FedEx triggers ATA Airlines collapse
ATA Airlines abruptly shut down operations and went out of business Thursday after filing for bankruptcy protection.
The Indianapolis-based airline said on its Web site that the loss of a key contract for its military charter business forced it to close down and liquidate its assets.
The loss of revenue from the contract made it impossible to have enough collateral to attract additional capital or restructure its business, ATA said. ATA was also a victim of skyrocketing fuel prices, which all airlines are struggling to cope with by raising fees or contemplating mergers.
The military contract was canceled by express carrier FedEx Corp., the lead contractor on the FedEx teaming arrangement with the Air Mobility Command. FedEx and ATA make their planes available to the U.S. military for emergency call-ups to airlift cargo and troops to crisis zones in exchange for a regular peacetime business as part of the Civil Reserve Air Fleet. Participating airlines must bid for the work, which is awarded based on the number and type of aircraft committed to the CRAF program.
ATA has been a member of the FedEx team for two decades.
FedEx informed ATA on Jan. 22 that it would be denied membership on the FedEx team for the government's next fiscal year, beginning Oct. 1. ATA said the termination is a full year earlier than the term specified in the teaming agreement. FedEx did not respond in time for this report regarding the reason for its action.
ATA was the largest transporter of U.S. military personnel and their families to and from overseas deployments at the time of the shutdown and along with one other airline flew most of the passenger requirements for the FedEx team.
'ATA has engaged in extensive discussions with numerous parties in an effort to obtain capital, identify other opportunities that would allow it to continue operating, or sell the business as a going concern. However, despite its best efforts, ATA could not continue operations or consummate a sale,' the company said.
One month ago, ATA announced plans to discontinue domestic service at Chicago's Midway Airport in mid-April in an effort to reduce costs.
At the time of its shutdown, ATA operated 29 aircraft, many of which are leased. ATA operated Boeing 737-800s, 757-200s, Boeing 757-300s, DC10s and Lockheed L-1011s. The airline had a minimal cargo operation in the belly of its passenger aircraft.
ATA emerged from Chapter 11 bankruptcy in 2006 and operated under a reorganized holding company called Global Aero Logistics, which is not affected by the ATA bankruptcy.
Last year, Global Aero bought World Airways, which operates a charter cargo fleet, and North American Airlines for $315 million. Global is majority owned by investment fund MatlinPatterson Global Opportunities Partners II. ' Eric Kulisch
FedEx triggers ATA Airlines collapse
