NEW YORK (CNN/Money) -
ATA Holdings Corp., parent of struggling low-cost carrier ATA Airlines, said Monday it filed for Chapter 11 bankruptcy protection.
The move came a day after the troubled airline named its chief financial officer, Gilbert Viets, to the new position of chief restructuring officer, hoping to control the airline's mounting debt.
The nation's tenth-largest airline is facing a fare war as many in the airline industry have been struggling with soaring fuel costs and lower demand.
"Excess capacity, extremely high fuel prices, which continue to escalate, and declining fares have necessitated that all airlines, including ATA, re-examine their business," George Mikelsons, CEO of ATA Holdings, said in a statement.
The airline said it would maintain its "flight schedule, operations, customer service and travel
rewards programs" during the bankruptcy proceeding.
ATA Holdings is based in Indianapolis. It has six other subsidiaries besides the airline and over 7,200 employees. The airline is the largest serving Chicago's Midway International Airport. The airline said it has carried more than 10 million passengers annually, providing service to over 400 destinations.
ATA also said that AirTran Airways will pay $87.5 million to assume ATA's flight operations, gates lease and routes in Chicago, New York and Washington. That deal is subject to bankruptcy court approval.
For some time ATA was expected to seek protection from creditors as record-high fuel costs, weak fares and multiple hurricanes in Florida have compounded its cash crunch.
On Monday, the airline also re-employed David Wing, who resigned as chief financial officer in June, in the same position, ATA said in a filing with the Securities and Exchange Commission Monday night.
Shares of ATA Holdings (Research) tumbled 53 cents to close at 93 cents on bankruptcy speculation. The bankruptcy announcement was made after Tuesday's close.
-- from staff and wire reports