ATA shuts down abruptly

ATA Airlines' slogan once was: "On ATA You're On Vacation!"

For many Midway International Airport passengers on Thursday, that changed to: "On ATA You're Out Of Luck."

ATA Airlines shut down operations and stranded thousands of travelers Thursday as the Indianapolis-based carrier filed for bankruptcy protection.

The second stunning bankruptcy in weeks -- after Aloha Airgroup announced its own last month -- both passengers and employees struggled to come to grips with its ramifications.

MORE COVERAGE Related stories Refund information

"It ruins my vacation," said Beatrice Martinez, who was trying to reach Guadalajara, Mexico, from Midway. "I'm in shock. So I guess I'll try to make other arrangements. Right now I just need to get to Mexico."

Chicago-based ATA pilot Matt Ellis said he sensed something might be in the works and got up early in the morning to read about his employer's demise on the Internet.

"I guess I'll start filling out job applications for another airline," said the 13-year-veteran of ATA. "It's still a shock, regardless of whether you knew this could be happening."

ATA announced last month it would eventually leave Midway on a phased basis.

The bankruptcies come on the heels of recent turbulence in the airline industry. American Airlines, Delta Air Lines, Southwest Airlines and United Airlines have grounded planes recently due to maintenance inspection concerns. Airlines have also been hit by rising fuel costs.

Along with the falling dollar and rising air fares, some area travel agents say they've heard customers voice concerns about air travel.

Schaumburg-based Travel Matters Inc. owner Jackie Galarza said she had a customer approach her on Thursday about an airline's solvency.

"I think all this is creating a kind of a panic through the industry," Galarza said. "If people loose faith in the FAA keeping us safe and prices keep getting higher #8230; I don't know what is going to happen."

At Batavia Custom Travel, certified travel consultant Louise Maywald said this winter's severe weather has been more of a concern to her clients.

"Business is booming," said the 29-year veteran of the travel industry. "Even if clients have any fear or trepidation, they are still flying."

ATA had more than 2,200 employees and "virtually all" were told their jobs were gone, company spokesman Michael Freitag said.

Many passengers learned of the collapse at ticket counters, where advisories were posted in the handful of cities ATA still served. About 10,000 passengers flew ATA each day when operations were shut down, according to the airline.

ATA cited the loss of key charter flights and soaring fuel costs for its collapse.

However, airline analyst Robert Mann said as capital markets recently tightened, hedge funds shut down their funding.

Hedge funds led the way out of bankruptcy for numerous airlines since the industry troubles following Sept. 11, 2001, said Mann, founder of R.W. Mann Co. in Port Washington, N.Y.

Once the nation's 10th-largest air carrier, ATA entered bankruptcy for the second time in just over three years. Hedge funds assisted in its last reincarnation, Mann said.

Other airlines at risk of being hurt by higher fuel prices this year include Northwest Airlines and American Airlines, which both have older aircraft that burn increasingly expensive fuel, Mann said.

ATA's bankruptcy will also affect Southwest Airlines customers. The Dallas-based airline has a code-share agreement with ATA for travel to Hawaii.

Some analysts have speculated fares to Hawaii will rise with the bankruptcies of both Aloha and ATA.