Published: April 03, 2008 09:59 am         

Indy-based ATA files for bankruptcy, discontinues all flights

INDIANAPOLIS — ATA Airlines canceled all flights Thursday after filing for bankruptcy as it posted advisories at ticket counters in the handful of cities it still served and sought help for stranded travelers.

The Indianapolis-based airline, once the nation's 10th-largest, entered bankruptcy for the second time in just over three years Wednesday, this time citing the loss of a key military charter business.

The airline had approximately 50 flights per day, mostly between Hawaii and four west coast cities — Oakland, Los Angeles, Phoenix and Las Vegas, said company spokesman Michael Freitag.

ATA said has been in contact with other airlines that may be able to assist with travelers holding tickets that the airline can no longer honor.

On its Web site, the airline apologized for the disruption and suggested that customers seek alternative travel arrangements.

The company had over 2,200 employees, Freitag said.

"Virtually all of ATA's employees are being notified today that their positions are eliminated," Freitag said.

The carrier retrenched in 2006 after emerging from bankruptcy, focusing on destinations in the Southwest and an increase in military charter business. But like other airlines, it has struggled in a foundering economy and has been unable to offset soaring fuel prices.

Fuel is one of the industry's top costs and has pushed some carriers into merger talks.

Major airlines, to offset record fuel prices, have slashed amenities that were once free and added fees for second bags, traveling with pets and booking tickets by phone.

United Airlines said new luggage fees it has imposed on travelers will generate more than $100 million annually.

ATA came out of bankruptcy with several other carriers two years ago, and it became the second to declare bankruptcy in just the past two weeks, both with operations in Hawaii. Aloha Airlines filed for Chapter 11 bankruptcy protection last month, a little more than two years after emerging from bankruptcy.

ATA announced last month that it would leave Chicago's Midway Airport, which it had used as a hub since 1992.

The chief executive officer at ATA's parent company resigned two weeks ago. Subodh Karnik, who had been CEO at ATA, stepped down after heavy pressure from a major investment firm to turn the airline around.