Now-Leaner ATA Sets Sights On Its Future

If its stable financial condition improves, the Indianapolis-based company might sell stock to the public within two years.


Mar. 10 -- While bankrupt Delta, Northwest and United grapple with how to turn their proud and profitless carriers into moneymakers again, ATA Airlines has quietly gone bankrupt, retrenched and gone on.

Once a leading Indianapolis employer, ATA last week emerged from a 16-month bankruptcy reorganization recast as a leaner company reliant on Pentagon charters.

If its stable financial condition improves, the Indianapolis-based company might sell stock to the public within two years, ATA chief John Denison said in his first interview outlining the new course since leaving bankruptcy Feb. 28.

Raising cash on the open stock market -- "going public," in other words -- would represent a remarkable turnaround for a company staggered by $1.5 billion in losses since 2000.

But in bankruptcy ATA has been busy. It shed jobs, planes, its unprofitable Chicago Midway hub and formed a business alliance allowing it to carry passengers for Southwest Airlines.

"I do think this is a viable plan for ATA," said aviation analyst Bill Swelbar, president of Eclat Consulting of Reston, Va., which analyzed ATA finances for the airline's flight attendants just before the bankruptcy. "They have access to places and equipment to fly to places Southwest can't get to."

Scaled today at half its pre-bankruptcy size, privately owned ATA is prepared to earn the profits necessary to support a public stock sale, Denison said.

"We fully expect to be that in the months and years ahead," said Denison, the airline's chief executive officer, about going public.

First, though, ATA must earn a profit. Last week, the carrier reported a $455.5 million loss for 2005, including $370 million in reorganization costs.

Denison concedes tough cost controls must remain in place. He has shown he doesn't flinch from deep cuts. While bigger bankrupt carriers grasped for strategies, Denison quickly scaled ATA down to 3,300 employees.

ATA pared its jet fleet to 30 airliners from 64, won employee contract concessions and cut nearly 4,800 jobs, almost 1,000 of them in Indianapolis, where ATA today employs 1,300.

The chastened carrier shaved $100 million off its annual fuel bill, $94 million off aircraft rentals, $87 million off payroll, $23 million off advertising, and $10 million off crew travel. In all, ATA trimmed its annual operating expenses by $460 million, to $1.17 billion last year. Operating revenue totaled $1.08 billion, a deficit of $90,000.

Matlin Patterson Global Opportunities Partners, the Manhattan investor now in control of ATA, saw the savings and last fall stepped in. ATA left bankruptcy last week cushioned by Matlin's new $95 million capital infusion.

Now, ATA's leaders are contemplating selling shares to the public in 12 to 24 months. That could compensate Matlin, which buys and sells distressed firms. The Matlin group usually holds an investment three to five years, Denison said.

Selling shares to the public also would arm ATA with an undetermined amount of new capital. That could finance still sketchy plans to bring in 20 new jetliners if business increases on regular passenger routes.

Today, ATA's jets are spread in two groups. Only 18 fly scheduled routes, chiefly focused on leisure travel between Western cities and Hawaii in the alliance with Southwest. A dozen are allocated to what is becoming the lead income source, Pentagon charters.

Ferrying U.S. troops around the globe is an ATA tradition, but a long way from founder J. George Mikelsons' audacious plan. He and John Tague, ATA's president in the late 1990s, launched the Indiana business into the ranks of major national airlines.

ATA's rapid 2001 expansion brought in a new fleet of Boeing 737s and ballooning airliner lease payments. Then when fare wars and rising fuel prices ate profits, ATA filed for protection from creditors on Oct. 26, 2004.

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