Could the Chicago area be headquarters to another financially strapped airline?
Perhaps. But maybe the better question to ask is whether Chicago really wants to be home to another financially strapped airline.
The answer to that may be “perhaps” as well. Jobs are jobs, after all. But that all may be moot now.
A particularly dire financial outlook from low-cost carrier ATA Airlines last week could cut short a reconnaissance mission that has been under wraps for months and had some business executives and officials with the city and state thinking big.
Sources say Indianapolis-based ATA Airlines and its consultants have been kicking the tires in Chicago during recent months and have had meetings with Mayor Richard M. Daley’s folks, and other officials.
ATA, run by Chairman George Mikelsons, has reached out before and then decided to keep the home base in Indianapolis.
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But discussions were getting more plentiful. There had been talk of possibly bringing lots of jobs to the region, maybe tying in with a new maintenance facility somewhere in the area, and looking at headquarters space downtown or closer to its operations at Midway.
Moving everything to Chicago would make sense in many ways. In Chicago, the airline could have everything in one place. ATA, despite its finances, says it’s still committed to its end of a $100 million training facility near Midway that would include a $25 million city subsidy as well as money from the state.
But the company said a move, to anywhere, is not imminent.
“We’ve got plenty on our plate right now; we certainly have no plans to relocate the company,” a company spokeswoman said Friday, refusing to address questions about meetings sources said the company has had about possibly moving its headquarters.
Of course, Chicago isn’t the only city ATA is not moving to right now. It wasn’t alone in this chase.
Insiders said ATA was considering other sites, including possibly out East and in the South, perhaps Jacksonville, Fla.
Until ATA’s recent troubles were revealed, Chicago and state officials may have considered playing footsy with the carrier to be worthwhile because it could have paid big dividends for the local economy in the long term.
But last week, bad news got worse for ATA.
The carrier, which is one of the dominant airlines at Midway, is all but saying bankruptcy is looming.
It reworked its debt in January and secured new aircraft lease arrangements with its three major lessors–Boeing Capital Service Corp., General Electric Capital Aviation Services and International Lease Finance Corp.–resulting in close to $70 million in lower cash payments in 2004. But it’s not enough.
In announcing its second-quarter earnings last week, ATA, which lost $26.7 million in the quarter, said it faces additional liquidity concerns and could run out of cash sometime in the first quarter of 2005 if its existing aircraft lease obligations don’t change.
With ATA firmly grounded in Indianapolis for now, Chicago officials can shove their plans back into a file folder and hope the airline industry can find a way out of its troubles.
At this rate, Chicago will just be happy if ATA follows through on its promise to build its training facility.
In the meantime, the business community can focus its worry on the survival of United Airlines, the financially strapped airline that already calls Chicago home.
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