Southwest Statement Regarding Bid for ATA Assets

17th Dec 2004

Southwest Airlines has been
selected as the winning bidder at the bankruptcy court-approved auction
for certain ATA Airlines, Inc. (ATA) assets. Bankruptcy court approval is
anticipated on Tuesday, December 21. Southwest’s approved bid calls for $80 million cash at closing to ATA.
Assets acquired include the leasehold of six Chicago Midway Airport gates
and an aircraft maintenance hangar. The purchase price for the assets is
$40 million, with the remaining $40 million in debtor-in-possession
financing. In addition to the cash, Southwest will guarantee payment of an
ATA construction loan to the City of Chicago for $7 million.

Upon ATA’s emergence from bankruptcy, Southwest has committed to convert
the debtor-in-possession financing to a term loan, payable over five
years. Additionally, Southwest has committed to purchase $30 million of
convertible preferred stock, in cash, for 27.5 percent of the new ATA. The
stock is nonvoting, and it is Southwest’s intent to liquidate that
position in an orderly manner over time.

Southwest and ATA are working on a code share agreement to exchange
passengers, initially at Chicago’s Midway Airport. Southwest estimates the
code share could add $25 to $50 million per year to each airline’s annual
revenues. Further information regarding flights and schedules pertaining
to the code share will be available once the agreement is finalized and
the flights are ready for sale, which is expected to be early next year.

“We are very excited to be named as the winning bidder. This allows
Southwest to grow our Chicago presence, and it will provide ATA and its
Employees and stakeholders with much needed liquidity,” said Southwest’s
CEO Gary Kelly. “The code share opportunity for both airlines is
significant, and I look forward to us working together. The real winners
here, of course, are the Customers traveling in and out of Chicago Midway
Airport, who will get a lot of low-fare flights to many destinations from
both airlines.”


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