Bankruptcy

Another Airline Goes Broke

ATA files for bankruptcy and cancels all operations, joining Aloha Airlines in that sorry state. Next up could be Alitalia.
Stephen TaubApril 3, 2008

The turbulence enveloping the airline industry continued on Wednesday, when ATA Airlines filed for Chapter 11 and has discontinued all operations and cancelled all current and future flights.

The airline said the loss of a key contract for its military charter business made it impossible to continue operations. “Unfortunately, we were not in a position to provide our customers or others with advance notice,” it stated on its website.

This is the second time in a little more than three years that ATA has filed for bankruptcy. And ATA is the second airline to file for bankruptcy in the past two weeks.

Last month, Aloha Airgroup, the parent of Aloha Airlines, filed for Chapter 11 for the second time in two years.

In its court filing, Aloha blamed its inability to generate sufficient revenues from its inter-island passenger business on its price war with Go, a low-fare airline operated by Mesa Air Group. The Hawaii-based company said it was forced to match Go’s “below-cost fares” at a time when the airline industry was facing “unprecedented increases” in the cost of jet fuel, which has meant an annual increase of $71 million in fuel expenses.

Meanwhile, the shares of Alitalia’s have been suspended, and the board of the Italian airline called an emergency meeting as it moved dangerously closer toward bankruptcy, according to the Associated Press.

The most recent potential buyer, Air France-KLM, on Wednesday decided not to move forward with a deal, the wire service noted. Afterward, Alitalia chairman Maurizio Prato resigned.

According to the report, Air France-KLM chairman Jean-Cyril Spinetta said union proposals would make it difficult for Alitalia to quickly return to profitability.