The article below from NYTimes.com has been sent to you by psa188@xxxxxxxxx /--------- E-mail Sponsored by Fox Searchlight ------------\ SIDEWAYS - NOW PLAYING IN SELECT CITIES An official selection of the New York Film Festival and the Toronto International Film Festival, SIDEWAYS is the new comedy from Alexander Payne, director of ELECTION and ABOUT SCHMIDT. Starring Paul Giamatti, Thomas Haden Church, Sandra Oh and Virginia Madsen. Watch the trailer at: http://www.foxsearchlight.com/sideways/index_nyt.html \----------------------------------------------------------/ U.S. Board Close to Backing a Bidder for ATA Airlines December 9, 2004 By MICHELINE MAYNARD The federal board that was created to oversee loan guarantees to airlines after the Sept. 11 attacks is about to play a crucial role in determining the next phase of industry competition. The Air Transportation Stabilization Board is preparing to endorse its choice to purchase some or all of the assets of ATA Airlines, the nation's 10th-largest airline and a unit of ATA Holdings, which sought bankruptcy protection this fall. As such, the board's staff members and its advisers have been in a position that brings to mind Don Corleone at his daughter's wedding in "The Godfather." Over the last few weeks, executives of various airlines have visited them, placed numerous phone calls and sent detailed proposals in hopes of winning the board's favor. The board's sway over ATA, a low-fare airline, is certainly not what Congress envisioned when it created the three-member loan board to oversee $10 billion in money for the struggling industry. And it is a situation that neither the airlines nor the government finds comfortable. "I think it's a bit awkward for everybody," said Joseph Leonard, the chief executive at AirTran Airways. It struck a tentative $90 million deal for some of ATA's operations this fall, but the bankruptcy court said it would consider other bids. Gary C. Kelly, the chief executive at Southwest Airlines, said, "It's definitely unwieldy." Southwest also expects to place a bid. Mark Dayton, the board's executive director, insisted that no matter what the board recommended, ATA and a federal bankruptcy court should decide what was best for the airline. "Though it looks on the surface like we have a lot of control, we are trying to stay in the background and let the private parties determine the outcome," Mr. Dayton said yesterday. The initial courting concludes tomorrow when bids for the assets of ATA must be filed in Indianapolis. The offers will be opened next week, setting off an auction during which the bids can be modified. A decision is due next Friday. In addition to Southwest and AirTran, another low-fare airline, America West, is expected to bid, as are several investment firms. None of the nation's traditional airlines have expressed an interest, however. The outcome will change the shape of competition among low-fare airlines, whose share of the airline market has risen to nearly 25 percent this year from 6 percent in 1990. "It's a significant moment for our industry," Mr. Leonard said. The board is involved because ATA owes $140 million on a package of federally backed loans, secured by the airline's cash and collateral like airplanes, gates, routes and other assets. Given that, the board's endorsement will be a significant factor in deciding who gets control of the airline's assets. Mr. Dayton's comments aside, a hands-off approach is impossible, said Jan K. Brueckner, a professor of economics at the University of Illinois. "Once the government starts down the path of guaranteeing large sums to the airlines, it's inextricably wrapped up in these issues," Professor Brueckner said. The matter is complicated by the different bids. AirTran is vying to buy ATA's 14 gates at Chicago Midway airport, plus operations at La Guardia and Ronald Reagan National Airport in Washington. That would leave ATA with its Indianapolis home base, as well as flights on the West Coast, and its military charter business. Southwest, meanwhile, is interested in half a dozen of ATA's Chicago gates, to go with the 19 it already has there. America West has said it wants to bid for all of ATA, although a spokeswoman said yesterday that the airline had not made a final decision. "It's not apples to apples, it's apples to oranges to grapes to pears," Mr. Dayton said. "Everyone is coming in with different valuations and priorities." >From a financial point of view, the most attractive bidder would clearly be Southwest, which is expected to be the only profitable company this year among the nation's airlines. Rather than send lawyers or finance experts to plead the airline's case, Mr. Kelly, the chief executive, walked the loan board's staff through the company's bid at a recent meeting. "It's important for us to understand what their needs are and for them to understand how we're thinking about a potential bid," he said. Southwest's plan would give it 25 out of 43 gates at Midway, making it by far the airport's dominant player. But that could give pause to the Justice Department, which will be involved in the matter because of antitrust concerns. AirTran officials, meanwhile, have been talking to the board's staff for weeks, said Mr. Leonard, trying to "show them the benefit to ATA and the industry with our plan." But AirTran's offer is not enough to cover the outstanding balance on ATA's federally backed loans. Assuming that ATA used some of the proceeds to run its operations, ATA would still owe the government the difference, only it would have to pay it from a smaller operation. An America West bid would create a big low-fare player, but it could raise government eyebrows, too. America West owes $123 million on its loan guarantee package, and the government also holds warrants that it can exchange for America West stock. Further, America West needs the loan board's permission to bid for ATA, which had not yet been granted as of yesterday. For his part, Mr. Dayton envisioned that several of the airlines ultimately could team up to make joint bids, dividing up the assets and presumably the burden of the outstanding loans. Once the offers have fallen into place, the board will make its pick, he said. Mr. Leonard said he knew the board's endorsement would be based on more than just routine business concerns. "At the end of the day, they've got to look out for the taxpayer first, and the airline second," he said of the board. http://www.nytimes.com/2004/12/09/business/09air.html?ex=1103606728&ei=1&en=618bd56bc00201c2 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! Click here: http://homedelivery.nytimes.com/HDS/SubscriptionT1.do?mode=SubscriptionT1&ExternalMediaCode=W24AF HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact onlinesales@xxxxxxxxxxx or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to help@xxxxxxxxxxxx Copyright 2004 The New York Times Company