More bad news arrives with the folding of ATA, the second airline in a week to abruptly cancel all flights and cease operations. Dawn Gilbertson and Toby Phillips for the Arizona Republic:
ATA Airlines, which offered daily nonstop service between Phoenix and Hawaii, suddenly shut down overnight after filing for bankruptcy. The last flight to operate was a Honolulu-to-Phoenix red eye due into Sky Harbor International Airport this morning. ...
Indianapolis-based ATA, which has been struggling financially and recently ended its Chicago operations, blamed the shutdown on the loss of a key military charter flight contract. Many passengers aboard the final ATA flight from Honolulu this morning said they were thankful that they made it to the mainland, but many others didn't know how or when they would be able to get back.
"I didn't realize that there was no flight returning when I left," said Hannah Smith, in Phoenix to visit family. ATA typically offered the cheapest tickets to the islands, Smith said. "That's where I live," she said. "I've got to get back."
Frances Fuller said she lives in Hawaii about half of every year, flying to and from Phoenix often. "I have about $1600 worth of plane tickets booked," Fuller said. She was unsure what her next steps would be. "My bank card company certainly wont give me a refund," she said.
Shocked that the airline gave no warning of the shutdown, Fuller said she felt for those who were suddenly without jobs. When agents gave passengers the news that all other flights would be canceled, Fuller said, "All I kept thinking was that they all just lost their jobs."
"It was a very sad morning."
In educational interest, article(s) quoted from extensively.
From WISH-TV Channel 8:
From KGMB-Channel 9 (video at link):
Getting to the mainland is no easy feat for stranded ATA passengers. One day after the carrier folded, hundreds paid to hop on a special flight to the west coast, but thousands more are still looking for seats. The frustration is growing at Honolulu International Airport. Long lines and lots of waiting as another round of stranded ATA airlines passengers scramble to find seats out of Hawaii.
"I just need, I gotta go to school. I can't be down here forever," said Florianne Molina of Vallejo California. Fortunately, Florianne Molina and nearly 300 others left with useless ATA tickets got out on a special Hawaiian airlines flight to San Francisco. But they did have to pay for it. $320 each.
Lieutenant Colonel Loren Weeks on vacation before deployment to the war zone also got a seat, but his travel problems aren't over yet. "I'm heading to Kansas to get possibly another ATA, well, flight to fly us into theater, and who knows that flight's on hold as well," said Weeks.
George Avalos for the San Jose Mercury News:
ATA's abrupt demise marked the second time this week that a major carrier serving the Oakland-Hawaii route suddenly terminated operations. On Monday, Aloha Airlines halted operations, just days after it had filed for bankruptcy. Aloha's collapse also erased flights between Oakland and Hawaii, along with other destinations.
ATA blamed the loss of a military contract for its shutdown. The airline said it depended on the revenue from the government deal tooffset a "tremendous spike in the cost of jet fuel." Aloha blamed its shutdown on soaring fuel prices and fierce competition in the mainland-to-Hawaii corridor.
Passengers who arrived at the Oakland airport Thursday were greeted by a deserted ATA counter and signs that stated the airline had filed for bankruptcy and ceased operations. "Now what? I don't know what to do," said Ed Mitchell, who was traveling with his wife, Chang Chi, and their two sons from Seattle to Hawaii. "I've been all over the world. This is the first time we've gotten stuck."
The Mitchell family had planned a birthday celebration on Maui for children Ivan, 9 and Ian, 8. "I hope we get a plane," Ivan said. "We've been planning this for a long time." ... "This is very challenging for our airport," said Robert Bernardo, a spokesman for the Oakland airport. "We no longer have direct flights to Hawaii. Since 2000, we had direct flights to the Hawaiian islands."
Together, ATA and Aloha accounted for 4.8 percent of the Oakland airport's 14.6million departing passengers during 2007, Bernardo said. That equates to about 700,800 passengers. ATA represented about 3.4 percent, or 496,400 passengers leaving the airport. Aloha generated about 1.8 percent of the business, or 204,400 passengers.
"We are working very hard to find other carriers who will provide that service to Hawaii," Bernardo said. Officials were hopeful the airport could land one or more replacements before long.
Unusual measures are being used to help stranded passengers notes Mary Forgione for the Los Angeles Times:
The Hawaii Tourism Authority is going to pay for charter flights to help the estimated 9,000 tourists stranded on the islands since ATA went under this week — the first time the agency has spent money on such a venture.
“We’ve never done this before and we hope we’ll never have to do it again,” Rex Johnson, chief executive of the Hawaii Tourism Authority, said today after the agency had an emergency meeting to authorize funding.
Ted Evanoff and Zach Dunkin for the Indianapolis Star report on the employee reaction:
Two years after emerging from bankruptcy, ATA Airlines filed for Chapter 11 again today, surprising employees who doubt the Indianapolis-based carrier will ever fly again.
ATA, founded in the city in 1973, was purchased out of bankruptcy in 2006 by the New York investment firm Matlin Patterson. Laid-off pilots hope to secure new jobs with the other two carriers the investor has bought over the last two years - North American and World Airways, both based in Atlanta and part of Matlin's Global Aero Logistics.
Employees including pilots and flight attendants lashed out today at the management installed since the original October 2004 bankruptcy filing. "The most glaring single factor in cessation of operations was grossly incompetent management from the time of the bankruptcy going forward," said Seth Cooperman, a Boeing 737 pilot at ATA.
Dropping the New York LaGuardia and Washington Reagan routes sapped passengers from the West Coast leisure routes to Hawaii even as fuel prices rose and the airline spent heavily to bring online mothballed DC10s, employees said. A deal with Southwest Airlines funneled passengers to certain routes shared by both carriers, but Cooperman said it appears the transaction was not profitable enough to sustain the carrier.
"They’ve closed their doors. It doesn’t look like they are going to reopen,’’ said Jacki Pritchett, an ATA flight attendant since the 1970s.
ATA employs 2,300, including about 560 workers in Indianapolis. Local employment alone is down from more than 2,000 employees four years ago when the discount carrier was the nation's No. 10 passenger airline and the largest carrier serving Indianapolis. All the local routes were dropped in bankruptcy, including the popular Indianapolis-to-Florida flights.
Southwest in turn took over many of those routes.
The scathing response by ATA's pilot's union, ALPA:
The union representing the pilots of ATA Airlines is condemning the airline's management for its callous disregard of its employees and passengers in canceling all operations without warning early on Thursday morning.
"By shutting down in the middle of the night, this management group has let down its loyal customers and the flight crews, cabin crews, mechanics, and other employees who have made deep sacrifices over the past few years to keep ATA afloat," said Capt. Steve Staples, chairman of the ATA unit of the Air Line Pilots Association, Int'l. "It shows an utter lack of respect and illustrates the ruthlessness of Wall Street hedge fund managers who have no knowledge or interest in the companies they own."
ALPA was notified at approximately 4:00 a.m. Central time that the airline was filing for bankruptcy and shutting down all operations immediately. The airline's last flight was ATA Flight 4586, a morning red-eye from Honolulu to Phoenix that was scheduled to land at 8:34 a.m. Pacific time.
"ATA's customers and employees had absolutely no warning that the airline was going out of business," Staples said. "This abrupt withdrawal is the airline equivalent of getting on the last helicopter out of Saigon."
The April 3 announcement that ATA is ceasing operations is two days shy of the first anniversary of ATA's announcement that its holding company was buying World Airways and North American Airlines. On April 5, 2007, ATA Holdings changed its name to Global Aero Logistics (GAL) and, in August 2007 completed the transaction that gave it three airlines: ATA, World, and North American. GAL is privately held by the hedge fund MatlinPatterson Global Opportunities Partners II.
"We find it unusually coincidental that ALPA, which was in contract negotiations with ATA and had the best opportunity to change our collective bargaining agreement to reflect the new realities of the industry, was suddenly forced to shut down while World and North American will continue operating under the Global Aero Logistics banner," Staples said.
"Since when does the acquiring airline go out of business while the acquired airlines keep flying?"
Staples said that all ATA employees are the ultimate victims of a series of incompetent managers who chose to blame economic conditions for the airline's problems instead of admitting their own mistakes.
"We were telling management two years ago that they needed to institute a fuel management program, and even found a fuel consultant who offered to work with the company - but our overtures to help ATA reduce its fuel costs were repeatedly ignored," he said. "Management decided to outsource virtually all of our maintenance, then acquired elderly, unreliable DC-10s that needed extensive repairs. The ripple effect of years of poor management decisions - not the current economy - was what doomed ATA."
Staples said the union's top priority is making sure that all 585 ATA pilots and flight engineers find new jobs, especially since part of ATA's fleet has been transferred to World Airways and more airplanes could go to World and North American later.
"Our position is that we are pilots of Global Aero Logistics, which is still operating, and we deserve to be in the cockpits of Global's airliners. Our contract says that the pilots go with the airplanes, and we will use every legal means available to us to ensure that our members' rights are protected," he said.
Hawaii is holding a job fairs for Aloha and ATA employees now out of work due to the shutdowns. Melinda Peer at Forbes looks at the business aspects of the events of this week:
On Thursday, ATA Airlines became the latest carrier to land itself in bankruptcy, citing high fuel prices, competition and the U.S. economic slowdown.
The complaints have become a refrain for the beleaguered airline industry and aren't expected to get better anytime soon. In early April, the International Air Transport Association cut its 2008 industry earnings forecast for the second time just a day after reporting that February's global passenger load factor slipped 0.6% from a year ago.
"The broadening impact of the U.S. credit crunch has brought buoyant consumer confidence to an abrupt end. Oil prices continue to rise. Demand is softening and after the 64% improvement in labor productivity and an 18% reduction in non-fuel unit cost attained since 2001, efficiency gains are much more difficult to achieve," said Giovanni Bisignani, the association's chief executive.
More analysis from David Field for Airline Business:
Fuel has gone from 1.25 cents per available seat mile for the majors in the second quarter of 2000 to 3.50 cents in 2007's second quarter, Swelbar notes, adding that labour costs dropped from 3.50 per ASM to 3.00 cents between the same periods.
Although ATA operated only 29 jets, it had a long history and was an early proponent of a blending of the low-fare model with the network model. But ATA had gradually retreated from the low-fare scheduled business as it increasingly came to rely on charter business and on effective "virtual charters" it operated as codeshares for Southwest Airlines. Much like Aloha, it had gone through a bankruptcy from which it emerged as private carrier in late 2004. ...
At ATA, the challenge came when one of its major charter customers, FedEx, announced it would not be renewing ATA's military charter sub-contract for the next US government fiscal year, which begins in October. ATA said the contract was supposed to last another year. ATA had already trimmed its scheduled service dramatically, announcing a month ago that it would end all service at Chicago Midway, the airport it had made synonymous with low fares, and would also end its West Coast/Hawaii service in June. Southwest, which said its arrangements with ATA also ended on 4 April, had expanded its Midway presence significantly by buying ATA gates at the airport. ...
George Hamlin, a consultant with ACA Associates, called Hawaii "a microcosm of the US market: a duopoly of Aloha and the larger Hawaiian Airlines in a market that could not sustain the entry of an additional carrier in this fuel-price environment". Hamlin thinks other airline failures are entirely possible, and that Columbus, Ohio-based Skybus could fail "relatively soon". The larger US carriers may have enough cash for the year, says Calyon Securities analyst Ray Neidl, but "if high fuel prices and a lacklustre economy persist through 2009, cash reserves at many airlines might become a concern".
This week also claimed a smaller charter carrier, Champion Air, which said it was hobbled by its fuel-swilling Boeing 727s and would end its operations in May. Champion said it too lost a major customer when Northwest Airlines' vacations subsidiary MLT said it would stop using the carrier.
Elsewhere in the USA, Sun Country said it would furlough 45 of its 156 pilots for the summer in a 30% cutback forced on it by the cost of fuel. The decision was made by the privately held low-cost carrier's new chief executive, former AirTran chief financial officer Stan Gadek.
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