Toledo's 3rd-busiest air carrier working to fend off bankruptcy
8/26/2004ATA Airlines, Toledo's third-busiest carrier and the provider of the airport's second-most seats, could be pulling out of Chicago Midway and declaring bankruptcy by year's end if cash-flow problems persist and the airline cannot restructure its debt.
That might be a problem for Toledo Express Airport because the airline currently offers only nonstop service to Chicago Midway, six flights a day during the week and four flights a day on Saturdays and Sundays.
About 80,000 passengers use ATA at Toledo Express each year, said Brian Schwartz, spokesman for the Toledo-Lucas County Port Authority, which operates the airport served by six carriers.
"That's why it's so important to us," he said.
"We're aware they have a cash-flow problem. This is really an industry-wide problem. Nonetheless, they keep plugging away."
But a pessimistic filing from the company with the Securities and Exchange Commission on Aug. 16 says a mixture of rising fuel costs, ticket price wars, and even trouble in the Middle East that resulted in fewer fliers has crippled the airline, and it could be bankrupt by 2005.
In the first six months of 2004, the company posted a $90 million loss.
According to the SEC filing, money owed on loans and leases comes due on Sept. 30.
Those payments could cause a cascade of default on other debt for which the terms require the airline to be current on obligations.
"Under current operating assumptions and absent any changes to existing aircraft lease obligations, the company does not expect to have sufficient cash to meet its cash obligations in the first quarter of 2005," the company wrote in the filing.
The company is trying to restructure its debt, including its Sept. 30 obligations.
Mr. Schwartz said the airline told port authority officials that it is committed to Toledo and has no plans to leave.
"They assured us that the reports of their demise have been greatly exaggerated, and they gave us some reassurances that we are in their plans for the future. They don't foresee any change to their local service right now," he said.
Said G. Opie Rollison, a port board member who is chairman of its airport committee, "Every single carrier we have is important. We're not a major hub, and we have some of the top carriers here, Delta, Northwest, but each and every one is important and no airport can ill afford to lose any one of their carriers."
An ATA pullout from Midway would signal a severe downsizing of the airline and possible pullback to its Indianapolis home. ATA has 14 gates at Midway and the most seats of any carrier there.
Contact Christopher D. Kirkpatrick at:
ckirkpatrick@theblade.com
or 419-724-6077.