America West FlightFund (Discontinued Program) - ATA/HP merger/buy-out consolidated thread

ATA is in a horrible position. A position that many have rumores and many would not have thought possible. Would in all possibilities a merger between America West Airlines and American Trans Air be feasible. It would seem as if America West Airlines has a much stronger clientele base with partner airlines that are inclusive of Hawaiian Airlines, Northwest Airlines, British Airways, and Mesa Airlines.

America West has a much stronger route network than American Trans Air and can by far become a leader within the U.S. domestic air game with the compliment of Chicago/MDW, and Indianapolis operation bases. not to mention the impressive list of cities that Amerian Trans Air serves from Honolulu, San Francisco, Los Angeles, and New York/LGA!

Any thoughts on the matter of America West joining forces with American Trans Air?

I wouldn't mind seeing a HP/TZ merger. If it could be pulled off HP would gain the following:


Greater CUN marketshare via LAX, and SFO. In addition they'll get a big slice of the midwest/northeast-CUN market.
Major player status in Hawaii. Access to three airports via LAX/SFO, and HNL via SEA.
Over-water capable aircraft.
Access to some Carribean destinations.
A moderate sized 752/753 fleet with compatible RR engines
A big slice of the midwest/northeast-CUN market.


However, there are some things working against this merger.


Labor/senoirity issues would be passed on to HP mgt.
HP would take on TZ's high lease rates since there is no bankruptcy involved.
The 738 fleet is not consistant with HP's all-airbus direction for smaller mainline planes. Although, they are new and should have less maint issues.
HP simply doesn't have the cash to buy TZ. It would have to be a stock swap.


HP would have a better chance of getting these things if TZ entered bankruptcy.

I think it would be an excellent fit operationally. Even though HP is trending towards all 'bus equipment, I wouldn't think there would be a problem with the nice, new 738's considering they would already have some commonality already with the 733's or am I mistaken?

From a personal standpoint, I hate Midway. The security lines are horrible and it's not convenient (for me at least)

HP would most likely keep the ORD gates for pax going to CHicago only. Now if you needed to connect, then you would have to go to MDW.

Edited to delete the problem I had raised- I had confused ATA and Airtran, so this post did not pertain to this discussion.

doesn't ATA lack first class and have crummy seat pitch? America West is not a suitor for ATA....America West would be more compatible with USAirways than with ATA.

doesn't ATA lack first class and have crummy seat pitch?

Yes. They have no F, but their pitch is the same as HP. These issues can be fixed fairly easy. There are plenty of used F seats out there that HP could use temporarily until they get their own ordered.

America West is not a suitor for ATA. America West would be more compatible with USAirways than with ATA.

There's no technical reason they can't be. MDW would give HP exposure in a very large market. TZ's flights don't conflict with HP's current system, and would even contribute some very valuable routes.

HP would become a major Hawaii player if they chose to exercise that option and discontinue the HA partnership.

TZ's entire fleet is compatible with HP's. THat can't be said for US'.

What does HP stand for?

Yes. They have no F, but their pitch is the same as HP.

ATA is actually now in the process of rolling out a "business class" product similar to that offered by AirTran, and not all that different from AWA's first class.

ATA is rolling Business Class out this month. It will be on all aircraft before Thanksgiving.

PHXTraveler,

Sorry you had a bad experience on ATA. We've really made quite a few improvements in our operation and out performance numbers for September were wonderful despite the Florida weather mess. The one sure thing at ATA is if you don't like something, just wait a few months and it will be different.

I hope we have an opportunity to welcome you onboard in the future.

joe

What does HP stand for?


Hey Paul, HP is the designator for America West Airlines. What it stands for is your call....happy passengers, horrible performance, etc. It was once mentioned that it was a carryover from Hughes Pacific, an airline owned by the late Howard Hughes, I don’t know this to be factual though. The FAA issues 2 letter/digit codes for all commercial airlines. They don’t always make sense. AW was already taken.

Ive been told, by a friend of mine that has worked for HP since '88, that when Beauvais and company were given the opportunity to pick the 2 letter codes for America West and AW was already taken, they chose HP because it could stand for Hub Phoenix. Whether its a true story or not, who knows.

And now, back to our regularly scheduled thread, already in progress....

:p

Oh, please no merger with ATA. I had a bad experience with them that left me stranded overnight with no sleep, no compensation and lost luggage. My company no longer allows us to fly on them because we have had so many problems.

I don't see how the two employee groups could merge and create a cohesive unit.

---------------------------------------

I second that one--I flew one disaster flight on ATA.....

Bad, bad, bad..... :mad:

I think what you have to remember is that ATA has been in a state of constant evolution for the last 30 years. One ATA flight does not adequately judge the entire operation despite your heuristic's desire to the contrary.

That said, I understand the psychology behind not wanting to give a second chance to something you've found to be less than satisfactory before. After all, you're the customer -- we merely serve you.

joe

With the somewhat troubled history of mergers HP would probably wait until ATA is bankrupt and then attempt to purchase the assets that they would want the most. The 757 fleet and gates would probably be key. HP would not want to sideline itself with seniority issues and pay which would disrupt things so much that stockholders would think the board has gone mad.

Of course a merger could be ATA employees i.e. unions only hope and they might bite the bullet and agree to any conditions HP may have. ATA is VERY near default and it is not too well known since the press is so focused on USAirways.

HP may also be interested in ATA's Pleasant Hawaiian Vacation's contract. If they aquired that, along with some 757-200s and -300s HP would be well positioned to enter the Hawai'i market.

HP may also be interested in ATA's Pleasant Hawaiian Vacation's contract. If they aquired that, along with some 757-200s and -300s HP would be well positioned to enter the Hawai'i market.

They tried that already

It seems HP and ATA might have something in the works. :)

article from the AZ Republic
AmWest about to grow? (http://www.azcentral.com/business/columns/articles/1001buzz-bizbuzz01.html)

With just a few flights a day out of Indianapolis, America West Airlines workers there don't see much of Chief Executive Officer Doug Parker and the company's top brass. That has changed in the past few weeks, eagle-eyed employees tell the Buzz, prompting rumors that the airline is in talks with financially troubled ATA Holdings.

One employee said Parker, No. 2 exec Jeff McClelland and a bevy of other officers have traveled to ATA's hometown recently. ATA, formerly American Trans Air, is best known locally as a charter company that flies planeloads of vacationers to Maui and Honolulu. Industry newsletter PlaneBusiness says it's the Hawaiian business that America West is eyeing. Editor Holly Hegeman notes that it is a rumor, but she thinks it has legs.

So is AmWest in negotiations with ATA, which is running out of cash? Spokeswoman Janice Monahan said it's the company's policy not to comment on rumors. Ditto, an ATA spokeswoman said.

................

A bankruptcy purchase would require cash - or fianancing - what they could do is do a swap swap merger and then a pre packaged bankruptcy restructure the whole thing rejecting/renegotiating all of the union contracts and leases and moving forward as a new entity.

As far as US Air - Remember when they bought PSA, where' anyone seen a USAIR flight up and down the west coast recently ?

Maybe we'll see some code share action here? (Hmm. I seem to recall banners announcing the TWA code share, right before TWA went BK)

HP could feed ATA's PHX-Hawaii service. This could introduce Maui service, and could be a companion for the existing code share.
ATA's LAX-MDW and LAX-IND service could fill gaps in HPs LA expansion
LAX-Hawaii - another no brainer for HP''s focus city.
PHX-MDW - HP's done it before. But that was back before the airport was rebuilt. It could be another worthwhile addition.
LAS-MDW - Why not?

LAS-IND - duplicates HP service
PHX-IND - duplicates HP service.

Or perhaps HP is ready to expand and go for the midwestern hub again. MDW may be the better odds possibility. It is a big market that could easily turn a profit. However, it would mean competing with AA, UA, and WN. IND would still have a fight with NW, and is a smaller market, so may end up like CMH. Also, IND is ATA's home base, so they may be less likely to give that up. Selling off MDW ops to help pay down debt would make a lot of sense, and allow them to focus on charters and IND. However, cash is probably not something they can expect to get out of HP at the moment.

Someone's bad experience is someone else's good one. I fly HP and TZ several times a year. TZ flights have been on time (DFW-MDW-everywhere else) and pretty enjoyable. Always have problems with HP, OTOH, from baggage (and "excess baggage"), late arrivals, etc.

I didn't know TZ was in that bad of shape. Too bad.

MDW may be the better odds possibility. It is a big market that could easily turn a profit. However, it would mean competing with AA

AA doesn't have much of a presence at MDW, maybe 5 flights a day for DFW and MCY.

AA doesn't have much of a presence at MDW, maybe 5 flights a day for DFW and MCY.
Last I checked they just had DFW and LGA flights.
However, AA and UA both have a huge presence at ORD. A hub at MDW would be competing with both of those.

FWIW, HP has plenty of cash if it wanted to buy TZ. As of the last quarter, AWA's unrestricted cash was somewhere around $400 million (or higher), and HP does have the ability to raise more capital if they spent a chunk in acquisitions. They've already filed a shelf registration with the SEC that would let them raise as much as $500 million in debt or equity.

If this deal were to be done it would most likely involved what is called a pre-packed bankruptcy - ATA files and would use the process to clean up issues while the HP sale contract is already in place at the start of the filing. (think TWA)

This is clean, easy and done all the time. Separately, I am not sure where you people get the cash required in bankruptcy deal - if the creditors and judge agree they could buy the company for toothpicks.

Hey Paul, HP is the designator for America West Airlines. What it stands for is your call....happy passengers, horrible performance, etc. It was once mentioned that it was a carryover from Hughes Pacific, an airline owned by the late Howard Hughes, I don’t know this to be factual though. The FAA issues 2 letter/digit codes for all commercial airlines. They don’t always make sense. AW was already taken.

the FAA designation for verbal communications between ground control and the aircraft is "Cactus"..

If this deal were to be done it would most likely involved what is called a pre-packed bankruptcy - ATA files and would use the process to clean up issues while the HP sale contract is already in place at the start of the filing. (think TWA)

This is clean, easy and done all the time. Separately, I am not sure where you people get the cash required in bankruptcy deal - if the creditors and judge agree they could buy the company for toothpicks.

Yes, this is true. But it would be interesting to see what would be required to be payed out and what HP would take on. I believe ATA has already disposed of its older, less efficient aircraft, so it would be likely that the remaining planes could easily be absorbed into HP. If HP absorbed the Chicago commutter operation as well that would definately give them a leg up in the middle of the country.

Long term, the hub operations at Midway would be incredibly attractive. But it is also a stronghold of Southwest. It seems no matter what HP does it always ends up with Southwest at its side.

Less attractive would be the Indianapolis operation, which, in time, I believe would be significantly scaled back. After all, HP bagged their Columbus operation, why would they want to pick up a similar operation not too far away? Of course, Las Vegas and Phoenix non-stops would be retained, but the others would likely go away in time. This is clearly not a fit here.

Time will tell.

If this deal were to be done it would most likely involved what is called a pre-packed bankruptcy - ATA files and would use the process to clean up issues while the HP sale contract is already in place at the start of the filing. (think TWA)

George Mikelsons owns more than 80% of ATA Holding's shares. It's strongly speculated that he's the person engineering/forcing an assets sale, in order for ATA to survive as a charter airline once again while not having to go through bankruptcy.

George Mikelsons owns more than 80% of ATA Holding's shares. It's strongly speculated that he's the person engineering/forcing an assets sale, in order for ATA to survive as a charter airline once again while not having to go through bankruptcy.

He can still accomplish that

Tube the company - sell off the scheduled airline assets to HP, reject overpriced leases, stiff the unsecured creditors and he picks up the operating certificate and enough aircraft to proceed with the charter biz, which I am not sure anyone else would want - certainly not HP

the FAA designation for verbal communications between ground control and the aircraft is "Cactus"..

HP stands for Hawaiian Pacific. AWA assumed the operating certificate of the defunct airline when it first started service back in 83.

Page C1 of the Wall Street Journal today ran the story under the heading:

"America West Kicks the Tires of Ailing ATA"

I love the way the reporters opened the article; "Who would be crazy enough to buy an airline these days?"

By Dawn Gilbertson, The Arizona Republic
PHOENIX — America West Airlines is in talks to buy all or part of ATA Holdings, parent of ATA Airlines, The Wall Street Journal reported Wednesday night on its Web site.
Citing unidentified people familiar with the discussions, the story provided no specifics or a potential timetable and said it wasn't clear if a transaction would be completed. It said other airlines also have shown interest in struggling ATA, which analysts and others have on bankruptcy watch. Speculation about a possible deal between America West and ATA has been swirling for the past few weeks, with no comment from either company. (Related story: ATA's future on shaky ground)

The Arizona Republic reported earlier this month that America West's chief executive officer, Doug Parker, and other top brass had been spotted frequently in Indianapolis, ATA's hometown.

They aren't regular visitors, because America West has just a few daily flights out of Indianapolis.

Joe Chronic, America West's vice president of flight operations, even addressed the rumors in his weekly message to pilots Monday.

"While I don't have any particular information to pass on at this time, I would point out that we've all thought all this year that an industry shakeout would have to occur at some point before too much time passed," he said.

America West reported revenue last year of $2.3 billion, compared with $1.5 billion for ATA.

ATA is the nation's No. 10 airline and operates a hub at Chicago's Midway Airport.

It's a hard choice for America West, they can take a chance and merge or buy part of ATA. While the economy is bad for airlines it is a unique opportunity. HP has a chance to get more 757's and MDW gates at what could literally be a going out of business sale :). A merger would be harder but could give a huge boost for HP to expand when the economy improves. Just imagine not only MDW gates but a new hub out east that is not constrained by traffic issues. HP has proven itself as the airline that will not die. Doug Parker has earned the right to make a bold move by making HP profitable when everyone thought that it was a fantasy. Maybe I'm an optimist, but maybe HP might just be able to pull it off. Besides as a flyertalk and flightfund member I sure would not mind first class in a 757-300 on the way to way to hawaii. :cool:

LAS-IND - duplicates HP service
PHX-IND - duplicates HP service.



FWIW, no more LAS-IND n/s or direct service on HP anymore. That is a very competitive route, however, with 3 n/s's apiece on WN and TZ. Starting 10/31, NW enters the fray with n/s service IND-LAS as part of their new IND focus city effort.

Most of you may not have heard this if you live outside Indy, but about a month or 6 weeks ago, there was a story reported by the Indianapolis Business Journal (IBJ) and picked up by some of the TV media that TZ was set to sell off its MDW operations. The story stewed for about 24 hours and before TZ brass came out with a denial in fairly definitive language. The Indy press quieted down immediately, probably because nobody here wants to see another corporate HQ potentially leave town.

I've also read some comments speculating on HP's desire to re-establish a Midwest presence, something they had at CMH in the past. There is a certain logic to this, especially considering HP's stated strategic transformation from a mainline carrier to a vacation/discount carrier. (Interestingly, TZ's stated strategic transformation is to go the other way, from a vacation/discount player to more of a business-focused airline). The MDW hub makes a lot of sense if HP is going to be a discount player, despite intesnse competition from WN. The Chicago market is big enough for HP to draw lots of fliers locally, but what's more, a ton of people drive to MDW from really far away. All of downstate Illinois (I used to live there, and have done this personally) has fairly crappy service for the vacation flyer so people drive 3+ hours for cheap fares. Folks in Iowa, Wisconsin, and northwest Indiana often drive to MDW for discount flights. So the hub itself can remain viable as a destination for HP. As a connecting point, then it also makes sense for many flyers due to its central location and decent airport (now that the MDW remodel is complete). TZ has been very successful there and revenues have actually been increasing - it's these end-loaded leases that are causing TZ's losses.

As for the IND operations, it's a pretty good situation for TZ. The flights from IND are to the most popular destinations and the planes are nearly always full or close to full. They've been able to handle the competition from WN, I think, because the fares are the same or similar, but the service is generally better. I choose TZ over WN head-to-head for nonstops out of IND mainly because I get an assigned seat. Again, revenues don't seem to be the problem at TZ, it's the end-loaded leases on all the new jets and the cost of fuel that seem to be eating them up.

The other thing to consider with TZ and IND is their Ambassadair Travel Club. This little-known vacation club/charter service is actually their most profitable business, according to an IBJ article from a few months ago. It's just not a very large segment of their business. Ambassadair is a club that individuals or families join for something like $200+ per year. The members then choose from a huge list of vacation trips and pay the costs for those packages on top of the membership fees. It's not really discount travel, but it's a good deal for many folks who like to travel and want the convenience of packaged deals and nonstops from Indy. They do a lot of day trips to see Colts or Pacers games or go to someplace like Niagara Falls or Mt. Rushmore, out in the morning and back in the evening without having to wait for your flight or anything.

I would be pretty suprised if HP moved in this direction. From reading the ATA annual reports it is clear that the only aircraft they own are the L1011's and a Saab340 - everything else (ie the 757's and 738's) are leased - if HP wanted more 757's there are a few available on the market anyway (for purchase or lease) and if ATA went under all of its would be available through the leasors pretty quick. I think it is far more likely that HP might buy some of ATA's route authorities / slots / gates etc (if they can do that, I am not sure?)....

ATA looses money, has poor name recognition, and very few actual assetts plus as a LCC its likely they have little company loyalty from PAX who are more likely motivated by the lowest fare so the base wouldn't automatically transfer to a purchasing carrier - buying the whole of ATA would be a huge waste of money for any other US carrier - just look at AA/TWA - AA ended up basically getting rid of 95% of the TWA staff, routes and aircraft - would have been way cheaper just to wait till it folded and pick up the gates / routes and aircraft you wanted in the assett sale.

Of course there is no accounting for the stupid moves of management (in general not specifically HP's) so who knows.....

Could even be a FF alliance (now that ATA sort of has a program) or codeshares but even that seems a long bow....

INMO, HP is really interested in the TZ 753s which are ETOPS certified. Along with those, look for HP to show an interest in the Pleasant Hawaiian Vacation packages. As HP would have been in the process of getting their own 752s ETOPS certified within the next year, this could be a perfect fit. And since LAX has been announced as a focus city, the LAX-HNL routes would work well.
In regards to a hub in an eastern city, don't count on it. Once CMH was shut, the savings far outweighed the expense. I can't imagine Doug Parker allowing this to happen again.
Yes, this is ALL speculation. Will HP pull it off, stay tuned. As an employee, it would go to show that Doug means business and management does not intend to sit around and watch other LCCs grow while we just hold our own.
Sit tight, this could get interesting!

In regards to a hub in an eastern city, don't count on it. Once CMH was shut, the savings far outweighed the expense. I can't imagine Doug Parker allowing this to happen again.
The problem with the Columbus hub is that Columbus wasn't a big enough city to support a decent sized hub, and didn't have a great deal of O&D. Chicago on the other hand, has plenty to go around. It has a much better shot at working than Columbus ever did, simply because it was in such a small city as Columbus. It's a fine city and all, but it's not big enough for an airline to hub there.

I think it is far more likely that HP might buy some of ATA's route authorities / slots / gates etc

Couldn't agree more. Someone earlier posted the idea of a planned bankruptcy/merger, which would open up the leases, restructure ATA, and get put those leases on the market for HP to pick up cheaply.

I also agree with the post above about the MDW hub idea vs. CMH. I believe CMH did indeed fail because of its small size. It was chosen after the bigger mainline carriers had picked off the best midwest locations for hubbing (ORD, CLE, DTW, STL, CVG, and keep in mind that US had both MCI and IND as "mini-hubs" at the time). The fact that CMH was positioned to pick off some flyers from the northern reaches of Cincinatti and the southern suburbs of Cleveland might have been an asset for HP, but in reality it allowed Delta and Continental to undercut them with cheap fares of their own out of CMH on competing routes. And DAY became a decent low-fare alternative for both CMH and CVG with Airtran.

IMHO, if HP is doing anything with TZ, it will probably take the shape of a deep codeshare, the likes of CO/NW, with many routes and gates at MDW switching to TZ metal. HP will probably sublease 757s from TZ, especially the ETOPS certified birds, and take over operations of the LAX routes as well. TZ will probably keep the Florida and east coast runs out of MDW and all of the routes out of IND.

There's one other note about TZ from the local business press here in Indy. There's a giant state-of-the-art aircraft maintenance facility sitting idle at IND. It was built by the city and state for UA, which never fully utilized it as they promised they would. When UA went into bankruptcy, their obligations to Indy and Indiana were among the first things to go. So officials just now found a tenant, an aircraft maintenance contractor, who will start operations here shortly. Anyway, TZ is rumored to be playing hardball with the union representing the maintenance guys and the speculation is that they will outsource all the work on their entire fleet to this contractor. This maintenance center is truly state-of-the-art and the most modern one of its kind in the country. It could be a good place for HP to base maintenance of certain aircraft as well, or maybe all of them. Perhaps this is another synergy between TZ and HP that could be exploited for mutual gain.

Food for thought.


Boof

If ATA was interested in dumping MDW and reverting back to a Charter carrier, why are they spending cash converting all of the 737 and 757's to two class service?

INMO, HP is really interested in the TZ 753s which are ETOPS certified. Along with those, look for HP to show an interest in the Pleasant Hawaiian Vacation packages. As HP would have been in the process of getting their own 752s ETOPS certified within the next year, this could be a perfect fit. And since LAX has been announced as a focus city, the LAX-HNL routes would work well.
In regards to a hub in an eastern city, don't count on it. Once CMH was shut, the savings far outweighed the expense. I can't imagine Doug Parker allowing this to happen again.
Yes, this is ALL speculation. Will HP pull it off, stay tuned. As an employee, it would go to show that Doug means business and management does not intend to sit around and watch other LCCs grow while we just hold our own.
Sit tight, this could get interesting!

Very doubtful. If HP just wants ETOPS certified airplanes there is a cheaper and less risky way of getting those than by inheriting an entire airline. If this is the intent, your suggestion of why America West is interested in ATA would just plainly be a dumb business decision. The benefit of ATAs structure is the gate and route network into and out of Chicago Midway and the instant recognition and customer goodwill/loyalty/intangibles that come with that. But the price of this has to be right. The attractiveness of this deal would be the ability of America West to absorb the bulk of the airline with little trouble. Most of the planes are newer and could easily absorb into America West and the route system is not duplicative. Southwest and AirTran are interested in some gates more than anything else as most of the planes are not compatible with their planes and would introduce more compelixity with little to gain. The only real incompatible item to America West would be some of the very oldest planes and the Indianapolis side of the operation. The oldest planes could be left out of any sale, and in time the Indianapolis operations could be adjusted - or just left out. The real benefit is Midway and the route structure that could be obtained, allowing America West access to much of the country in a much better hub situation that it currently has in Phoenix or Las Vegas.

I just can't see HP taking over TZ. From the sounds of things, FL and HP are interested in some of the planes and routes. TZ would keep their old L1011 birds and revert to being a charter carrier doing military charters. FL may take the 738 birds and the 753s go to HP, along with some routes.
I stick with my comment on an east coast hub. From what Doug said in town hall meetings earlier this year, HP is not looking at an east coast hub. IMHO, this could change if US liquidates. I just can't see MDW being that location tho.
I agree that there is a better way to get ETOPS birds! But to pick up the birds AND the perfect routes at the same time?? It looks like a natural fit.
But then again, this industry is STC!

America West eyes ATA?
Discount carrier reportedly is in talks to acquire struggling ATA for an undisclosed price.

America West Airlines is in talks to acquire all or part of low-cost carrier ATA Airlines, according to a published report Thursday.

The Wall Street Journal, which spoke to people familiar with the matter, did not specify how much America West (Research) would pay for the debt-heavy, Indianapolis-based carrier, which is struggling to restructure its finances.

The report said that other airlines have shown interest in ATA (Research), whose market value is about $31 million, with AirTran Airways -- a rival low-cost air carrier -- having held preliminary talks with the air carrier.

The U.S. airline industry has lost more than $30 billion since the Sept. 11 attacks on New York and Washington. Network carriers such as UAL Corp.'s United and US Airways are operating under Chapter 11 bankruptcy protection, and No. 3 U.S. carrier Delta Air Lines (Research) is fighting to avoid bankruptcy.

Phone calls seeking comment from representatives for ATA and America West were not immediately returned early Thursday.

ATA really doesn't have much route competition with Southwest at MDW. In the midwest, IND is pretty much the only destination they share. TZ goes to MSP and a number of smaller Midwestern destinations (Des Moines, Dayton, etc.), WN to STL, MCI etc. To east coast destinations, TZ goes to DCA, LGA, and BOS, WN goes to BWI, ISP, and PVD. On the west coast, TZ goes to SFO, while WN goes to OAK. There are a few cities (particularly Florida) where they both fly, but for the most part, if you want to get to a major city or a small midwestern destination, you fly TZ. If you want to get to the secondary airport, you fly WN.
HP could have some success with a hub there.

As for IND, there is the Northwest and Southwest issue. Though it would be funny to see Northwest, Southwest, and AmericaWest all with hubs there... Just need to add a Midwest hub to be complete.

The big question I see, is "what could Hp do with TZ assets that TZ couldn't do itself?"

ATA already has some of the lowest costs in the industry, so there is not much fat to trim there. Though getting some of the assets at a fire-sale may help there.

ATA has been increadibly schizophrenic in its plans. Having a major frequent flier program with somewhat stable service could help. There could also be significant marketing opportunities. With TZ and UA having similar prices from PHX-SBN, a PHX flier would probably pick the more widley known UA. However, if it were Hp offering the flight, they may prefer to add more miles to thier FF account. A combination would also open up some new route possiblities, and allow for some reassignment. (Who wants to fly PHX-DSM on an RJ?)

Then there is the big training center in Chicago. Maybe they could get some good deal on that?

There's a giant state-of-the-art aircraft maintenance facility sitting idle at IND. It was built by the city and state for UA, which never fully utilized it as they promised they would. When UA went into bankruptcy, their obligations to Indy and Indiana were among the first things to go.

When UA was bidding for the facility, it struck me as odd that IND was in the running as UA had a minimal presence at IND.

A couple of months after the facility opened, I got to tour it. It is/was absolutely awesome. Anything an aircraft needed could be done there. All the UA folks were excited about the possibilities the facility had.

Again, revenues don't seem to be the problem at TZ, it's the end-loaded leases on all the new jets and the cost of fuel that seem to be eating them up.




Actually, you couldn't be further from the truth. Revenue IS the only problem for them. Sure, end loaded leases will add to their cost structure, which is VERY low atm, but if they can't maintain while paying pennies on the doallr, they won't be able to maintain when they are paying the doallr plus interest, plus baloon payments. As far as cost goes...few can beat them now, but you have mentioned the reason why their costs are low...new planes, little maintenence costs, and tiny payments.

I just can't see HP taking over TZ. From the sounds of things, FL and HP are interested in some of the planes and routes. TZ would keep their old L1011 birds and revert to being a charter carrier doing military charters. FL may take the 738 birds and the 753s go to HP, along with some routes.
I stick with my comment on an east coast hub. From what Doug said in town hall meetings earlier this year, HP is not looking at an east coast hub. IMHO, this could change if US liquidates. I just can't see MDW being that location tho.
I agree that there is a better way to get ETOPS birds! But to pick up the birds AND the perfect routes at the same time?? It looks like a natural fit.
But then again, this industry is STC!

MDW is not really east coast, but it is central USA and provides a pretty strong string of local traffic. One of the major issues with HP's future growth is that both Las Vegas and Phoenix are located in the southwestern part of the country, making connections via them not all that sensible unless you live in S. Cal or are going to S. Cal. MDW presents a much better opportunity to grow the system with business travelers - and it only will be picked up by HP if it makes sense and comes at a great cost.

With MDW HP could become a very dominant player for west coast traffic to DCA with the connections at MDW. HP could grow its east coast traffic much better and efficiently for Pacific Northwest destinations where it has always been silly to connect in Phoenix (i.e. Alaska, Seattle, Portland, Salt Lake) as well as pick up new connection points for east coasters where they can't really use HP via Phoenix today (i.e. Minneapolis, Milwaukiee, Kansas City, St. Louis, and so forth) I see long term that HP will dump Indianapolis. I see real potential...but it needs to really make good business sense.

The Hawaii flights don't really help America West unless it significantly grows its route structure to really support the flights. Hawaii flights are often money losers anyway.

The Hawaii flights don't really help America West unless it significantly grows its route structure to really support the flights. Hawaii flights are often money losers anyway.

I agree with everything you said except the above. Yes, Hawaii flts are notorious losers, but I'm not sure they are happy with HA as a codeshare partner. This would fill the need for FF members that want to travel to HNL.

HP tried the hub in CMH and it never was what was projected. Yes, there was eastbound traffic from there and one nonstop CMH-LAX but that was it. If HP goes up against WN in MDW, would/could HP make it work? You bet. And remember, this will never happen unless it makes financial sense.

It is interesting that TZ announced layoffs today and HP pushed back the date of the 3Q financial info release. hmmmmm...

I agree with everything you said except the above. Yes, Hawaii flts are notorious losers, but I'm not sure they are happy with HA as a codeshare partner. This would fill the need for FF members that want to travel to HNL.

HP tried the hub in CMH and it never was what was projected. Yes, there was eastbound traffic from there and one nonstop CMH-LAX but that was it. If HP goes up against WN in MDW, would/could HP make it work? You bet. And remember, this will never happen unless it makes financial sense.

It is interesting that TZ announced layoffs today and HP pushed back the date of the 3Q financial info release. hmmmmm...

I don't think it is relevant in the decision making process that HP is unhappy with HA as a partner. HP has a lack of partners period, so this issue is deeper than just HA.

HP competes against WN at Phoenix and Las Vegas, so why would MDW be different? What HP needs is a better mix of routes in and out of there to make it work as well as the local commuter connector to the smaller cities around Chicago.

My guess?! Rather than buy ATA outright, I think HP will do a code-share & frequent flyer partner partnership as well as the direct purchase of an equity interest (or loan) that is specifically secured by some of the 757 airplanes and some of the MDW gates. This way it decreases the exposure of ATA failing and essentially gives HP the first right of refusal.

In the end, who knows. But any decision to buy the airline is not going to be based upon the Hawaii flights, period.

I don't think it is relevant in the decision making process that HP is unhappy with HA as a partner. HP has a lack of partners period, so this issue is deeper than just HA.

Absolutely true. I don't see any domestic carrier that would codeshare with HP since they changed their pricing structure. Hence the reason for the CO divorce.
I don't think the only reason to go after parts of TZ is Hawaii routes. TZ also has the SFO/LAX-CUN routes that are well served with the 753 birds. In the package could come the TZ ETOPS certified planes that have greater range and capacity. Those planes coule be used for PHX-SJU or Belize City, both of which are strong rumors, Hawaii is an added bonus. Plus the Pleasant Hawaiian Holiday package would fit well with HP Vacations.
Reportedly, FL is interested in some of the aircraft and possibly some of the MDW gates.
I'm still not 100% sold on the MDW/IND part but if anyone could make it work, Parker and his team could. HP can't afford to sit around and see what happens with other LCCs.
Once again, all this is strictly rumor mill, water cooler talk.

I think what you have to remember is that ATA has been in a state of constant evolution for the last 30 years. One ATA flight does not adequately judge the entire operation despite your heuristic's desire to the contrary.

That said, I understand the psychology behind not wanting to give a second chance to something you've found to be less than satisfactory before. After all, you're the customer -- we merely serve you.

joe

Edited to delete the problem I had raised- I had confused ATA and Airtran, so this post did not pertain to this discussion.

So, my point here is that ATA seems to be a troubled airline, and I don’t see how HP can assimilate it into their culture and operations, when HP is having their own problems.

HP is having their own problems? What might those be? Most carriers are having problems right now but HP is in better shape than most of them.

PHX and fellow HP forum lurkers:
Firstly, I certainly understand where your emotions come from. Being stuck overnight, with all that brings, is never fun. Being treated in a lesser manner than you had expected can only add layers to that. Too often in this business we field complaints that really are caused by lack of education or understanding of the industry than any real failure. Your experience -- from what I know of it -- clearly does not fit in to that category. Unfortunately, sustained effort in dealing with these gripes, when combined with the anxiety, unease, and stress inherent with a job in this industry, make for less than ideal responses when a legitimate problem arises. I can't tell you how much of my day goes toward trying to separate those trying to game the system (and our company!) from those who legitimately have been disserviced.
By way of example, I checked in a lady this afternoon who clearly was inwardly irate and outwardly a ***** (pardon the word choice) when I explained to her that the two bags she wished to check were over our 50 lb. weight limit (76 and 54 lbs, respectively, to be exact). There was nothing I could do or say to calm her in the least. To her, the Faygo pop and potato chips she had stuffed in that huge and immensely heavy 22-style bag were the most important things she wished to have back with her in SFO. Alas, they were not important enough to pay our excess baggage fee (USD50). No problem. We worked to redistribute the weight under the TSA's ever-watchful eye. Carefully weighing what we removed and reweighing the bags when we were finished, we managed to comply with the rules and get things moving along. However, at the end of our contact, she came up to the counter and demanded from me -- in the most disrespectful and belittling tone of voice -- our Customer Relations department's contact information. I'd gone by the book, been understanding and empathetic, and she was still convinced I had it out for her because she wanted me to let her overweight bags slide. So be it; to be sure, there is a small essay awaiting the representative who gets her complain if they read her PNR. To you I say, be forewarned that's the type of character you're competing with when you approach a customer contact employee. Doubly so in this crazy business. It's really, really difficult to separate the wheat from the chaff, so to speak. Unfortunately, that factor influences the way you're treated when you have a legitimate issue.
To get (back) to your point of making the best out of crisis moments, I couldn't agree more. I'd just point out that spending cash at this point is not something airlines can afford to do -- even if done in the name of assuaging customers. When your (used generically) ticket doesn't cover the cost of moving mass from point A to B, it's difficult to whip out hotel vouchers or even offer offline travel accommodations. Ironically, it's often those who pay the least who demand the most. Travel vouchers are the only tangible weapon we have in our customer mollification and appreciation arsenal. And, as a personal point, I even use those sparingly lest customers become more accustomed to being "compensated" for every sub-optimal experience. I'll be sure to offer comforting words and a smile, however. To me, that's customer service. However, a very frequent response by the customer in question is "so there's nothing you can do for me?" That's very frustrating to hear after just having explained all the (non-monetary) things I will do or try to do to serve the customer's needs. Ad infinitum..
An exposition on the poor behaviors of customers would continue to go on at considerable length. I'll spare the effort and agree that the job of customer service personnel is to take such behavior in stride and act with as few in-kind feelings as possible. However, knowing that as an academic statement and holding back the river of emotional (and logical) response that becomes present in the face of a direct accusation or a luring display of emotion on the customer's part lead to two separate (but correlated) behaviors on the part of customer service personnel. Moral? As I'm sure you know, catch what you want with honey, and leave the vinegar in the kitchen for cooking.
BTW, how did your bag make the connection yet you did not? Not that it helped you any, but that's some job by the rampers!
I'm not sure how to explain (let alone rebut) your statistical evidence, but I am sorry for your poor experiences. There has never been a time when it is more important to "want your customers" than now. If the ATA/HP deal does blossom, we certainly have our work cutout -- as you and your story aptly exemplify.
There are many people at ATA who are competent and do care. If you ever need to come the way of Toledo (hold the jokes, please), be sure to let me know.
Posts like yours are the reason I browse and contribute in-kind to FT.
Best,
joe

HP is having their own problems? What might those be? Most carriers are having problems right now but HP is in better shape than most of them.

HP has been having on time performance problems as of August (September was better) but the biggest problem is that they are now projecting “significant losses” for the next 2 quarters. In my experience, when you are losing money is not the time to make an acquisition. Merging 2 companies is expensive and short term cash flow will be real bad even under normal conditions in a healthy business.

For the record, I am obviously PHX based, and I support HP as much as I can with my business. I have been Plat for many years, although this year I am Gold and will be so for next year. I am gold on Continental and will be gold with them next year. When I can, I chose HP over Continental.

My fear on the acquisition is that the risks are too high to take on ATA unless they simply acquire just some select pieces or routes. To take on the whole company can bring HP down, and I want them to survive.

BTW, how did your bag make the connection yet you did not? Not that it helped you any, but that's some job by the rampers!


Joe, thank you for your post and your perspectives.

Edited by PHXTraveler: Turns out I have ATA and Airtran confused here. I have no beef with ATA, this experience was with Airtran. My appoligies to all. This and my previous posts were about Airtran.

We've heard nothing from these rumors now for a week or so....does this mean this whole deal is a no-go....?

We've heard nothing from these rumors now for a week or so....does this mean this whole deal is a no-go....?
ATA did just have a press release about their dire cash situation. I can think of a few posibilities:

1) ATA is playing up its wow to make it easier for HP to come in and be a 'savior' (by buying off some assets, or the whole thing)
2) HP was looking at a TZ code share. However, with the poor financial condition, they are having second thoughts.
3) TZ is trying to trim additional fat before consumating the deal
4) Perhaps most likely - TZ is going around in circles trying some totally different strategy at the moment. A few months ago it was selling gates at MDW to WN. Now a merger with HP. What next?

Press Release (http://us.rd.yahoo.com/mymod/hdln/z//sty/SIG=11ljtr8d1/*http%3A//biz.yahoo.com/prnews/041026/nytu254_1.html)

AirTran Airways, a subsidiary of AirTran Holdings, announced today that the airline has agreed, subject to certain conditions, to assume the Chicago Midway Airport gate leases and acquire certain other related assets including takeoff and landing slots at New York's LaGuardia and Washington's Ronald Reagan National airports of ATA Airlines.

AirTran ... intends to enter into a marketing agreement with ATA Airlines which is currently contemplated to include a code-share, frequent traveler program and other programs to benefit both carriers' customers. In conjunction with the code-share arrangement, the carriers, also intend to enter into an agreement to outsource certain flying during the transition of service from ATA Airlines to AirTran Airways at Chicago's Midway Airport.

No word about ATA's planes.

Guess this puts the ATA/HP merger rumors to rest...

http://biz.yahoo.com/prnews/041026/nytu254_1.html

No word about ATA's planes.

..... because ATA has no control over "it's" aircraft since they are all leased and it will be up to the leasors to decide what will happen with them in the future.

I wonder what this will mean to the Chicago Express computer operation running from MDW -

HP could come up with a counter offer, or just wait until some of the 757's leases are canceled and try to lease them from the lessors. The biggest surprise is that ATA is only giving up on MDW and will keep their hawaii ops. This reduces their need for 737's but the remaining hawaiian ops will still require some 757's. There still is hope for some sort of expansion but ATA seems to prefer Airtran but they could be persuaded by the right amount of cash. :D

F**k AirTran. :mad:

I'm pretty pissed that HP didn't get the airline(initially). I'm hoping CEO Parker has another ace up his sleeve. I hope the judge can see that FL is just gutting the company versus HP's proposal which would save way more jobs.


If I recall correctly HP has the authority to build up another $500 million through equity sales. Can anyone confirm this?

There was NO way possible that Doug Parker would jeopardize HP, the employees, shareholders or creditors for TZ. I still think that HP will pick at the carcass that is left of TZ, namely the 753 birds and some of the routes to Hawaii.
I just didn't see a MDW hub in the cards, not with this CEO. Just sit tight, it ain't over!

F**k AirTran. :mad:

I'm pretty pissed that HP didn't get the airline

Oh my god, throwing a temper tantrum over the failed acquisition of ATA? Get real.

Another glimmer of hope for HP
America West still may bid for troubled ATA (http://www.usatoday.com/travel/news/2004-10-28-amwest-ata_x.htm)
Maybe Doug Parker still has an ace up his sleeve after all. ;)

My Fav quote from that article is:

"Representatives of the unions representing ATA flight attendants and aircraft mechanics have issued statements expressing concerns over the bankruptcy filing and its impact on jobs."


Perhaps if they had been more concerned BEFORE the filing!!!??!!!


As a GRR based company, we use TZ often so I have watched this thread with interest - I am nor sure we care all that much who wins this, either way actually helps our market.

I am curious however why people on this thread have been so obsessed with HI service for HP - I understand the legacy component, but why does anyone think that HI is a core expansion market - there are a zillion places that HP should build out first since markets do not exist just for the benefit of free tickets. Am I not understanding some unique HP dynamic here??

I am curious however why people on this thread have been so obsessed with HI service for HP - I understand the legacy component, but why does anyone think that HI is a core expansion market - there are a zillion places that HP should build out first since markets do not exist just for the benefit of free tickets. Am I not understanding some unique HP dynamic here??

I really don't think "obsess" would be the correct word. The comments have been based on facts. HI has been rumored as an expansion market with HP for the past year. As the process to get some of the 752 birds ETOPS certified is starting in November 2004, HI seems to have some relevance. Other rumored cities for expansion have been SJU and BZE.
Once ETOPS certification has taken place, the 752 birds will be able to cut across the Gulf to get to CUN and Florida, saving about 45 minutes to an hour off the flight PHX-MIA (this from an A320 captain) and 30-45 minutes on PHX-CUN...not to mention the fuel savings.
Back to the HI comment--HP has not been happy with the codeshare arrangment with HA. It would seem logical that HP needs to expand (within reason following a $47.1 million loss in Q3) but where?
Doug has repeatedly said that he will NOT jeopardize HP with any expansion. HP still MAY have something to say in the final process and since FL does not want the 753 birds from TZ, what happens to them? TZ will use their L1011s for the charter work, FL takes some of the 738s and HP can grab a few of the 753s. Since those are already ETOPS certified and use the same engines as the HP 752s, they fit nicely in the HP stable.
Like I said, this is NOT over. Sit back, and keep your seat belt fastened. :D

TZ will use their L1011s for the charter work, FL takes some of the 738s and HP can grab a few of the 753s. Since those are already ETOPS certified and use the same engines as the HP 752s, they fit nicely in the HP stable.


Just remember that not only does the metal need to be ETOPS certified, but HP's opps also need to be ETOPS certified.

My Fav quote from that article is:
I am curious however why people on this thread have been so obsessed with HI service for HP - I understand the legacy component, but why does anyone think that HI is a core expansion market - there are a zillion places that HP should build out first since markets do not exist just for the benefit of free tickets. Am I not understanding some unique HP dynamic here??

I couldn't agree more. Some people here have this fixation with HP serving Hawaii so they can redeem their miles go there OR get upgraded for free onb flights. I am not so sure HP itself is so unhappy with HA or it is a few people here wanting something free (upgrades and mile redemption) that they can't get under the codeshare deal.

Hawaii is a loser market for most major airlines. There are few, if any, full fare passengers as it is a leisure destination planned out in advance. Many of the tickets sell through consolidators as well. The attraction for the majors to serve Hawaii is providing a goodwill service to their business passengers and hoping to edge out some profit with a full, but efficient staff under some kind of economy of scale theory. HP doesn't have a wide enough domestic market to support this. If HP wanted Hawaii, why does it have to buy ATA to get there? It can acquire its own jets, certified, to fly over the Pacific at a much cheaper cost than what it would cost to buy an entire airline. HP has never done this!

Also, lets not forget the fact that HP's Phoenix gateway is a weak market for local Phoenix traffic to Hawaii. Phoenix weather is already very decent most of the year. Contrast this with Seattle, which is loaded with Hawaii flights on Hawaiian, NWA, and ATA, and is a smaller market, but the weather supports wanting to get out of town to Hawaii. Even Portland has two non-stop Hawaii flights on Hawaiian and one on NWA to start in a few weeks...and Portland is an incredibly smaller market than Phoenix and yet has more Hawaii flights, even with the codeshare possibilities HP presents. I do take note of Hawaiian's new 2:45 am flight to Honolulu from Las Vegas...but let's remember, Las Vegas is one of the top destinations for Hawaii residents. This does add another dimension to codeshares, but now Las Vegas even has more flights to Hawaii than Phoenix does, go figure.

If HP was serious on Hawaii, you'd see it already.

Now I do believe HP made a bid for ATA, and if it came with Hawaii flights then they'd be absorbed, at least for the time being...but it didn't work out. Take note that Air Tran didn't want those flights - they got the good assets (MDW, DCA, JFK gates) The rest of it is basically worthless. How will ATA survive with its major hub of Indianapolis?

As an HP employee, my "6 sense" tells me HP/ATA will not merge unless HP can do it on the cheap. HP just lost 47 million in its 3rd qt. HP is expecting another big loss in the final quarter. Overall, HP will end 2004 with a loss. HP is very tight with their money so a merger would be a major gamble for them. HP is only interested in ATA's aircraft. Much of ATA's aircraft is equiped to fly over water so this will be a major plus. HP most likely will eliminate ATA's IND hub. HP's CMH hub never worked for them so I imagine IND will not either. Also, there is a lot of cut throat competition within the midwest, east coast, Florida markets especially with Southwest, AirTran, Spirit, Jetblue, etc that I do not think HP wants to try to compete. I think HP will keep ATA's larger fleet and fly to some possible Carribean routes like SJU from PHX or some South American markets. Since I have been employed with HP for more than 6 years, HP has never expressed any real interest in Hawaii routes. I remember a senior management telling employees at a meeting that Hawaii routes are difficult to make profitable. Since HP stopped flying to HNL over 10 years ago, they have dumped all their Hawaii bookings on codeshare partners. Well, I could always be wrong so I guess we can only see what happens.

Hey guys,
I don't disagree with ANYTHING you have said--Hawaii routes are not profitable. In the BIG picture, TZ's Pleasant Hawaiian Vacations contract would be something HP would like to get their hands on. As HP Vacations expands and becomes a much more important part of the HP umbrella, this would be something to look into, which I think is part of the reason TZ may look attractive. Understood that HP ops have to be certified (as well as the birds), this process is due to start in November 2004.
I agree that FL didn't want the HI routes...they are based in ATL, it doesn't make sense financially for them.

HP is only interested in ATA's aircraft.

I doubt this very much. As I've said in other posts, TZ has some routes that would be extrmely desireable to HP. LAX/SFO-CUN(these alone would greatly benefit HP) and MDW-CUN/CZM/SJU/PUJ/PVR/ZIH are nothing to sneeze at.

or some South American markets.

Won't happen. Even with the 757's, everything outside of extreme northern S. America is out of reach.

"America West Chief Executive Doug Parker said at the conference that ATA's Midway operations would give his airline a mid-continent hub in addition to its main airport operations in Phoenix and Las Vegas. The Phoenix-based carrier, a unit of America West Holdings Corp., also is interested in ATA's Boeing Co. 757 aircraft, he said."

http://www.chicagotribune.com/business/chi-041109ata,1,3122481.story?coll=chi-business-hed

Here is another report on possible future bid.

America West says it might bid for all of ATA (http://www.indystar.com/articles/1/193525-8551-102.html)

It seems that things are getting muddled with Airtran wanting only a portion of the airline but wants all the gates in midway. Mayor Daley has come out as saying that he has the call over who the gates end up with :rolleyes: , meanwhile Southwest has categorically stated that expansion at midway IS a key goal for 2005. Rumors are that Airtran may be tasting sour grapes and just avoid the whole mess and withdraw their offer. ATA pilots are favoring the America West bid because supposedly it would let them keep their jobs that would be lost in the Airtran offer.

Maybe America West is waiting for this to become a 3 way tug of war and ride in as the white knight. :)

P.S. The bankruptcy court has set a deadline of NOV. 23 for bids. At least this torture will end soon and we will know who wins. :D

There is an extensive existing thread on the ATA/HP potential, plus another single post thread, so I'm going to use the moderator tools to consolidate all of these into one thread.

AZ Travels the World
Moderator

This was in the Indy Star today. Looks like HP isn't done with TZ quite yet...Like I said awhile ago, sit tight!


AirTran rivals say they'll bid on ATA
America West, Southwest lawyers tell court that offers for all or part of bankrupt carrier are forthcoming.


AirTran Airways got the official word Thursday that rival carriers will try to outbid it for bankrupt ATA Airlines' Chicago Midway hub.

Lawyers for America West Airlines and Southwest Airlines told a bankruptcy judge in Indianapolis the companies intend to make separate bids for part or all of ATA.

ATA probably won't see a bidding war for the prime real estate it leases at Midway International Airport, one airline executive said.

However, creditors would welcome any deal that eked out more cash than AirTran's $89.9 million proposal.

Hit by fare wars and record fuel prices, Indianapolis-based ATA filed for Chapter 11 bankruptcy Oct. 26. On the same day it revealed a deal taking shape with AirTran for the sale of the rights to the 14 Midway gates and three gates at New York LaGuardia and Reagan Washington.

ATA, which employs 7,700, including 2,300 in Indianapolis, wants to use cash from the sale to regroup as a smaller airline. It would focus on Indianapolis regional service and regular long-haul flights to Hawaii, Los Angeles, San Francisco, Mexico and the Caribbean.

Because a company in bankruptcy generally must open the door to all potential acquirers, ATA can't complete a deal with Florida-based AirTran without first putting itself up for sale under the court's auspices.

In Thursday's hearing, U.S. Bankruptcy Judge Basil Lorch III set Dec. 10 as the deadline for interested buyers to submit bids. The bids will be opened and reviewed Dec. 13 at the Indianapolis office of Baker & Daniels, ATA's attorney. Lorch will pick a winning bid Dec. 16.

ATA is on a tight schedule to reach a deal before its cash drain resumes after Dec. 23. That's when ATA again must make jet airliner lease payments postponed by the bankruptcy filing.

As it started to run short of cash in June, ATA executives contacted 10 other airlines to ask about a merger or sale of the prized Midway gates. Only AirTran, an Orlando carrier unrelated to ATA, responded with an offer, said Gilbert Viets, ATA's chief restructuring officer, in an interview.

That led to an agreement reached Tuesday with AirTran for an $89.9 million deal to be submitted to the bankruptcy court as part of the ATA auction process.

In Thursday's hearing, lawyers for creditors and ATA spent most of the nearly three-hour session wrangling about the pay AirTran should receive for its time in case its bid is rejected Dec. 16.

AirTran asked for a $3.75 million breakup fee if its offer is rejected. ATA would pay the fee. Such fees are considered common in bankruptcy auctions.

Lorch finally cut the debate short, recommending a $3 million fee, which AirTran accepted.

During the debate, America West and Southwest declared they were interested in bidding.

It happened after an ATA attorney said the $3.75 million was fair because only AirTran had made an effort to negotiate with ATA.

"I don't want to lose this buyer," said ATA attorney James Carr.

Lawyers separately representing Southwest and America West immediately responded, pointing out their airlines were considering making bids.

Elise Eberwein, an America West vice president, in a telephone interview said she doubted a bidding war would erupt and ratchet the Midway hub's price beyond its market value at a time when most airlines are short on cash.

"This business is ego-driven. You hear a lot of trash talk," Eberwein said. "But at the end of the day, no airline is stupid. No one is going to pursue something just to pursue it. It has to make economic sense."

ATA shares closed at $1.15, down 5 cents.


Added by Moderator: There is an extensive thread dedicated to this topic. Rather than start a new one, I'm going to merge this post/thread into the existing one.