updated 10/26/2004 8:00:20 PM ET 2004-10-27T00:00:20

ATA Airlines Inc., the nation’s 10th-largest airline, filed for bankruptcy protection Tuesday, becoming the latest U.S. airline tripped up by rising fuel costs and fare wars.

ATA sold off airport slots and other assets to AirTran Airways Inc. for $87.6 million but said it plans to honor tickets and maintain its full flight schedule.

The Orlando, Fla.-based AirTran Holdings Inc. 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,” founder and chief executive George Mikelsons said Tuesday.

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

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. Delta is expected to decide by Wednesday whether to seek Chapter 11 bankruptcy protection.

The ATA filing under Chapter 11 of the federal bankruptcy code came as the Indianapolis-based airline, whose parent company is ATA Holdings Corp., faces sharply lower demand for military charter flights, in addition to the soaring fuel costs and fare wars. ATA also is saddled with millions of dollars in debt from new aircraft purchases.

The value of the company plummeted 36 percent Tuesday, its stock closing at 93 cents a share, down 53 cents, on the Nasdaq stock exchange. The stock had hit a 52-week high of $13.31 on Feb. 2.

In Washington, the Air Transportation Stabilization Board said it planned to work with the airline through the bankruptcy process to make sure taxpayers’ interests are protected.

The board, which was set up after the 2001 terrorist attacks to administer a $10 billion government loan guarantee program for the airlines, issued ATA a $148.5 million loan guarantee in September 2002.

In its filing, ATA seeks bankruptcy protection for eight different corporate entities from more than 1,000 creditors. The filing listed total assets of about $745.1 million and total debts of $940.5 million.

In recent weeks ATA has announced plans to cut more than 300 jobs. So far this year, ATA pilots and flight attendants have accepted nearly $70 million in wage concessions.

ATA is the largest North American operator of commercial and military charters. ATA operates hubs at Chicago’s Midway Airport, where it has 14 gates, and Indianapolis International Airport.

Indianapolis will remain ATA’s headquarters and primary hub, company officials said.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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