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ATA temporary layoffs won\'t help carrier
ATA temporary layoffs won't help carrier--analysts (Reuters)
By Jui Chakravorty
NEW YORK, Oct 15 (Reuters) - 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 International Airport, said it will lay off 156 employees, beginning Oct. 31. The temporary layoffs, will involve 150 flight attendants, four flight engineers and two first officers, the airline said.
Skepticism among analysts echoed the tone they voiced on Thursday amid speculation that the struggling airline was in merger talks with larger rival America West Airlines (AWA.N: Quote, Profile, Research) . Many see an 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.
The company's shares fell more than 6 percent on Friday, a day after they rose by more than 22 percent on reports the carrier was in talks to merge with larger rival America West.
"The market has gotten over the good feeling that someone might buy ATA," Calyon Securities analyst Ray Neidl said in an interview. "A deal would be highly problematic, with ATA being in such poor financial condition," he said.
ATA, the No. 10 U.S. airline 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.
Indianapolis-based ATA, which has nearly $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," S&P analyst Philip 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. Neidl on Friday said cost-cutting measures are not going to save the company, whose future he thinks is "highly doubtful."
The airline has been negotiating with its pilots and flight attendants for concessions. ATA's 1,100 pilots in July agreed to $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 $8.9 million in pay givebacks, are currently in another round of negotiations with the company, Keane said.
Shares of ATA Holdings Corp., the parent company of the airline, were off 18 cents, or 6.3 percent, at $2.67, in mid-day trading on the Nasdaq. (Additional reporting by Dan Wilchins)
ATA temporary layoffs won't help carrier--analysts (Reuters)
By Jui Chakravorty
NEW YORK, Oct 15 (Reuters) - 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 International Airport, said it will lay off 156 employees, beginning Oct. 31. The temporary layoffs, will involve 150 flight attendants, four flight engineers and two first officers, the airline said.
Skepticism among analysts echoed the tone they voiced on Thursday amid speculation that the struggling airline was in merger talks with larger rival America West Airlines (AWA.N: Quote, Profile, Research) . Many see an 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.
The company's shares fell more than 6 percent on Friday, a day after they rose by more than 22 percent on reports the carrier was in talks to merge with larger rival America West.
"The market has gotten over the good feeling that someone might buy ATA," Calyon Securities analyst Ray Neidl said in an interview. "A deal would be highly problematic, with ATA being in such poor financial condition," he said.
ATA, the No. 10 U.S. airline 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.
Indianapolis-based ATA, which has nearly $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," S&P analyst Philip 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. Neidl on Friday said cost-cutting measures are not going to save the company, whose future he thinks is "highly doubtful."
The airline has been negotiating with its pilots and flight attendants for concessions. ATA's 1,100 pilots in July agreed to $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 $8.9 million in pay givebacks, are currently in another round of negotiations with the company, Keane said.
Shares of ATA Holdings Corp., the parent company of the airline, were off 18 cents, or 6.3 percent, at $2.67, in mid-day trading on the Nasdaq. (Additional reporting by Dan Wilchins)
