ATA Airlines has received approval by the federal bankruptcy judge to emerge from bankruptcy today. ATA was the 10th largest airline when it went into bankruptcy, but has reduced its fleet and tightened operations as it looks to be better prepared for the ultra-competitive airline marketplace. With a 120 million dollar cash infusion by MatlinPatterson Global Opportunities Partners II, the company hopes to have the capital and resources to compete profitably in the low cost carrier landscape.
The Indianapolis-based airline and parent company ATA Holdings Corp. have scaled back their fleet of jets, slashed destinations and cut by half their labor force since filing for Chapter 11 bankruptcy protection in October 2004.
Only time will show whether ATA will be able to successfully redefine itself as a niche carrier amid turbulent economic times that have forced at least seven airlines into bankruptcy proceedings in the past three years.
“The longer-term issue for ATA is that they have to turn a profit and they have to be consistently profitable or else they won’t survive in this business,” said Michael Miller, an aviation analyst with Washington, D.C.-based The Velocity Group. “You can’t just be a low-cost airline. You have to be a profitable low-cost airline.”
ATA’s emergence plan — which focuses on such destinations as Cancun, Los Angeles and Las Vegas and includes an increase in military charter business — was approved by a federal bankruptcy judge on Jan. 30. via the Chicago Tribune