ATA Airlines, which is grappling with a liquidity crisis, said it has no plans to leave Chicago's Midway Airport, even as industry experts speculated on Wednesday it plans to sell its gates there.

The Indianapolis-based airline, the largest carrier at Midway, said in a federal filing last week that barring changes to its aircraft lease agreements, it does not expect to have enough cash to meet those obligations in the first quarter of 2005.

ATA said in a statement on Tuesday night that the carrier is busy restructuring its finances. "While engaged in that effort, we are not abandoning Chicago Midway, nor are we canceling any flights," said George Mikelsons, chairman and chief executive.

The airline declined to comment further on Wednesday.

"Not abandoning doesn't mean they won't sell some gates," said Michael Boyd, an aviation consultant at the Boyd Group. "They might be pulling down some operations, but not pulling out."

Boyd, who said ATA is "definitely" looking at selling gates at Midway, added that Southwest Airlines would most likely buy those gates. "They are ATA's boldest competitor at Midway. And if anyone else bought the gates, they would have to take on Southwest head-on," he said. "No one would want to do that."

ATA also said in the filing with the US Securities and Exchange Commission that it might sell some assets.

The airline has been aggressively cutting costs in the past year to cope with falling fares, soaring jet fuel prices and declining demand for its military charter flights.

"I think the outlook for ATA is bleak," said Alok Makhija, deputy head of research at DebtTraders, a New York dealer of high-yield and distressed debt. "They are trying to sell their Midway assets. They will have trouble getting full price for them, because people know the airline is going through a tough time."

"People know that if the company doesn't sell the assets, it will probably file for bankruptcy, where the assets could be for sale for even cheaper," Makhija said.

Chicago's aviation department said ATA currently leases 14 gates at Midway. "They have preferential leases on their gates, which means if ATA reduces or ceases operations at Midway, then the city can reclaim the gates and reallocate them to other airlines," the department said in a statement.

Fulcrum Global Partners analyst Susan Donofrio said on Tuesday that ATA plans to sell its assets at Midway. "They shopped it to Southwest specifically," she said.

Southwest Airlines declined to comment.

ATA is also trying to transfer the leases on its more than 30 Boeing 737-800 jets, Makhija said. "But once they transfer the leases, they will not be able to use the planes, and the 737-800s are the best aircraft for ATA's business. So transferring the leases will reduce obligations in the short term, but could harm the business in the long term," he said.

"My feeling is that ATA is now headed in a different direction," Boyd said. "They will probably pull out scheduled service, refocus on Las Vegas, and other chartered markets."

(Reuters)