Indiana agrees to USD15.5m ATA Airlines bailout

Airline Industry Information, Nov 9, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

The Transportation Finance Authority in Indiana has agreed to spend USD15.5m to buy assets from the bankrupt carrier ATA Airlines and then lease them back to it.

The airline's attorney told the board that the airline would go out of business without the money. The board voted unanimously to approve the deal but it still requires the approval of the Indianapolis International Airport Authority and the judge overseeing ATA Airlines' bankruptcy.

The USD15.5m will be borrowed from Bank One and will be used to buy spare aircraft parts, tools and other equipment which would then be leased back to ATA Airlines. The money cannot be loaned directly to ATA from the state as it would constitute illegal state aid, reports The Associated Press.

((Comments on this story may be sent to aii.feedback@m2.com))