Rough times call ATA chief back to work
By Mark Jewell
Associated Press
INDIANAPOLIS — George Mikelsons, the 65-year-old founder of American Trans Air, owns a stable full of horses, a twin-engine helicopter and a handful of Harley-Davidsons.
Associated Press
Until recently, he also had the time to enjoy them.
George Mikelsons, who founded American Trans Air in 1973, returned from semiretirement in August to become the company's president and chief executive — positions he left in 1997. The airline posted a $61 million loss in the third quarter this year.
But with ATA in peril amid an industrywide downturn, Mikelsons returned from semiretirement in August to become the company's president and chief executive — positions he thought he had left for good in 1997, when the industry was in better shape.
Mikelsons has been so busy that he even sold his motor home. "It'll be a cold day in hell when I get a chance to traipse around the country and drive for two weeks," Mikelsons grumbled jokingly.
If the hours Mikelsons dedicates to the business haven't changed much since he started building ATA in 1973, the challenges certainly have.
Like most airlines, ATA — a major charter airline to Hawai'i through tour wholesaler Pleasant Hawaiian Holidays — has struggled financially in the past two years because of the economic downturn, reduced spending by business travelers and the lingering impact of the Sept. 11 terrorist attacks.
ATA reported a $61 million loss in the third quarter, compared with a $13,000 profit in the year-ago period.
To guide the airline through these turbulent times, Mikelsons is on a mission to cut costs.
Even those who stand to lose out as Mikelsons looks to reduce the airline's operating expenses say they respect his commitment to the company.
Kevin Friel, chairman of the bargaining unit of the Air Line Pilots Association representing ATA pilots, does not consider Mikelsons a friend of unions, but he concedes more cuts are needed. Friel praised Mikelsons for "coming back, rolling up his sleeves and trying to steer the company in the right direction to keep it viable."
Mikelsons, a native of Latvia, credits an "immigrant mentality" with helping him make tough decisions.
Five years ago, Mikelsons handed off the top executive positions to John Tague, while remaining chairman of the board of ATA's parent company, ATA Holdings Corp.
Tague's primary expertise was in marketing — a valuable asset when ATA posted strong growth in the late 1990s, but less important in today's environment, Mikelsons said.
Upon returning as CEO, Mikelsons simplified the airline's fleet and split the charter and passenger businesses into separate divisions. He also announced plans to eliminate up to 1,500 employees, or 8 percent of the company's work force. In December, ATA added three new destinations from San Francisco and added frequencies on other routes.
In the early days, ATA flew mainly to tropical destinations and adorned its jets with images of palm trees and rum cocktails. ATA still flies to vacation spots but it caters increasingly to business travelers and its planes now have understated blue-and-gold paint jobs.
ATA competes with low-fare carriers such as Southwest, flying to both coasts from a hub at Chicago's Midway Airport and from Indianapolis International Airport. Mikelsons has built ATA into the nation's 10th-largest carrier based on revenue passenger miles — a measure of the number of paying customers that travel one mile — and into North America's largest operator of commercial and military charters.
Mikelsons didn't take an easy route to where he is today. His family fled communism in Latvia and the Nazis while living in Germany. Mikelsons later moved to Australia before reaching Indianapolis in 1960, when he learned to fly.
Soon after, Mikelsons ran an air taxi service and became chief pilot of an Indianapolis-based travel club. In 1973 he bought a Boeing 720 and started his own travel club, Ambassadair, which later became ATA.
It wasn't until 1992 that ATA began scheduled service from Chicago-Midway Airport. In 1993, it went public. The airline passed the $1 billion mark in annual revenue in 1999.
Last year, Mikelsons tried to return ATA to private ownership by purchasing the remaining 28 percent of stock at $23 a share. Would-be creditors withdrew financing after the attacks.
Mikelsons' compensation — $680,000 last year — will not change despite his added responsibilities. He could stand to benefit plenty, however, if he can engineer a comeback that would boost ATA's stock. He owns 72 percent of ATA's 11.8 million shares, which hovered around $22 each in summer 2001. They hit a 52-week low of $2.72, but have since climbed back above $6.
Mikelsons said his decision to return as ATA's CEO was rooted in the financial austerity required to deal with the aftershocks of the attacks.
In a down market, ATA must squeeze as much flight time as possible out of its fleet, which is one of the youngest among U.S. carriers as a result of a 2-year-old modernization program. ATA also has sought to maintain flight crew staff levels, while cutting costs and eliminating support positions. ATA recalled most of the 1,100 employees it furloughed after the attacks.
Still, with fares declining, travel demand hurt by a depressed economy and ATA facing higher security costs, the airline sought financial help from the federal government by applying for a loan guarantee. On Nov. 20, the government agreed to back most of a $168 million loan ATA used for short-term needs.
To those watching the industry, Mikelsons' return as ATA's chief executive was not a surprise.
"He shines in this kind of environment," said Michael Boyd, president of The Boyd Group, an Evergreen, Colo.-based aviation consultant. "If he was able to get the airline through the last 30 years, the next 36 months should be a cakewalk for him. Mikelsons is ATA."
While others his age might prefer playing golf, Mikelsons said he couldn't stomach such a fate, insisting he would be "miserable if I sat on my rear end." As chairman, he typically worked eight-hour days. Now, with added responsibilities, he's putting in 11 hours.
"He tried a little bit to back off a few years ago, and he's so much happier when he's leading ATA," said Sally Brown, who started as an ATA flight attendant in 1975 and now heads ATA's Ambassadair Travel Club. "I think he's at his peak right now."
Mikelsons offered no predictions as to when he will step down as CEO and resume riding the Harleys that sit idle in his garage.
"I don't know that I will," he said. "I think that in my case, there's no such thing as retirement."
