Temporary layoffs announced by ATA Airlines, a carrier with very little cash in a tough operating environment, will not save the airline from bankruptcy or liquidation, analysts said on Friday.
ATA, the largest carrier at Chicago’s Midway Airport, said it will lay off 156 employees, beginning October 31. The temporary layoffs, will involve 150 flight attendants, four flight engineers and two first officers, the airline said.
Analysts echoed the tone they voiced on Thursday amid speculation that the struggling airline was in merger talks with larger rival America West Airlines. Many see a bankruptcy filing soon, and see liquidation as more likely than a merger.
Spokeswoman Erike Keane in an interview said the cuts were made in anticipation of weak travel demand in the fourth quarter. She was unsure if the laid-off employees were guaranteed to be hired back at some point.
ATA has been cutting costs aggressively over the past few years in the face of tough competition, surging fuel prices, weakening demand of its military charter flights and the cost of renewing its fleet.
The airline, which has nearly USD$2.5 billion in debt, will most likely file for bankruptcy this year if it cannot merge with another carrier, S&P analyst Philip Baggaley said on Thursday.
Many analysts said the chances of ATA sealing a merger deal with any carrier are very slim. “They have stronger chances of liquidation, and of their assets being sold,” Baggaley said in an interview.
ATA in August warned it would likely run out of cash in 2005, and said it may sell some assets or restructure.
The airline has been negotiating with its pilots and flight attendants for concessions. Its 1,100 pilots in July agreed to USD$43 million in concessions and are now negotiating a second round of givebacks.
The airline’s 1,900 flight attendants, who earlier this year rejected a request for USD$8.9 million in pay givebacks, are currently in another round of negotiations with the company, Keane said.
By: EAL_KING - 17th October 2004 at 21:59
aparently airtran and another airline is talking to ata’s bosses about buying them.
By: EAL_KING - 17th October 2004 at 21:59
aparently airtran and another airline is talking to ata’s bosses about buying them.
By: Ren Frew - 17th October 2004 at 21:35
Sounding like it’s gonna be US or ATA that takes a fall into the pit ?
By: Ren Frew - 17th October 2004 at 21:35
Sounding like it’s gonna be US or ATA that takes a fall into the pit ?
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October 17, 2004 at 8:10 pm