I'd like to point out that ATA filed a 8-K denying any plans to leave Midway at this stage. That's a pretty strong statement. I definitely think it's premature to write off ATA.
It's probably no coincidence that these rumors leaked at a time when the pilots prepare for another round of concessionary talks, the flight attendants are getting ready for a second vote on concessions, and the mechanics are threatening with strike in order to push through a contract that would in all likelihood significantly increase ATA's maintenance expenses.
I would expect the pilots to agree to further concessions, and I would expect the flight attendants to do the same thing, when the revised proposal comes up for a vote again.
I am not so sure what the mechanics are up to. My understanding is that the current controversy between manangement and AMFA is about protective covenants which would prevent the company from outsourcing certain maintenance works. My hunch is that the company will not budge on this issue. Whether or not that will result in a strike remains to be seen. In any case the company could not weather a strike, not even the strong rumor of a looming strike.
Aside from that, one has to ask if that worst-case scenario would really be so bad for ATA.
I would certainly disagree with the notion that the sale of gates at MDW as well as aircraft lease cancellations would automatically mean the end for ATA as a scheduled carrier.
For one, it looks like ATA still plans to go ahead with the scheduled transatlantic flights next year.
Midway is without doubt a nice airport, but is it a good hub for ATA? It's certainly not an airport that could be used as a transatlantic gateway because of runway limitations. ATA has still huge gaps in its route system, but on the other hand space in general is also limited at Midway, and it could never grow to become a full-blown Midwestern hub. It would absolutely make sense for ATA to close or significantly shrink Midway and open shop somewhere else. Can ATA sell something that they don't own? Absolutely not. Can they raise cash from something they don't own? Oh yes! And that's all that matters. I imagine that ATA has a clause in its leases with the Chicago Airport Authority that would allow sub-leasing the gates. And if the sublessee is willing to pay a substantial amount of the lease to ATA upfront - who could possibly care? I would not even expect ATA to give up all the gates, but rather 10 or 11 out of 14. The remainder could be used for poin-to-point flights between Chicago and the biggest markets on the East and West Coast (BOS, NYC, DCA, SFO, LAX).
Personally, I think that AirTran would be the ideal candidate to establish a larger presence at Midway. They could use their B717s to serve markets that are to big for ATA's B737-800. (Incidentally, in the German press AirTran has also been rumored to provide domestic feeder service for ATA's planned transatlantic flights.)
This brings us to the other issue: ATA's B737 fleet. Without doubt these are fantastic flying machines. Aside from a beautiful livery, they have the strongest engines available for this type, cockpits fitted with HUDs, very appealing cabin interior. One can certainly tell that they were ordered by a plane lover
. The only problem is those leases cost ATA an arm and a leg. And on many routes these birds are just overkill, especially if ATA decided to shift the bulk of its operations away from Midway. So, if ATA were unable to negotiate lower lease rates and had to file Ch 11, it would not be totally unreasonable to have the B737NG leases canceled and substitute them with B737 classic. They are readily available and cost only a fraction of the B737NG.
An another alternative would be to file Ch 11 with DIP in place (I really think that AA and TWA set the new standard for mergers in this industry). I could see either AirTran or America West pull this one off. Both would in all likelihood only be interested in the B757s and ATA's long-haul operation.
In any case, it looks to me that JGM has plenty of options here. However, for the time being I am quite optimistic that ATA will make it through these rough times more or less unscathed. ATA was able to negotiate lower rates for the B757s - I don't see, why they shouldn't be able to do the same for the -37s. Employees are in earnest negotiations with the company. Crude price is dropping, and let's not forget that ATA burns cash at a much lower rate than the competition ...
