ATA Airlines becomes second US airline to shut down

Indianapolis-based, independent carrier, ATA Airlines, shut down operations this week after filing for Chapter 11 bankruptcy protection Wednesday. In operation since 1973, the airline said the loss of a military charter contract sparked the shut-down.

The carrier operated 29 aircraft and served 10,000 passengers a day. Its 2,230 employees have now lost their positions.

ATA becomes the second US carrier to close operations this week, after Aloha Airlines. A third, charter carrier, Champion Air, has also announced that it will stop operations from 31 May.

"We deeply regret the disruption and hardship caused by the sudden shut down of ATA, an outcome we and our employees had worked very hard and made many sacrifices to avoid," COO Doug Yakola said. "Unfortunately, the cancellation of a critical agreement for our military charter business undermined ATA's plan to address the current conditions facing all scheduled service airlines, including the tremendous spike in the price of jet fuel in recent months. As a result, it became impossible for ATA to continue operating."

ATA had a nearly two-decade working arrangement with FedEx that provided it with a share of the airlift, contracted by the US Dept of Defense Air Mobility Command, to provide transport of military personnel and their families. ATA says described the decision to terminate this arrangement with FedEx as "abrupt and unexpected."

FedEx officials said that ATA had been notified in January that it would not be included in the contract or team arrangement for the Air Mobility Command.

Southwest Airlines (SWA), which had operated a limited codeshare with ATA since 2005, said it would accommodate all passengers who purchased tickets from SWA but were scheduled to fly ATA. SWA CEO, Gary Kelly, said. "We are sad to end our codeshare relationship with ATA but understand it's extremely difficult for an airline to flourish in today's arduous financial environment."