EXHIBIT 10.1

 

October 24, 2004

ATA Holdings Corp.
ATA Airlines, Inc.
1337 West Washington Street
Indianapolis, Indiana 46231

Attn.:  Mr. Gilbert F. Viets
           Executive Vice President and Chief Restructuring Officer

             In Re:  Commitment Letter

Dear Sirs:

     This letter will constitute the commitment by AirTran Airways, Inc.
("AirTran" or "we"), subject to the terms and conditions herein contained and
the receipt of a signed copy of this commitment letter, to acquire in an asset
acquisition (the "Acquisition") (a) the leasehold interest of Sellers under the
Chicago Midway Airport Amended and Restated Airport Use Agreement and Facility
Lease with an effective date of January 1, 1997, as amended to date (the "Midway
Facilities Lease") including without limitation all Sellers' right, title and
interest in and to 14 gates, ramp space and associated service facilities at
Chicago's Midway Airport, including the space to build 12 additional regional
jet gates and the furnishings, fixtures and personal property (exclusive of
ground equipment) used or employed in connection with such gates and service
facilities (collectively, the "Midway Gates"), (b) 8 permanent and 11 AIR 21
arrival and departure slots of Sellers at LaGuardia and 4 AIR 21 arrival and
departure slots of Sellers at Reagan (collectively, the "Slots") and (c)
Sellers' interest in certain airport facility leases or arrangements at outlying
stations served from Midway (the "Station Leases") (the Midway Facilities Lease,
the Slots and the Station Leases, collectively, the "Midway Assets"). The
Purchase Price for the Midway Assets will be Eighty Seven Million Five Hundred
Thousand Dollars ($87,500,000) payable in cash at closing (the "Acquisition
Price"). The terms "Sellers" and "you" mean and refer jointly and severally to
ATA Holdings Corp. and ATA Airlines, Inc. irrespective of whether this
commitment letter is fully or partially executed before or after the date of
filing of the Chapter 11 Case (hereinafter defined).

     The transactions contemplated hereby are to be accomplished in a Chapter 11
case to be filed by Sellers under the Bankruptcy Code (11 U.S.C. section 101 et
seq.) (the "Chapter 11 Case") in the United States Bankruptcy Court for the
Southern District of Indiana (the "Bankruptcy Court").

     Consummation of the Acquisition is subject to, among other things, (1)
execution of a definitive asset acquisition agreement (the "Asset Acquisition
Agreement") in form and substance satisfactory to AirTran incorporating the
terms and conditions of this commitment

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 2

letter and such other terms and conditions with respect to the Acquisition as
may be required by AirTran, (2) completion of AirTran's due diligence
investigation in all respects satisfactory to AirTran, which AirTran shall
endeavor to complete no later than November 1, 2004, and which will not be a
condition precedent in the Asset Acquisition Agreement, and (3) availability to
AirTran of financing necessary to fund the Acquisition Price, which financing
contingency will not be a condition precedent in the Asset Acquisition
Agreement. AirTran hereby advises you that, based upon conversations with its
investment bankers, AirTran is highly confident that such financing should be
available to it and that it will be in a position to execute an otherwise
acceptable Asset Acquisition Agreement which does not include as a condition
precedent to a closing the obtaining of financing by AirTran.

     We are prepared to commence preparation of the Asset Acquisition Agreement
immediately and to complete our due diligence investigation. Such agreements
will contain customary terms and conditions for an acquisition of this nature,
including:

(i) the filing by Sellers of the Chapter 11 Case;

(ii) AirTran to have the option of wet leasing during a transition period such
number of Sellers' B-737-800 aircraft as AirTran may determine. AirTran to
provide to Sellers as promptly as practicable after filing of the Chapter 11
Case an initial indication of the number, if any, of B-737 aircraft it
tentatively would elect to take on wet lease for a term of no more than 1 year
and within 45-days of filing of the Chapter 11 Case and notify Sellers of
AirTran's final determination of the number, if any, of B-737 aircraft it elects
to take on wet lease for a term of no more than 1 year;

(iii) B-737-800 wet leases to be on market rates (not to exceed Sellers'
out-of-pocket costs) which, among other things, reflect current market aircraft
rental rates which are less than rental rates that Sellers are currently
incurring on the B-737-800 aircraft (AirTran and Sellers to jointly work with
B-737-800 lessors on new lease rate/return schedule for transition period);

(iv) Sellers to operate a Midway schedule during transition period of up to 120
days, such schedule to be coordinated with AirTran wet lease operations, if any,
and with, at AirTran's option, a representative of AirTran to be stationed at
Sellers' headquarters to coordinate operations between AirTran and Sellers;

(v) Effective with transfer of the Midway Assets to AirTran, AirTran to enter
into airport and ground services arrangement with Sellers for Midway operation,
such agreement to be terminable by AirTran (a) on 70-day prior notice in the
case of termination of such services arrangement with respect to all or
substantially all the Midway Gates and (b) on such shorter notice

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 3

period as AirTran deems reasonable under the circumstances for termination of
such services arrangement with respect to individual Midway Gates or less than
substantially all the Midway Gates;

(vi) Sellers to use their best efforts to effect the transfer to AirTran of all
Sellers' interest in such of the airport facility leases or arrangements at
outlying stations currently served by Sellers from Midway as AirTran may
request. In the event, despite Sellers best reasonable efforts, Sellers are
unable to assign or transfer any such facility leases or arrangements, such
failure shall not be a basis for terminating AirTran's commitment but, in such
event, Sellers shall cooperate fully with AirTran, by such alternative
arrangements as may be reasonably available, to provide AirTran with the benefit
of such leases or arrangements. To the extent consistent with the level of
AirTran's use of such support facilities, AirTran will endeavor to enter into
arrangements with Sellers, as may reasonably be requested by Sellers at closing
of the Acquisition, to permit Sellers continued access to such facilities on
commercially reasonable terms;

(vii) Without undertaking any obligation to hire any employee or group, to the
extent practical and consistent with its hiring needs and standards, AirTran to
undertake good faith efforts to employ individual qualified existing employees
of Sellers as new AirTran employees;

(viii) Asset Acquisition Agreement to provide for code share for transition and
such other elements as most efficiently support passenger accommodation and/or
as otherwise required in AirTran's judgment;

(ix) Sellers and AirTran to enter into an agreement with Sellers with respect to
ticket sales by Sellers involving transportation to, from or through Chicago's
Midway Airport pursuant to which AirTran will be entitled to the ticket revenue
but will reimburse Sellers from such revenue for Sellers' out-of-pocket selling
costs with respect to such tickets booked by Sellers (and to reimburse, from
credit card holdback proceeds received by AirTran, Sellers for transportation
taxes and governmental fees and charges which Sellers paid (prior to providing
the travel service) on sale of tickets) for passengers who use such tickets to
fly on AirTran flights. Parties to explore other marketing opportunities;

(x) AirTran, at its election, to have the right to enter into a marketing
agreement with the Sellers' commuter carrier at Midway on market terms. As
promptly as practicable after filing of the Chapter 11 Case, AirTran to provide
to Sellers an initial indication of whether it intends to elect to enter into
such a marketing agreement with such commuter carrier and within 45-days after
such filing, AirTran to notify Sellers of AirTran's

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 4

final determination of whether it will enter into such a marketing agreement
with such commuter carrier;

(xi) AirTran and Sellers to bargain in good faith concerning a mutually
agreeable code share alliance and/or joint marketing arrangement post closing
respecting, among others, AirTran's Midway operations and Sellers' Hawaiian
operations. Any such arrangement must be on economic terms acceptable to
AirTran;

(xii) at closing of the Acquisition which shall occur no later than 120 days
after filing of the Chapter 11 Case, good and valid title to the Midway Assets
to be transferred to AirTran debt free and clear of any liens or encumbrances;

(xiii) such approval as AirTran may deem necessary of any aspects of the
Acquisition by AirTran's unions and review and final approval of the Acquisition
by AirTran's Board;

(xiv) MAC clause relating to (a) fuel escalation above $2.00 per gallon
(including taxes and fees), (b) cessation of operations by Sellers, (c)
conversion of the Chapter 11 Case to a Chapter 7, (d) work stoppage or slow down
with respect to Sellers' flight operation of B-737-800 aircraft pursuant to wet
leases with AirTran or the operation of regular scheduled flights of Chicago
Express Airlines, Inc., or (e) occurrence of any 9/11 type terrorist event or
other customary "market out" event;

(xv) the option on the part of AirTran to purchase or acquire all or any portion
of the ground support equipment owned, leased or operated by Sellers at
Chicago's Midway Airport at the appraised liquidation value;

(xvi) representations and warranties from Sellers with respect to the ownership
of the Midway Assets and Sellers' ability to consummate the Acquisition,
Sellers' business, condition (financial or otherwise), results of operations,
assets, liabilities, properties and prospects of Sellers and specific
environmental matters, including to the extent relevant to the Midway Assets;

(xvii) covenants with respect to the Midway Assets between the time of the
execution of the Asset Acquisition Agreement and the closing of the Acquisition;

(xviii) concurrent with the transfer by Sellers of the Midway Facilities Lease
to AirTran, AirTran may deduct from the Acquisition Price and pay over to the
City of Chicago all amounts owing to the City of Chicago in respect of the
$7,500,000 principal amount unsecured loan made to fund the jetway

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 5

extension at Chicago's Midway Airport and any other amounts as may be owing to
the City of Chicago which are cross-defaulted to the Midway Facilities Lease;
provided, however, in no event shall AirTran be permitted to deduct in excess of
$8,000,000 from such Acquisition Price for such payment to the City of Chicago;

(xix) other customary conditions to AirTran's obligations to close the
Acquisition, including, without limitation, Bankruptcy Court approval, continued
accuracy of representations and warranties and compliance with covenants and
receipt by all parties of all corporate, regulatory and other third party
approvals and authorizations necessary to consummate the Acquisition;

(xx) covenant with respect to a holdback amount with respect to the Slots (the
"Holdback Amount") to be withheld from the Acquisition Price until such Slots
are actually transferred to AirTran. The Holdback Amount will be $24,000,000 and
will be released $8,000,000 upon conveyance to AirTran of the eight permanent
LaGuardia non AIR 21 arrival and departure slots and $941,177 per Slot upon
vesting in AirTran (either by direct transfer or by re-issuance by the FAA/DOT)
of each AIR 21 arrival and departure slot at LaGuardia and Reagan (exclusive of
the four AIR 21 slots at LaGuardia to be retained by Sellers). Until vesting
each Slot, the Slots (exclusive of the four AIR 21 slots at LaGuardia to be
retained by Sellers) may be operated by AirTran pursuant to a code share
arrangement with Sellers. Should any such Slot not be awarded to AirTran (and
the Holdback Amount therefore not be paid to Sellers) and such Slot nevertheless
be operated by AirTran pursuant to a code share arrangement with Sellers so that
AirTran achieves the operational benefits thereof, the parties will bargain in
good faith concerning compensation to Sellers therefore; and

(xxi) covenant with respect to payment by Sellers of a breakup fee on customary
terms in the event the Acquisition is not consummated, such fee to be in the
amount of 3% of the Acquisition Price plus all out-of-pocket expenses (not to
exceed in the aggregate $1,000,000) incurred by AirTran in connection with due
diligence, analysis and negotiation of the Acquisition. In the event the
Bankruptcy Court does not approve the Acquisition or requires that competing
offers be considered, and thereafter another offer for the Midway Assets is
proposed to be accepted by Sellers, AirTran will have a right to increase its
commitment to purchase to terms which are more favorable to Sellers than such
other offer. Should the Acquisition of the Midway Facilities Lease not be
consummated on or prior to 120 days after the filing of the Chapter 11 Case or
the commitment of the Sellers to sell the Midway Assets be terminated prior

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 6

to such date, any wet leases theretofore entered into may be thereafter
terminated on such date as is reasonably specified by AirTran in a notice to
Sellers.

Our legal counsel is prepared to commence the preparation of the Asset
Acquisition Agreement as soon as you return a signed copy of this commitment
letter to us.

     Promptly following your execution and delivery of this commitment letter in
the manner provided below and until the Termination Date (as defined below),
Sellers will provide AirTran and any person or organization who is considering
providing financing to AirTran to fund all or any portion of the Acquisition
Price and their respective officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives (together
"Representatives") with full access, upon reasonable prior notice, to all
officers, employees and accountants of Sellers and their subsidiaries and to
their Midway Assets and other properties, contracts, books, records and all such
other information and data concerning the Midway Assets and the business and
operations and financial condition of Sellers and their subsidiaries as AirTran
or any of such Representatives reasonably may request in connection with such
investigation. AirTran acknowledges that it has entered into a confidentiality
agreement dated August 4, 2004 with you and agrees that its due diligence will
be conducted in accordance with and governed by the terms thereof.

     In consideration of the substantial expenditure of time, effort and expense
to be undertaken by AirTran and its Representatives immediately upon your
execution and delivery of this commitment letter, you hereby undertake and agree
that, for the period from the date hereof until the execution of the Asset
Acquisition Agreement, but not later than November 1, 2004 (the "Termination
Date"), subject to the duties imposed by applicable law, Sellers will not, nor
will Sellers permit any of their subsidiaries or affiliates (or authorize or
permit any of their respective Representatives) to, take, directly or
indirectly, any action to initiate, assist, solicit, receive, negotiate,
encourage or accept any offer or inquiry from any person (a) to transfer, assign
or pledge the Midway Assets or to engage in any Business Combination (as defined
below), (b) to reach any agreement or understanding (whether or not such
agreement or understanding is absolute, revocable, contingent or conditional)
for, or otherwise attempt to consummate, any Business Combination or (c) to
furnish or cause to be furnished any information with respect to the Midway
Assets or the Sellers or any of their subsidiaries to any person (other than as
contemplated by this commitment letter) who Sellers or any such subsidiary,
affiliate or Representative knows or has reason to believe is in the process of
considering any acquisition of the Midway Assets or any Business Combination. If
Sellers or any such subsidiary, affiliate or Representative receives, or has
received, from any person any offer, inquiry or informational request referred
to above, Sellers will promptly advise such person, by written notice, of the
terms of this paragraph and will promptly, orally and in writing, advise AirTran
of such offer, inquiry or request and deliver a copy of the foregoing notice to
AirTran. For purposes hereof, "Business Combination" means any merger,
consolidation or combination to which Sellers or any of their subsidiaries is a
party, any sale, dividend, split or other disposition of capital stock or other
equity interest of Sellers or any of their subsidiaries or

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 7

any sale, dividend or other disposition of the Midway Assets or all or
substantially all of the properties and assets of Sellers or any of their
subsidiaries.

     AirTran and Sellers agree that money damages would not be a sufficient
remedy for any breach of any provision of the two preceding paragraphs by
Sellers, and that in addition to all other remedies which any party hereto may
have, each party will be entitled to specific performance and injunctive or
other equitable relief as a remedy for any such breach. No failure or delay by
any party hereto in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any right,
power or privilege hereunder.

     Notwithstanding the foregoing, AirTran acknowledges that Sellers will be
obligated as debtors in possession in the Chapter 11 Cases to file a motion with
the Bankruptcy Court seeking approval of the assumption and assignment of the
Midway Facilities Lease and other executory contracts included in the Midway
Assets and to sell or otherwise dispose of the Midway Assets pursuant to
Sections 363 and 365 of the Bankruptcy Code (the "Sale Motion"), that the Sale
Motion will be a public document, that other potential acquirers of the Midway
Assets will have to be afforded an opportunity to obtain information from
Sellers re the Midway Assets to make an offer to acquire the Midway Assets
before the final hearing on the Sale Motion, all as provided in one or more
orders of the Bankruptcy Court ("Sale Procedure Orders"). The filing of the Sale
Motion and compliance by Sellers with the Sale Procedures Orders shall not
constitute any violation of their obligations under this letter or the Asset
Acquisition Agreement.

     To become effective and create a commitment by AirTran to proceed with the
Acquisition , the terms and conditions contained herein must be accepted and
agreed by you and a signed copy transmitted to us by facsimile by 5:00 p.m.
(Atlanta time), on October 25, 2004, with a signed original of such letter
returned to us by Noon (Atlanta time) on October 26, 2004.

     This commitment letter shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the conflicts of
laws principles thereof.

     By acceptance of this commitment letter, Sellers agree that, except for
that certain letter agreement regarding confidentiality dated August 4, 2004
between AirTran and Sellers, this commitment letter supersedes any and all
discussions, negotiations, understandings or agreements, written or oral,
express or implied. This commitment letter may not be contradicted by evidence
of any actual or alleged prior contemporaneous or subsequent understandings or
agreements of the parties, written or oral, express or implied, other than a
writing which expressly amends or supersedes this letter. There are no unwritten
understandings or agreements between the parties.

ATA Holdings Corp.
ATA Airlines, Inc.
October 24, 2004
Page 8

     BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS
ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON
AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAW. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION (WITHOUT SUBMITTING TO
ARBITRATION), THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER
THIS LETTER OR ANY OF THE LOAN DOCUMENTS.

     If you are in agreement with the foregoing, please so indicate by signing
two copies of this commitment letter in the spaces set forth below and returning
one of such signed copies to the undersigned, whereupon this commitment letter
shall constitute our binding agreement to the extent and in accordance with the
terms and provisions set forth above.

Very truly yours,

AIRTRAN AIRWAYS, INC.

 

By: /s/ Richard P. Magurno
   Name: Richard P. Magurno
   Title: Senior Vice President General Counsel

Accepted and agreed to as of the
24th day of October, 2004:

ATA HOLDINGS CORP.

By: /s/ J. Georgia Mikelsons
   Name: J. George Mikelsons
   Title: Chairman and Chief Executive Officer

ATA AIRLINES, INC.

By: /s/ J. Georgia Mikelsons
   Name: J. George Mikelsons
   Title: Chairman and Chief Executive Officer