"Southwest Airlines: $117 million deal includes 6 of ATA's Midway gates"

Sunday, December 19, 2004

SOUTHWEST AIRLINES: $117 million deal includes 6 of ATA's Midway gates
The Chicago (IL) Tribune


And the winner is ... Southwest Airlines.

The nation's dominant low-fare carrier beat out AirTran Airways in the
bidding for troubled ATA Airlines, agreeing to pay $117 million for part
ownership of a restructured ATA and six of its 14 gates at Chicago's Midway
Airport.

The deal will give Dallas-based Southwest 25 of Midway's 43 gates, and also
contains provisions that will enable passengers to buy a ticket on ATA and
complete their travel on Southwest.

Southwest plans to increase flights from Midway to 169 per day through April
and to as many as 200 by 2006.

"It's a good strategy to broaden their presence in the Chicago area," said
Klaus Breil, a fund manager at Adig Investments in Frankfurt. "The market
share of low-cost carriers in the U.S. will further increase, and as
Southwest is already the biggest discount airline, this is a continuation of
their very successful business policy."

A smaller ATA said it still is determining how many flights it will cut and
which cities it may stop serving. But it will retain a Chicago presence, and
it also gets to keep its landing rights in New York and Washington, D.C.,
two valuable assets it had earlier expected to lose in the bankruptcy.

Still, analysts are split on how good a deal it will be for the
Indianapolis-based carrier.

"They're serving Southwest's purpose for the time being, and when their
purpose has ended, Southwest will probably just cut the cord," said Calyon
Securities analyst Ray Neidl.

What's next: A bankruptcy judge in Indianapolis is expected to sign off on
the deal Tuesday, and the City of Chicago, which owns the Midway gates, also
is expected to approve it.


 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dcfp/dcboard.php


*****************************************