ATA Holdings may make a proposal to restructure $175 million of unsecured notes maturing in 2004 at a conference call scheduled for this Tuesday, according to one analyst who follows the airline. ATA had said it expects to be profitable in the second quarter, marking the first time it would be in the black in over a year. However, it is not expected to have enough cash to meet the '04 maturity of the notes.
The analyst expects a restructuring in part because George Mikelsons, the ceo and chairman, owns a substantial portion of the outstanding equity in the company and he would not want to see it lose its value in a bankruptcy filing. Further, the analyst notes that ATA has several large suppliers with an interest in keeping it operating, including General Electric and Boeing. ATA declined to discuss its debt in a year-end conference call, after earlier saying it had been considering various options, the analyst says.
Betsy Snyder, analyst at Standard & Poor's, says ATA may be hampered in its decision making by theAir Transportation Stabilization Board, which made loan guarantees to the airline last year. She declines to speculate, however, on whether the company is likely to avoid a Chapter 11 filing. "They'll have to take some action, because they don't have the cash to pay the notes that come due next fall," she says.
The bonds were bid close to 70 last week. A call to David Wing, cfo of ATA, was not returned by press time last Friday.