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Southwest seeks control of ATA
Southwest Airlines is trying to take over control of bankrupt ATA Airlines, with the intent of providing it with a cash injection and naming new senior executives taking aim at cutting labor costs 15% or more.
Southwest would give ATA $47 million in cash and take a 35% stake in the airline, according to The Indianapolis Star, which cited a draft copy of Southwest’s plans.
The proposal was discussed earlier this week during a meeting between lawyers for ATA, lenders and creditors. They met to review bids placed by Southwest and AirTran Airways for ATA’s Chicago Midway operations.
Southwest’s plan is part of a $100 million bid for six ATA Gates at Midway, where the two airlines are the biggest carriers.
AirTran’s competing plan is to take all 14 of the gates at Midway and some flight slots at Washington’s Reagan National Airport and New York’s LaGuardia for $90 million in cash.
The Southwest deal would pay $47 million in cash for ATA’s assets and the rest in loans, according to wire services. The bid would include letting ATA book Southwest passengers on nonstop flights from Midway to nine cities.
AirTran’s contention is that Southwest is seeking a monopoly at Midway.
“Southwest Airlines’ bid is nothing more than a clever trick to gain a stranglehold at Chicago’s Midway Airport,” said Kevin Healy, AirTran’s vice president of planning and sales.
Southwest spokeswoman Melanie Jones told the Associated Press that airline officials were not elaborating any more details of their bid, which is apparently flexible and subject to change.
ATA chairman George Mikelsons has said his plan was to scale down the airline and have it emerge from bankruptcy as a smaller, Indianapolis-based carrier.
ATA is the nation’s 10th largest US carrier based on revenue miles.
Federal Bankruptcy Court Judge Basil Lorch III is scheduled to pick a winning bid Thursday.
Report by David Wilkening
David
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