Chicago Tribune Article w/emphasis added for those wondering about the landing rights at LGA and DCA.
Southwest wins bid for more Midway gates
By Mark Skertic, Tribune staff reporter
December 16, 2004, 4:20 PM CST
Southwest Airlines will gain control over more than half the gates at Midway Airport, while ATA Airlines will scale back operations there, under a $117 million deal that will enable ATA to emerge from bankruptcy protection.
Passengers who have grown accustomed to flying ATA will find fewer flights from Midway, and some routes may be eliminated. But that may be balanced by Southwest expanding its offerings in Chicago. The deal announced today gives Southwest part ownership in ATA. It allows Southwest to significantly increase its presence here — expanding its capacity by a third &151; and prevent another rival from moving in and taking over all the gates ATA has been using at Midway.
The bid includes a commitment to connect Southwest passengers with the restructured airline.
Indianapolis-based ATA will continue to have a large Chicago presence, and the airline will keep its landing rights in New York and Washington, D.C., two valuable assets it had earlier expected to lose in the bankruptcy.
The agreement between the two low-cost carriers must still be approved by a bankruptcy judge and the city of Chicago, which owns the gates. Southwest expects the bankruptcy court will approve the plan Tuesday and the deal will close early next year.
"This allows Southwest to grow our Chicago presence, and it will provide ATA and its employees and stakeholders with much needed liquidity," said Gary Kelly, Southwest chief executive, in a prepared statement. "The real winners here, of course, are the customers traveling in and out of Chicago Midway Airport, who will get a lot of low-fare flights to many destinations from both airlines."
Southwest will pay $40 million in cash and $40 million in financing for ATA assets, and buy $30 million in ATA preferred stock. Southwest also will guarantee a $7 million payment to the City of Chicago for a construction loan.
AirTran Airways today acknowledged that it had lost its competing bid to take over Midway gate leases held by ATA.
"We saw Midway Airport expansion as a good opportunity, but we were not going to overpay for those assets. We congratulate the parties on the conclusion of the auction," said Joe Leonard, AirTran chairman and chief executive, in a statement.
Ultimately, the deal could give Southwest control of three of every four gates at Midway, including ATA's remaining eight gates. Dallas-based Southwest now controls 19 of the 43 Midway gates.
AirTran had bid $90 million in October, on the same day ATA filed for bankruptcy.
Midway gates are owned by the City of Chicago, which has signaled that it would not object to Southwest's plans to expand at the airport.
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