Ata Running Out Of Cash

[jimntx]

Could it be that ATA might go back to solid charter operation?

[post="172629"][/post]​

The article in the Financial Times opined that going back to strictly charter was probably what ATA has in mind. I don't know if their charter business is being "hurt" by competitors. I have a friend who flies for them, and he has done two overseas DOD charters within the last month and a couple of domestic DOD trips (where he and the rest of his crew met the plane at first port in U.S. at Bangor, ME then flew it the rest of the way to the U.S. destination(s)).

I really feel for all the people at ATA. As my friend just started flying for them in March, he will most likely lose his job in any cutback.

 

[coolflyingfool]

People talk of the sale of ATA's assets in MDW like they own something. They don't. They have the lease on a bunch of gates and that is it. Whoever takes up the leases on the gates is going to need a bunch of planes also. Aren't all but 3 or 4 of ATA's planes leased?

 

[LiveInAHotel]

Just Plane Crazy,

I don't even think ATA has their L1011's anymore. I think they were replaced by the 757-300. The 757-300 can't fly to all of the destinations the government would need them for. It doesn't have the range of the L1011 or MD-11. ATA's days are numbered and that is very sad.

 

[jimntx]

People talk of the sale of ATA's assets in MDW like they own something. They don't. They have the lease on a bunch of gates and that is it. Whoever takes up the leases on the gates is going to need a bunch of planes also. Aren't all but 3 or 4 of ATA's planes leased?

[post="172659"][/post]​

If you will go back and actually read the article link to the Financial Times you will find that the investment bank is charged with looking for a buyer "for the gate leases" at MDW and someone to which to "transfer the leases on all 30 737-800s."

 

[jimntx]

Just Plane Crazy,

I don't even think ATA has their L1011's anymore. I think they were replaced by the 757-300. The 757-300 can't fly to all of the destinations the government would need them for. It doesn't have the range of the L1011 or MD-11. ATA's days are numbered and that is very sad.

[post="172666"][/post]​

You are not correct, they do have the L1011s. My friend was just working one of their L1011s on his two overseas DOD charters. Stops included Shannon, Ireland, Bahrain, Bucharest, London, and Bangor, Me.

 

[Just Plane Crazy]

According to the records I could access here is the ATA fleet list:

B727-200 1 (1 parked)
B737-800 32 [32 leased]
B757-200 16 (1 parked) [14 leased]
B757-300 12 [12 leased]
L1011 7 (5 parked) [1 leased]
L1011-500 5 (1 parked)

Orders
B737-800 9

 

[whlinder]

Perhaps AS will get some 738s sooner than expected thanks to ATA...

 

[coolflyingfool]

If ATA has hope of surviving, it appears they will be a vastly changed airline when the transformation is over. I think that the scheduled service will be drastically smaller and their charter operation will be larger. For mainline right now, I can't believe they serve MDW-LAS. With SWA, AWA, Spirit, Ted, and AA all serving the Chicago market nonstop, there must be too much capacity on this route. Both SWA and Ted have 9 nonstops each.

 

[funguy2]

If ATA has hope of surviving, it appears they will be a vastly changed airline when the transformation is over. I think that the scheduled service will be drastically smaller and their charter operation will be larger. For mainline right now, I can't believe they serve MDW-LAS. With SWA, AWA, Spirit, Ted, and AA all serving the Chicago market nonstop, there must be too much capacity on this route. Both SWA and Ted have 9 nonstops each.

[post="172759"][/post]​

The other side of that equation is that if you are going to have a hub in Chicago, you have to be in the markets where people travel... And judging by the amount of competition on Chicago-Las Vegas, I would have to assume a fair number of people fly the route.

I would be more concerned if they DID NOT fly MDW-LAS... Because I would be thinking "why can't ATA make MDW-LAS work?" I would think the same thing for any other major city, and in fact I think ATA should probably be flying to ATL and DTW from MDW... These are rather "basic" spokes for a decent sized hub.

 

[coolflyingfool]

I was only trying to make a point with the fact that there are 30 non-stops a day between LAS-Chicago, maybe they should look elsewhere. Say maybe a PDX, SMF, SJC, or a SAN. Just a city with far less non-stops where fares might be more stable and higher. Just my thoughts.......

 

[Ch. 12]

I was only trying to make a point with the fact that there are 30 non-stops a day between LAS-Chicago, maybe they should look elsewhere. Say maybe a PDX, SMF, SJC, or a SAN. Just a city with far less non-stops where fares might be more stable and higher. Just my thoughts.......

[post="172928"][/post]​

I have to agree. The popular misconception is that you need to go where the people WANT to go (i.e. high load factors) but in reality, successful hub carriers must go where people WILL PAY to go (i.e. high yield). Of course, a high yield with no loads means nothing so there must be a combination. Unfortunately, LAS and many other ATA markets are simply high traffic and low yields. That has been their issue. I agree that they should try large, but underserved, markets.

 

[PHX Flyer]

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 ...

 

[Ch. 12]

I will say that the difference between ATA and other carriers in financial difficulties is that ATA has a strong charter base that it can fall back on.

 

[Fubijaakr]

Why would AS want dissimilar -800s from ATA when there are available slots on th Boeing line? Remember the 11 -800 slots sold 18 months ago by DAL to an 'unnamed' airline?

Wanna bet who that is? And that there will be an announcement just as soon as the labor contracts are 'in the can'?

 

[PHX Flyer]

@ Fubijaakr:
The purchase of eleven B737s means a substantial financial commitment. Any publicly traded company would have to disclose that the moment they enter such an agreement. I didn't hear anything in that regard from Alsaska, hence I do not believe it's AS.

@ Ch. 12:
Yes, the charter business is an important revenue source for ATA.
However, I don't believe that ATA would resort to charters only in case of a significant downsizing (the abandonment of the B737 fleet, that is). 25 B757s is too large a fleet for a charter operation. And for many holiday charters the B757 is oversized. ATA would still need a smaller fleet type, or find a partner airline, where ATA could fill a niche with its B757s and the long-haul expertise.