Airlines shut down operations and stranded thousands of travelers Thursday [April 3] when an unexpected loss of key charter flights and soaring fuel costs forced the carrier into bankruptcy.
Once the nation's 10th-largest air carrier, ATA entered bankruptcy for the second time in just over three years. The company had more than 2,200 employees, and "virtually all" were told that their jobs were gone, company spokesman Michael Freitag said.
Many passengers learned of the collapse at ticket counters, where advisories were posted in the handful of cities ATA still served. About 10,000 passengers flew ATA each day when operations were shut down, according to the airline.
The ATA bankruptcy generated little surprise. It was the second carrier to declare bankruptcy in just the past two weeks. Aloha Airlines filed for Chapter 11 bankruptcy protection last month, a little more than two years after emerging from bankruptcy.
"We are seeing some of the very marginal carriers shut down ... and will probably see more," said Ray Neidl, an analyst at Calyon Securities in New York.
Analysts don't think larger carriers are in imminent danger of bankruptcy. But many industry observers have long warned that sustained high fuel prices and a slowing economy could push larger airlines to the brink.
ATA said in a statement that the cancellation of a critical agreement with FedEx Corp. for most of the airline's charter business left it unable to offset exorbitant fuel prices.
That agreement gave ATA a significant share of the airlift contracts to fly military members and their families overseas, ATA said. FedEx told ATA that that agreement would end when the government's 2009 fiscal year begins in October.
ATA announced last month that it would leave Chicago's Midway Airport, which it had used as a hub since 1992.
ATA's bankruptcy will also affect Southwest Airlines customers. The Dallas-based airline has a code-share agreement with ATA for travel to Hawaii.
Southwest said Thursday that it immediately began rebooking passengers with dates and times as close to the original travel plans as possible. Southwest said it would give priority to customers who are scheduled to travel in the next 14 days.
AP Business Writer John Wilen in New York, AP Videographer Mark Carlson of Chicago and Associated Press Writer Chris Havlik in Indianapolis contributed to this report.