ATA Airlines files for bankruptcy and shuts down
By Mark McSherry,
Posted: 2008-04-03 14:51:10
NEW YORK (Reuters) – ATA Airlines Inc said on Thursday it filed for Chapter 11 bankruptcy and shut down all operations after cancellation of a key military charter agreement.
The Indianapolis-based low-cost airline and its rivals have recently been hamstrung by big increases in jet fuel prices. ATA is the second airline to file for bankruptcy in the past few weeks.
The fuel price spike, coupled with a steadily weakening U.S. economy, has stalled the airline industry’s modest recovery from the 2001-2006 downturn.
On Sunday, Hawaii-based Aloha Airlines said it would shut down its passenger operations less than two weeks after it filed for bankruptcy protection.
Big airlines are beginning to shrink to cope with much tougher operating conditions. On March 18, Delta Air Lines Inc (DAL.N) unveiled plans to cut 2,000 jobs and scale back flights.
Carriers have also moved to pass on fuel costs to travelers through higher fares and surcharges. Some airlines have opened new revenue streams by charging for products and services that previously had been included in the price of a ticket.
Oil prices, which are directly related to jet fuel costs, remain above $100 a barrel.