The final flight of Chicago Express was greeted by a water salute as it landed at Chicago Midway Airport on March 28.

However, if all goes according to plan, that last flight from Indianapolis will not be the last for the regional carrier.

Okun Enterprises, an Indianapolis-based real estate developer, won a six-way bidding contest on March 31 to pay an undisclosed sum for the regional unit of bankrupt ATA Holdings [ATAHQ]. The bankruptcy court in Indianapolis is scheduled to ratify the sale on April 4.

A minimum bid of $1 million had earlier been set by ATAH. The deal includes the Chicago Express operating certificate, spare parts and inventory. In a separate deal, Okun agreed to buy the carrier's two Saab 340Bs. According to a statement from ATAH, the sale is contingent on Okun obtaining approvals from the Federal Aviation Administration (FAA) and the U.S. Department of Transportation (DOT). Its operating certificate remains valid for 30 days, the FAA said.

Okun Enterprises is a unit of Investment Properties of America, which owns malls, offices and warehouses around the nation. Edward Okun is the firm's CEO. Outside of his real estate interests, Okun has been a sponsor of an IndyCar series race team.

While ATAH announced the deal, it shed little light on the future of Chicago Express. It is not clear how or when the carrier will again be in the air. Okun, who departed for vacation immediate after closing the deal, could not be reached for comment.

ATAH did not reveal any information on the five other parties seeking to buy Chicago Express.

It is not clear when the new Chicago Express will take to the skies again, or if it will have an ATA code-share. After the sale was announced, ATAH declined to talk about any future code-share agreements. The company had decided on Jan. 26 to close down the regional unit because it no longer needed the code-share feed into Chicago Midway that Chicago Express had provided since 1996 (RAN, Feb. 7). Instead, ATA's new partnership with Southwest Airlines [LUV] excluded Chicago Express. The two low- fare carriers have been feeding passengers to each other through their Midway gates. Southwest recently estimated that arrangement with ATA should produce $100 million in new revenue this year.

The Closure

Following through on its promise, ATAH shut down Chicago Express on March 28. It had 38 roundtrips flying that last day into its hub operations in Indianapolis and Chicago from six cities in Indiana, Michigan and Wisconsin. While it once had 17 Saab 340s operating on its network, in the end it was down to flying less than 10, including the only two planes it owned. As of March 28, Chicago Express began preparations to return all its leased Saabs that it had not already returned, ATAH spokeswoman Roxanne Butler told Regional Aviation News.

Earlier in the week, American Airlines [AMR] filed a claim in the ATAH bankruptcy case to protect its six Saabs that had been leased to Chicago Express. It asked the court to compel ATAH to make any missed lease payments or lapsed maintenance requirements before approving the sale of Chicago Express to any bidder. Butler said that the carrier has returned the six planes to American Airlines.

Some of Chicago Express's Saabs are now part of Colgan Air's growing fleet in Texas. Colgan is a new turboprop code-share partner for Continental Airlines [CAL] out of Houston.

Over the last two months, Chicago Express' payroll dwindled from 600 workers to 450, with 320 remaining in Chicago. In its closing days, one-third of the employees found new jobs or chose not to stay until the end, said Butler. Most of the 450 remained on the payroll until April 3 to close down stations or assist with the transition. "We are all optimistic that the auction will result in the best situation for all the employees," Butler told Regional Aviation News before the auction.

As the court established the auction timetable, it approved a special bonus pool of $214,000 to enable Chicago Express to hold onto 16 senior executives. The uninterrupted employment of the key employees was accomplished to assure a smooth transfer of the carrier's operating certificate to a new owner.

The First Bid

The one party not participating in the March 31 auction was NatTel, the Connecticut investment firm that pushed for the sale of Chicago Express since December.

As an investment group, NatTel said it was critical that it purchase the airline while it was still operating. NatTel president Jack Robinson, a former Eastern Express president, contended that the Chicago Express operating certificate would be worthless once the carrier stopped flying.

After the financial examiner, Navigant Consulting, which NatTel fought to have appointed, set a minimum bid threshold at $1 million, NatTel submitted its final bid at $1,020,000, said Aaron Hammer, NatTel's Chicago based attorney at Freeborn & Peters. NatTel offered a cash deal provided the purchase could be consummated before the carrier was shut down.

Hammer said ATAH rejected the offer because it believed that there would be other parties interested in paying a higher price. NatTel, he said, would not participate in the auction.

Before the March 25 bid deadline, NatTel submitted an offer of $100,000. In December, it submitted an unsolicited bid $37,700, contending that Chicago Express was effectively worthless since it was saddled with $722 million in debt that ATAH owed to Boeing [BA] for new aircraft that ATA had ordered (RAN, Jan. 3). Robinson's token payment was calculated to cover the legal costs to ATAH in closing the deal.

When NatTel submitted its first bid in December, it was rejected because it was thought that Chicago Express still had a future in the ATA family. At that same December auction, Southwest paid $117 million for six gates at Midway and entered into a code-sharing partnership with ATA.

ATAH's game plan as it entered bankruptcy was to withdraw from Chicago Midway. It had struck a deal to sell all of its Midway gates to AirTran [AAI] for $87.6 million. ATA would create a new network based at Indianapolis. Likewise, Chicago Express reduced its flights into Midway and crafted a new intra-Indiana service, also based at Indianapolis.

>>Contacts: Roxanne Butler, ATAH, (317) 282-2659; Aaron Hammer, Freeborn & Peters, (312) 360-6558.<<