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"Southwest shows interest in ATA assets"
Friday, October 15, 2004
Southwest shows interest in ATA assets
By Mike Nolan
The Daily Southtown, Chicago (IL)
Southwest Airlines may be interested in buying jets or acquiring other
assets of ailing ATA Airlines, Southwest's chief executive said Thursday.
Also Thursday, a published report said two other airlines - AirTran and
America West - were engaged in talks with Indianapolis-based ATA regarding
possible asset acquisitions.
ATA also said it would furlough 156 workers systemwide at the end of the
Acquiring some of ATA's gates at Chicago's Midway Airport could help
Southwest increase its presence at the airport. Southwest is the No. 2
carrier at Midway behind ATA.
Gary Kelly, Southwest's CEO, told analysts that the airline may be
interested in taking over some of ATA's gate space at the Southwest Side
airport. Kelly, in a conference call with reporters, also said there "could
be some other assets" Southwest would be interested in buying from ATA.
Kelly said he didn't want to speculate on what other assets Southwest might
have its eye on.
ATA reportedly has hired an investment banking firm to help find buyers for
some, or all, of its assets.
As Southwest reported a 12 percent jump in third-quarter earnings on
Thursday, Kelly said the airline plans to focus on its "core" next year,
enhancing operations in markets where it already has an established
The Wall Street Journal reported Thursday that America West's parent company
and AirTran have talked with ATA about possible asset purchases. The
newspaper cited people familiar with the talks.
AirTran offers service from Midway, and America West operates at O'Hare
A spokeswoman for ATA said the airline wouldn't comment on "market
Southwest couldn't buy gates outright from ATA, which leases 14 gates from
the city's aviation department. If ATA ceases or reduces operations from any
of the gates, those gates would be reclaimed by the department, according to
Southwest leases 19 gates at Midway and has about 140 daily flights. ATA has
168 daily departures from the airfield, but that includes its ATA Connection
Southwest's chief said the airline will take delivery of 34 new Boeing 737
jets next year, and will retire five older jets. Kelly said that, in order
to accommodate additional growth, "major airlines that are downsizing" could
be an additional source of aircraft.
Southwest has been adding new markets and is boosting service in established
markets. At the end of the month, the airline will increase the number of
daily nonstop flights from Midway to cities in California and Florida,
including Los Angeles and Orlando.
Overcapacity and rising fuel prices have hurt the airline industry. Kelly
noted that, industrywide, there are "too many seats and not enough
passengers" to fill them.
Southwest has been insulated, to a degree, from high fuel prices because it
has used hedging to purchase fuel at lower prices.
Separately, ATA said that 156 employees, including 150 flight attendants,
would be furloughed because of an anticipated fourth-quarter drop in
ATA shares finished the day Friday at $2.85, up 21 cents on the Nasdaq Stock
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