Passengers Left in the Lurch as ATA Shuts Down Operations

Confusion reigned supreme and passengers found themselves stranded at airports as U.S. Midwest airline ATA Airlines Inc. shut shop after the company filed for bankruptcy in Indianapolis for the second time in four years.

In a statement, ATA’s COO, Doug Yukola, said, “We deeply regret the disruption and hardship caused by the sudden shutdown of ATA, an outcome we and our employees had worked very hard and made many sacrifices to avoid.”

The company said it was closing operations and would not be able to honor any tickets that passengers may have booked with it any more. It said the shutdown was primarily because of increasing fuel costs and losing a contract for charter flights for the military. It issued a statement to the effect that it would be ceasing all work by the end of today.

With this, ATA becomes the second carrier in the space of two weeks to close down operations. On March 31 this year, Aloha Airgroup Inc. from Hawaii closed operations after declaring bankruptcy.

ATA also becomes possibly the third carrier to file for bankruptcy between 2005 and now. The primary reason many carriers are struggling today is the steadily increasing price of jet fuel. Jet fuel prices have gone up by 70 percent over the past one year, making it the biggest cost factor for airline companies.

After the shutdown, ATA says it would not be able to provide refunds to those passengers who had bought tickets with them by cash or check. They could get a refund, partial or complete, by filing a claim in its Chapter 11 bankruptcy proceedings.

For passengers who bought tickets using their credit cards, there was some hope, as they could get in touch with their credit card company or travel agency to find out how they could get a refund.

ATA warned other airlines about its impending shutdown and asked them to pitch in and help passengers who had booked with ATA and were left high and dry because of the shutdown, according to Michael Frietag, an ATA spokesman.

Other airline companies are coming forward to help ATA passengers. Northwest Airlines Corp. said it would be willing to fly ATA stranded ATA passengers till May 3. The airlines said it would charge a fee of $100 per leg for flights to and from Cancun, Mexico, and Hawaii. Southwest Airlines Co. has also agreed to fly those of its customers who had booked with ATA, providing a refund option to them as well.

Filing for bankruptcy in court, ATA said it had debts worth $100 million and assets between $100 million and $500 million. The court papers also showed ATA had approximately 2,230 employees, 25 percent of whom were based out of the company’s headquarters in Indianapolis.

Two other airlines that are affiliated to ATA, North American Airlines and World Airways, are not affected by the bankruptcy, apparently. The two airlines are part of the parent company of ATA, ATA Acquisition Inc., and were acquired last August. ATA Acquisition Inc. itself is a subsidiary company of MatlinPatterson Global Opportunities Partners LP, a private equity fund.