INDIANAPOLIS, Jan. 30, 2006 (PRIMEZONE) -- ATA Holdings Corp. (the "Company") (Pink Sheets:ATAHQ) and four of its subsidiaries, including ATA Airlines, Inc. (the "Reorganizing Debtors"), today received oral confirmation by the U.S. Bankruptcy Court for the Southern District of Indiana of their First Amended Plan of Reorganization (POR). The Judge indicated that he would enter a written order confirming the POR tomorrow. This approval clears the way for the Company to emerge from Chapter 11 by late February 2006.
"Throughout this process, I have never doubted that our employees were contributing everything they had to making our restructuring a success," said ATA Chairman, President and CEO John Denison. "Today's ruling reflects their incredible accomplishments. Thanks to their hard work in developing an effective business plan, ATA has been able to transform itself into a more viable airline ready to emerge from Chapter 11. I believe the same efforts our employees applied during this challenging period will allow us to exceed the expectations of customers for many years to come."
During today's hearing, the Reorganizing Debtors revealed that both classes of unsecured creditors eligible to vote accepted the Plan. Independent of these results, the Hon. Judge Basil Lorch III confirmed that the Plan fulfills all requirements of the U.S. Bankruptcy Code and allows for fair and equitable treatment of all creditors. As part of the last steps in achieving this confirmation, ATA recently finalized certain outstanding agreements relative to the Plan, including settlement terms on its loan from the Air Transportation Stabilization Board (ATSB). The judge stated he plans to enter his official order confirming the First Amended POR sometime early tomorrow, Jan. 31, 2006.
"Reaching this positive end to the restructuring process is even more rewarding because it is the result of consensual agreements reached between ATA, various stakeholders, interested parties and the Unsecured Creditors' Committee," explained ATA Interim Chief Financial Officer Frank Conway. "Reaching such agreements so quickly is an unusual achievement and has contributed greatly toward allowing ATA to regain a solid operational and financial footing in a remarkably short amount of time."
Doug Yakola, who will assume the role of ATA's Chief Financial Officer upon emergence, agreed with Conway. "With a strengthened cash balance thanks to our new investment partner MatlinPatterson, a substantially lower CASM due to several cost-saving initiatives, and the right operational plan to leverage our strengths, all the pieces are in place to help secure the Company's future," said Yakola. "As we anticipate emergence, we look forward with a renewed sense of confidence in ATA's enduring success."
Settlement Distribution
As part of the settlement of their claims, unsecured creditors will receive upon emergence distributions of common stock ("New Common Stock") representing seven percent of the outstanding equity in the newly formed privately held holding company ("New ATA Holdings Corp."), which will become the ultimate parent company of ATA Airlines. In addition, unsecured creditors will receive warrants to acquire two percent of the New Common Stock outstanding upon emergence. Finally, ballots have revealed that a rights offering providing qualifying Class 6 unsecured creditors the opportunity to purchase approximately $25 million in value of New Common Stock has been fully subscribed. As a result, these qualifying unsecured creditors will also receive an additional two percent of the New Common Stock. In accordance with the confirmed POR, ATA Holdings common and preferred stock will be cancelled upon the emergence date and no distribution will be made to current holders of those securities.
Investor Commitment
As previously outlined, the Plan includes an investment of $95 million from ATA's new investor, MatlinPatterson. This investment consists of: (i) $30 million in debtor-in-possession (DIP) financing, which will be converted into equity upon emergence, and (ii) upon emergence, $45 million to New ATA Holdings Corp. in the form of an equity investment, reflecting the full subscription of New Common Stock in the rights offering. Upon emergence, MatlinPatterson will also provide an additional $20 million of exit debt financing.
Stronger Airline, Fresh Takeoff
Today's ruling comes exactly one week following ATA's announcement that it is expanding its codeshare agreement with Southwest Airlines to increase service between Hawaii and the West Coast and introduce new flights between Houston and New York. Earlier in the year, the U.S. Department of Transportation approved both carriers entering into the seven-year expanded codeshare agreement as a crucial part of ATA's restructuring efforts.
"During the restructuring, we've made substantial strides in identifying broader and more robust sources of revenue through our enhanced codeshare agreement and strategic route realignment," emphasized ATA Executive Vice President and Chief Operating Officer Subodh Karnik. "Starting with our announcement of new service from Houston and increased flights between Hawaii and the mainland, we will be focusing on taking off in new directions as a Company that open up our unique brand of convenient business and leisure travel to thousands more customers across the country. By doing so, we will be reinforcing our position as a leading provider of affordable travel in markets that have been traditionally underserved by value-based carriers."
Last week's announced flight additions further detail a strategy previously outlined in ATA's POR that accounts for scheduled service to remain a core element of its operations. To ensure profitability, the Company has worked to identify routes that not only further leverage the codeshare, but that also make efficient utilization of its aircraft and slot portfolios while enhancing markets that were historically robust for the carrier. As demonstration of its commitment to these priorities as well as its military charter operations, the Company also recently realigned its senior leadership team responsibilities to drive down accountability to every area of its operations.
The Plan confirmed today was previously included as an exhibit to a Current Report on Form 8-K that was filed by ATA Holdings. It may be viewed at www.ata.com under the captions "About ATA - Investor Relations - SEC Filings." The Plan and Disclosure Statement used by creditors to determine their voting decisions are currently available to the public and may be found, read, printed and downloaded from (1) the Bankruptcy Court website found at www.insb.uscourts.gov, and (2) the Reorganizing Debtors' noticing, claims and balloting agent's website found at www.bmcgroup.com/ata. Please note that access to these documents at the Bankruptcy Court website requires registration on PACER and certain fees per page are charged. Instructions for registration are at the Bankruptcy Court's website.
ATA is entering its 33rd year, bringing more convenient, value-based service to the skies. ATA provides features travelers have come to expect, including advanced seat assignments, self-service kiosks, Web check-in, simplified and consistent fare structure, and a frequent flier program with one of the lowest thresholds for earning travel in the industry. Through direct and connecting codeshare flights, ATA now serves customers in more than 60 markets, including major business and leisure destinations such as Houston, New York, Chicago, Washington, D.C., Hawaii, Cancun and Guadalajara. For more information, visit ata.com.
Caution Concerning Forward-Looking Statements: This communication contains certain "forward-looking statements." These statements are based on ATA Holdings Corp.'s management's current expectations and are naturally subject to uncertainty and changes in circumstances. Except to the extent required under the federal securities laws, ATA Holdings Corp. is not under any obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.