ATA bankrupt again, ending all operations

Norm Heikens, The IBJ

nheikens@ibj.com

ATA Airlines Inc. said today it has filed for Chapter 11 bankruptcy protection, just two years after emerging from a bankruptcy filed in 2004.

All operations were discontinued as of 4 a.m. today, the carrier said, meaning ticket holders will need to find alternatives. ATA had previously discontinued scheduled flights from Indianapolis.

The filing means that about 600 workers in Indianapolis are immediately out of a job, ATA said. The company employs a total of 2,300; all are now out of work.

The voluntary filing was prompted primarily by the unexpected cancellation of a key military charter contract, ATA said. High fuel costs were another factor.

"We deeply regret the disruption and hardship caused by the sudden shutdown of ATA, an outcome we and our employees had worked very hard and made many sacrifices to avoid," Chief Operating Officer Doug Yakola said in a statement.

Customers can find more information at www.ata.com or by calling 800-435-9282. Customers who used credit cards to buy tickets should contact their credit card provider directly to determine how to obtain refunds, ATA said.

ATA is owned by Global Aero Logistics Inc., which is not affected by the bankruptcy filing.

Global Aero's headquarters were moved to Peachtree City, Ga., last fall from Indianapolis. Global Aero is majority owned by New York-based MatlinPatterson Global Opportunities Partners, which purchased ATA out of bankruptcy two years ago.

The companies' 29 airplanes were carrying about 10,000 passengers a day.

ATA had been a military subcontractor to FedEx for nearly two decades. However, FedEx abruptly told ATA that the contract would not be renewed for the federal government's fiscal year, which begins in October. The notification came a year earlier than the contract was to have ended, ATA said.

Soaring fuel prices had forced ATA on March 6 to announce that it would stop low-fare service out of Midway Airport in Chicago by April 14. ATA's international service from the airport was to have ended June 7. It's other scheduled flights were between the West Coast and Hawaii.

Last month, Global Aero CEO Subodh Karnik resigned and was temporarily replaced by Global Aero Chairman, John Denison. The company wouldn't discuss Karnik's departure.

Denison was ATA president and CEO from February 2005 to December 2006.

If efforts to revive ATA fail, the bankruptcy brings to an end an airline started in 1973 in Indianapolis by J. George Mikelsons. It once employed more than 2,000 locally.