Southwest spokesman says airline `confident' in its bid for ATA

Tuesday, December 14th 2004, 10:39 am
By: News On 6

INDIANAPOLIS (AP) _ Southwest Airlines said Thursday that ATA Airlines had accepted its bid for the bankrupt carrier's operations at Chicago's Midway International Airport.

``We are very excited to be named as the winning bidder. 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, chief executive of Dallas-based Southwest.

Southwest said it expected U.S. Bankruptcy Court Judge Basil Lorch III to formally approve its bid on Tuesday. Under the deal, Southwest would pay $80 million cash at closing. Half of that would go to acquire ATA's leases on six gates and an aircraft maintenance hangar at Midway, while the remainder would be financing to help the struggling airline stay in business.

Southwest would invest $30 million in ATA in the form of notes it could exchange later for about 27 percent of ATA stock once ATA emerges from bankruptcy.

The airlines also planned a code-sharing program that would allow passengers to buy one ticket and fly on either carrier.

AirTran Airways conceded that its own attempt to acquire ATA's gates at Midway had failed. ATA and Orlando, Fla.-based AirTran this fall negotiated an $89.3 million deal for all 14 of ATA's Midway gates.

``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,'' AirTran chief executive Joe Leonard said in a written statement Thursday.

Lenders and creditors have spent days reviewing the bids placed by Southwest and AirTran for ATA's Midway operations. Southwest is Midway's largest operator, with 19 gates.

ATA is the nation's 10th-largest U.S. carrier based on revenue passenger miles and currently has 7,700 employees, including some 2,500 in Indianapolis. It also is the largest North American operator of commercial and military charters.