"Chicago at odds with ATA over ownership of airport gates"

Wednesday, August 25, 2004

City at odds with ATA over ownership of airport gates
The Chicago (IL) Tribune


Reports were flying Tuesday that ATA Airlines is considering unloading
some or all of its gates at Midway Airport for hundreds of millions of
dollars in order to stave off bankruptcy.

Not so fast, say city officials, who ultimately control the 14 gates
that ATA leases.

Chicago doesn't consider those gates to be among ATA's assets, even if
ATA does, thinking it can randomly dole them out to willing airlines
looking to get a toehold in the Windy City.

Prior to and following a published report Tuesday that ATA had sought an
investment firm to look at selling assets, including its gates at
Midway, the city's Aviation Department and Mayor Richard M. Daley's
office said they had not heard a peep from ATA on its plans.

"To date, ATA has not articulated to the City of Chicago that there will
be any major changes to their operation," a city aviation spokeswoman
said.

"We understand that ATA, like many airline carriers, is facing
tremendous challenges. We will continue to monitor the situation."

Furthermore, the Aviation Department said that if ATA reduces flights or
ceases operations, the city could take those gates back.

And although ATA sought to distance itself from the whirlwind of
speculation about whether it had plans to lighten its service or pull
out of Chicago, the question of who ultimately controls the gates
remains critical to ATA and, more pointedly, airline Chairman George
Mikelsons.

You see, Mikelsons owns 70 percent of Indianapolis-based ATA and stands
to lose his shirt if the company files for bankruptcy. It wouldn't
surprise anyone that he would try desperately to cut a deal before he
runs out of time and cash.

And bankruptcy for ATA--the biggest airline at Midway in terms of
passengers, edging out Southwest Airlines in 2003--is a real
possibility. Last week the company all but said it was nose-diving right
into it.

Some at the company say a bankruptcy filing could happen as early as
October.

In a filing with the Securities and Exchange Commission last week, the
company said that "under current operating assumptions and absent any
changes to existing aircraft lease obligations, the company does not
expect to have sufficient cash to meet its cash obligations in the first
quarter of 2005."

It now looks like that filing may be what's causing all the commotion.
Sources say the report to the SEC prompted some carriers to contact ATA
to see if its Chicago slots might be available. ATA didn't seek out the
carriers, sources said.

Still, there would be some interest from other low-cost carriers, such
as AirTran Airways, according to a report.

JetBlue Airways, the hip, low-cost carrier, has circled O'Hare for
gates. But with no room there and other airlines pulling back flights,
it's possible that Midway and ATA's gates would become an option for
JetBlue. But JetBlue has been keeping its eye on O'Hare as its first
choice.

"It's no secret we've been looking at Chicago, and that includes looking
at all airports in Chicago," said a spokesman for the Forest Hills,
N.Y.-based carrier.

All ATA was saying Tuesday was this: "As indicated in our recent SEC
filing, ATA is busy restructuring its finances. While engaged in that
effort, we are not abandoning Chicago Midway, nor are we canceling any
flights.

"We look forward to continuing to provide outstanding value to our many
customers."

Until now, the city and ATA have had a cozy and mutually beneficial
relationship, with about two-thirds of the airlines' passengers flying
out of Midway.

ATA's commitment to Chicago is a big reason why Daley was able to get a
major $927 million expansion at Midway completed this year, which
included a 941,000-square-foot terminal complex and 14 more gates.

It added new life to the Southwest Side neighborhood surrounding the
airport and helped secure other commitments.

Even last week, ATA was saying that it remained committed to a $100
million training facility that will be partially subsidized by the city.

And sources say that some of Daley's close staffers met with Mikelsons a
few months ago to talk about the possibility of bringing the remainder
of ATA's operations here, including a new maintenance facility.


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