INDIANAPOLIS -- ATA Airlines, which accounts for about two-thirds of Chicago Midway Airport's traffic, filed for Chapter 11 bankruptcy reorganization Tuesday.
ATA Holdings, reporting $745 million in assets and $940.5 million in debts, sought bankruptcy protection for eight subsidiaries from more than 1,000 creditors, reported the Indianapolis Star Tribune.
The airline agreed to turn over its Midway Airport operations to Air Tran Airways Inc, once known as ValueJet, for $87.5 million as part of its restructuring, subject to approval by Chicago city officials and the bankruptcy court.
AirTran would assume ATA's flight operations, gate leases and routes at Midway, as well as arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport, said ATA Airlines.
Indianapolis would continue to serve as ATA's headquarters and main hub, but ATA would operate business services at Midway for AirTran to generate cash while it reorganizes, ATA chairman George Mickelsons said in a memo to employees.
ATA officials said it would honor tickets, maintain its full schedule and uphold frequent-flyer reward programs.
AirTran wants Midway as a hub to lessen its dependence on its Atlanta hub, where it faces a fare war with Delta Airlines, the Star said.
