jimntx said:
According to what I read of the AWA pull-out, the lessor is sending the a/c to some airline in Asia that is willing pay more for the a/c than any U.S. airline. They are not available to SW either.
Gary Kelly has recorded an employee news line saying SWA is
NOT interested in ATA's -800's. Also, if the money from either offer is used to pay the leases on ATA's aircraft, they'd be current and not open to repossesion, right??
The mayor of Chicago has gone on record as saying that he will not approve any airline taking over ATA's gates without also taking all of ATA's Chicago-based employees. It all depends upon how the gate leases are written. At some airports, the airline can buy/sell/trade gates as if they owned them. At others, if an airline fails to utilize its gates, they to revert to the airport authority.
Either way, the city of Chicago could tie up the deal in court for a long time. Remember being the owner of the physical gates makes the city of Chicago a
secured creditor in the BK court--a standing that carries a lot of weight.
[post="228876"][/post]
Today's Chicago Tribune says something entirely different about Chicago's position.
Southwest's bid for ATA makes it Midway power
By Mark Skertic, Tribune staff reporter
December 15, 2004
Southwest Airlines' offer to rescue ATA Airlines from bankruptcy ultimately could give Southwest control of three of every four gates at Midway Airport, say sources familiar with the deal.
Southwest's $117 million bid for Indianapolis-based ATA is a combination of $40 million in cash, a $47 million loan and $30 million in equity in the restructured company.
Sources said Southwest would gain a 35 percent stake in ATA and control over who is named to top management.
Details of Southwest's offer, which was submitted Friday, have not been made public. But according to sources familiar with the deal, Southwest would take over six of Midway's gates and allow ATA to continue using the other eight.
In addition, Southwest wants ATA to downsize its fleet and reduce its labor costs by 15 percent to 20 percent.
And if ATA defaults on its loan, Southwest wants first right to all the gates at Midway that ATA controls, according to a source familiar with the bankruptcy talks under way this week in Indianapolis. Dallas-based Southwest now controls 19 of the 43 Midway gates.
Southwest and another low-cost airline, Orlando-based AirTran Airways, have made offers for ATA, which filed for Chapter 11 protection in October. This week, ATA attorneys have been meeting in closed-door sessions with those owed money by the airline and representatives of Southwest and AirTran.
ATA's representatives are scheduled to present the best offer for the airline to the bankruptcy court on Thursday.
On Tuesday, representatives of AirTran and Southwest declined to characterize this week's negotiations. Although both have made bids for ATA, they are allowed to modify their offers during the talks with ATA's lawyers.
AirTran's $90 million bid was presented in October, on the same day ATA filed for bankruptcy. In return it would receive the rights to all of ATA's gates at Midway, as well as landing rights at New York's LaGuardia and Washington's Reagan National Airports.
The AirTran offer would push ATA almost completely out of Chicago, though it would continue as a low-cost airline operating out of Indianapolis. AirTran would gain a major presence in the Midwest overnight.
Midway Airport gates are owned by the City of Chicago, which must approve any transfer of control. The city would not object to a plan that would give Southwest a part ownership of its next largest competitor at Midway, said Annette Martinez, city aviation spokeswoman.
Nor would the city argue against a plan that eventually could allow Southwest to assume control over all of the gates ATA occupies.
"At this point, if Southwest is writing that in their proposal, it's a way to protect their investment," Martinez said. "We don't see it as a way to go through the back door and take over every single gate there is at Midway Airport. It's simply a protection of their investment."
Southwest is the dominant carrier at Dallas' Love Field, but that has not hurt competition in the area, said Ray Neidl, an aviation analyst with Calyon Securities.
As in Dallas, prices in the Chicago aviation market are influenced by the presence of two large airports, he said.
Southwest, by most measures the most successful low-cost carrier in the nation, is an asset that the city is probably trying to protect, Neidl said.
"Do you want a strong, powerful Southwest," Neidl said, "or do you want competition between two at the risk of alienating Southwest?"
Copyright © 2004, Chicago Tribune
