INDIANAPOLIS, July 15, 2005 (PRIMEZONE) -- ATA Airlines, Inc., subsidiary of parent company ATA Holdings Corp. (Pink Sheets:ATAHQ), today announced a number of cost reduction initiatives aimed at making the airline more competitive as the Company continues on its track to emerge from Chapter 11. The restructuring initiatives include expanded outsourcing of the airline's heavy maintenance program, strategic sourcing activities and outsourcing its customer reservations call center.
Approximately 450 positions are affected by the restructuring: 350 maintenance and 100 reservations personnel. ATA will eliminate some jobs, while some employees will be furloughed with the possibility of being called back to the Company at a future date. ATA is giving every affected employee at least sixty (60) days notice. ATA has reduced its total workforce by 40 percent over the last two years, from approximately 7,800 employees to 4,687. Those reductions were the result of the airline shedding unprofitable routes and downsizing its fleet.
ATA Airlines CEO, John Denison, said, "ATA has for decades used outside facilities for heavy aircraft maintenance. Expanding that practice delivers the safety we demand in the most efficient way possible."
Denison explained that the airline industry has changed dramatically over the last several years. "ATA must adapt to this new environment to survive. The anticipated cost savings of $100 million over the next five years are critical to our emerging from Chapter 11 as a Company with a competitive cost structure," he said.
ATA's Heavy Maintenance Outsourcing
ATA has proposals from several firms competing to perform heavy maintenance on its fleet of 45 aircraft. By restructuring many maintenance practices, ATA expects to save about 20 percent of the airline's total maintenance costs. As of June 30, 2005, the fleet included 22 Boeing 737-800s, six Boeing 757-200s, 12 Boeing 757-300s and five Lockheed L-1011s. At this time last year, ATA operated 67 jet aircraft.
John Graber, ATA's Senior Vice President of Flight Operations and Maintenance, told the maintenance workforce about the changes today. "We've strived to keep our employees informed about this situation," he said. "This spring we told everyone that we were studying the costs associated with every maintenance option. Though we are an excellent airline with a productive in-house maintenance operation, we simply can't compete with giant, commercial heavy check maintenance facilities."
ATA has approximately 800 maintenance employees system-wide. ATA will maintain a significant level of maintenance work in Indianapolis and throughout its system. Every U.S. airline outsources some portion of its heavy maintenance work to firms that specialize in comprehensive airframe maintenance. According to the U.S. Department of Transportation, the amount of maintenance outsourced by airlines based in the U.S. has grown from 37 percent in 1996 to 51 percent today.
ATA's Customer Reservations Center Outsourcing
ATA is also moving to an outside service provider in its Customer Reservations area. The move affects approximately 100 positions at the Company's Indianapolis Reservation Center and saves ATA approximately $1 million annually, or about 15 percent of its reservations budget. ATA will consolidate all customer reservations calls at the Florida-based PRC in a transition that will be completed by November 1, 2005.
Doug Yakola, Senior Vice President of Customers and Ground Operations, said, "This has been a very difficult decision for us, especially given the quality product that our own agents have consistently offered our customers. Ultimately, the incremental savings of $5 million over five years could not be ignored. PRC has an outstanding track record, and we know that they will continue to live up to the great service levels our customers have come to expect."
About ATA Airlines
ATA Airlines, now in its 32nd year of operation, employs 4,687 people system-wide, including 1,775 people in Indiana. During the first six months of 2005, more than 2.8 million passengers flew ATA Airlines. For more information about ATA, 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. Actual results may vary materially from the expectations contained herein. 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.
About PRC
Headquartered in Ft. Lauderdale, Florida, PRC is an internationally recognized provider of outsourced solutions that manages and supports customer communications for some of the world's leading corporations. PRC offers its services in voice and web-enabled centers in the Dominican Republic, India and the Philippines. The company employs 10,000 customer care associates worldwide. For more information visit www.prcnet.com.