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U.S. airline ATA seeks bankruptcy protection

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INDIANAPOLIS — ATA Airlines Inc., the nation's 10th-largest airline, filed for bankruptcy protection Tuesday and sold off airport slots and other assets to AirTran Airways Inc. for $87.6 million, becoming the latest U.S. airline tripped up by rising fuel costs and fare wars.

AirTran Holdings Inc., based in Orlando, Fla., will assume ATA's flight operations, gate leases and routes at Chicago Midway Airport and arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport.

The deal is subject to approvals by the bankruptcy court and other entities and is expected to take effect by early next year, ATA officials said.

"We will recreate ATA as a formidable, low-cost carrier," ATA founder and chief executive George Mikelsons said Tuesday.

ATA's announcement came amid speculation that Delta Air Lines Inc., the nation's third-largest airline, would win $1 billion in concessions from its pilots and avoid bankruptcy. The airline is expected to decide by today Wednesday whether to seek Chapter 11 bankruptcy protection.

ATA on Monday named an executive to oversee the restructuring of the discount carrier's mounting debt.

The filing under Chapter 11 of the federal bankruptcy code came as the Indianapolis-based airline, whose parent company is ATA Holdings Corp., faces soaring fuel costs, an industry fare war and sharply lower demand for military charter flights.

ATA also is saddled with millions of dollars in debt from new aircraft purchases.