ATA HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) June 30, December 31, 2004 2003 ----------- ------------ ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 150,046 $ 160,644 Receivables, net of allowance for doubtful accounts (2004 - $1,077; 2003 - $1,388) 114,303 118,745 Inventories, net 46,803 47,604 Prepaid expenses and other current assets 30,568 21,406 ----------- ------------ Total current assets 341,720 348,399 Property and equipment: Flight equipment 330,993 324,697 Facilities and ground equipment 147,250 142,032 ----------- ------------ 478,243 466,729 Accumulated depreciation (236,329) (213,247) ----------- ------------ 241,914 253,482 Restricted cash 31,682 48,301 Goodwill 14,887 14,887 Prepaid aircraft rent 146,175 144,088 Investment in BATA 13,679 14,672 Deposits and other assets 51,549 46,158 ----------- ------------ Total assets $ 841,606 $ 869,987 =========== ============ LIABILITIES AND SHAREHOLDERS' DEFICIT Current liabilities: Current maturities of long-term debt $ 59,597 $ 51,645 Accounts payable 31,687 25,327 Air traffic liabilities 125,677 102,831 Accrued expenses 171,398 154,689 ----------- ------------ Total current liabilities 388,359 334,492 Long-term debt, less current maturities 433,531 443,051 Deferred gains from sale and leaseback of aircraft 53,484 55,392 Other deferred items . 80,695 51,822 Mandatorily redeemable preferred stock; authorized and issued 500 shares 50,000 56,330 ----------- ------------ Total liabilities 1,006,069 941,087 Commitments and contingencies Convertible redeemable preferred stock; authorized and issued 300 shares 30,000 32,907 Shareholders' deficit: Preferred stock; authorized 9,999,200 shares; none issued - - Common stock, without par value; authorized 30,000,000 shares; issued 13,535,304 - 2004; 13,476,193 - 2003 66,236 65,711 Treasury stock; 1,711,440 shares - 2004; 1,711,440 shares - 2003 (24,778) (24,778) Additional paid-in capital 17,938 18,163 Accumulated deficit (253,859) (163,103) ----------- ------------ Total shareholders' deficit (194,463) (104,007) ----------- ------------ Total liabilities and shareholders' deficit $ 841,606 $ 869,987 =========== ============ See accompanying notes.United States

ATA HOLDINGS CORP.AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2004 2003 2004 2003 ----------- ----------- ----------- ------------ (Unaudited) (Unaudited) (Unaudited) (Unaudited) Operating revenues: Scheduled service $ 300,750 $ 278,009 $ 577,917 $ 522,777 Charter 72,676 94,550 164,366 206,857 Ground package 2,978 3,265 7,873 8,476 Other 14,370 12,298 27,951 23,641 ------------ ----------- ----------- ----------- Total operating revenues 390,774 388,122 778,107 761,751 ------------ ----------- ----------- ----------- Operating expenses: Salaries, wages Securities and ~~benefits~~Exchange 107,394 98,875 215,062 193,153 Fuel and oil 85,838 68,081 168,128 143,173 Aircraft rentals 59,835 56,065 119,380 111,334 Handling, landing and navigation fees 30,097 31,399 63,452 61,456 Aircraft maintenance, materials and repairs 19,512 10,751 39,414 24,230 Other selling expenses 14,015 13,085 26,559 24,842 Crew and other employee travel 12,967 16,856 29,984 31,843 Depreciation and amortization 12,819 13,796 26,450 28,989 Advertising 10,399 10,030 20,226 20,305 Passenger service 10,096 10,756 21,432 21,005 Facilities and other rentals 6,729 5,797 13,113 11,621 Insurance 5,978 7,526 11,476 14,861 Commissions 5,676 4,214 12,496 10,240 Ground package cost 2,508 2,786 6,571 6,990 U.S. Government Funds - (37,156) - (37,156) Other 17,434 19,316 37,238 37,400 ----------- ----------- ----------- ----------- Total operating expenses 401,297 332,177 10,981 704,286 ----------- ----------- ----------- ----------- Operating income (loss) (10,523) 55,945 (32,874) 57,465 Other income (expense): Interest income 532 705 1,075 1,511 Interest expense (15,442) (12,959) (30,431) (25,641) Loss on extinguishment of debt - - (27,314) - Other (229) (376) (462) (1,012) ----------- ----------- ----------- ----------- Other expense (15,139) (12,630) (57,132) (25,142) ----------- ----------- ----------- ----------- Income (loss) before income taxes (25,662) 43,315 (90,006) 32,323 Income taxes - - - - ----------- ----------- ----------- ----------- Net income (loss) (25,662) 43,315 (90,006) 32,323 Preferred stock dividends (375) (2,485) (750) (2,860) ----------- ----------- ----------- ----------- Income (loss) available to common shareholders $ (26,037) $ 40,830 $ (90,756) $ 29,463 =========== =========== =========== =========== Basic earnings per common share: Average shares outstanding 11,823,864 11,764,753 11,823,317 11,764,753 Net income (loss) per share $ (2.20) $ 3.47 $ (7.68) $ 2.50 =========== =========== =========== =========== Diluted earnings per common share: Average shares outstanding 11,823,864 14,077,005 11,823,317 14,053,238 Net income (loss) per share $ (2.20) $ 2.93 $ (7.68) $ 2.15 =========== =========== =========== =========== See accompanying notes.Commission

ATA HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' DEFICIT (Dollars in thousands) Convertible Redeemable Additional Total Preferred Common Treasury Paid-in Retained Shareholders' Stock Stock Stock Capital Deficit Deficit ------- ------- --------- ------- --------- --------- Balance as of December 31Washington, 2003 $32,907 $65,711 $ (24,778) $18,163 $(163,103) $(104,007) Net loss - - - - (64,344) (64,344) Stock options exercised - 525 - (225) - 300 Preferred stock dividends (2,907) - - - (375) (375) ------- ------- --------- ------- --------- --------- Balance as of March 31, 2004 $30,000 $66,236 $ (24,778) $17,938 $(227,822) $(168,426) ======= ======= ========= ======= ========= ========= Net loss - - - - (25,662) (25,662) Preferred stock dividends - - - - (375) (375) ------- ------- --------- ------- --------- --------- Balance as of June 30, 2004 $30,000 $66,236 $ (24,778) $17,938 $(253,859) $(194,463) ======= ======= ========= ======= ========= ========= See accompanying notes D.C. 20549

ATA HOLDINGS CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Six Months EndedJune 30, 2004 2003 (Unaudited) (Unaudited) ----------- ----------- Operating activities: Net income (loss) $ (90,006) $ 32,323 Adjustments to reconcilenet income(loss) to net cash provided byoperatingactivities: Depreciation andamortization 26,450 28,989 Loss on extinguishment of debt 27,314 - Other non-cash items 5,472 4,969 Changes in operating assets and liabilities: U.S.Government grant receivable - 6,158 Other receivables 4,442 (14,394) Inventories (736) (151) Prepaid expenses (4,760) 2,719 Accounts payable 6,360 (1,275) Air traffic liabilities 22,846 14,835 Accrued expenses 21,934 2,551 Other deferred items 20,000 - --------- --------- Net cash provided by operating activities 39,316 76,724 --------- --------- Investing activities: Aircraft pre-delivery deposits - 8,374 Capital expenditures (13,515) (29,523) Noncurrent prepaid aircraft rent (2,087) (63,882) (Additions) reductions to other assets (8,468) 4,909 Proceeds from sales of property and equipment 108 171 --------- --------- Net cash used in investing activities (23,962) (79,951) --------- --------- Financing activities: Proceeds from long-term debt 1,500 5,729 Payments of preferred dividends (9,987) - Payments on short-term debt - (4,187) Payments on long-term debt and exchange offers (29,982) (4,283) Decrease (increase) in restricted cash 12,217 (8,210) Proceeds from stock options exercises 300 - --------- --------- Net cash used in financing activities (25,952) (FORM 10~~,951)~~ --------- --------- Decrease in cash and cash equivalents (10,598) (14,178) Cash and cash equivalents, beginning of period 160,644 200,160 --------- --------- Cash and cash equivalents, end of period $ 150,046 $ 185,982 ========= ========= Supplemental disclosures: Cash payments (receipts) for: Interest $ 26,047 $ 22,999 Income tax refunds (4,142) (16,711) Financing and investing activities not affecting cash: Accrued capitalized interest 479 752 Accrued preferred stock dividends - 2,860 Additional new notes $ 12,991 $ - See accompany notes.Q

~~Three Months Ended June 30 , 2004 2003 ------------ ------------ Numerator: Net income~~ (~~loss~~Mark One) $ (25,662,000) $ 43,315,000 Preferred stock dividends (375,000) (2,485,000) ------------- ------------ Income (loss) available to common shareholders - numerator for basic earnings per share $ (26,037,000) $ 40,830,000 ------------- ------------ Effect of dilutive securities: Convertible redeemable preferred stock $ - $ 375,000 ------------- ------------ Numerator for diluted earnings per share $ (26,037,000) $ 41,205,000 ============= ============ Denominator: Denominator for basic earnings per share - weighted average shares 11,823,864 11,764,753 Effect of potential delutive securities: Employee stock options - - Convertible redeemable preferred stock - 1,914,486 Warrants issued under secured term loan - 397,766 ------------- ------------ Denominator for diluted earnings per share - adjusted weighted average shares 11,823,864 14,077,005 ============= ============ Basic income (loss) per share $ (2.20) $ 3.47 ============= ============ Diluted income (loss) per share $ (2.20) $ 2.93 ============= ============

~~Six~~[X] Quarterly ~~Months~~Report ~~Ended~~Pursuant June 30 , 2004 2003 ------------- ------------ Numerator: Net income (loss) $ (90,006,000) $ 32,323,000 Preferred stock dividends (750,000) (2,860,000) ------------- ------------ Income (loss) available to ~~common~~Section ~~shareholders~~13 -or ~~numerator for basic earnings per share $~~ 15(~~90,756,000~~d) ~~$ 29,463,000 ------------- ------------ Effect~~ of ~~dilutive~~the ~~securities:~~Securities Convertible redeemable preferred stock - $ 750,000 ------------- ------------ Numerator for diluted earnings per share $ (90,756,000) $ 30,213,000 ============= ============ Denominator: Denominator for basic earnings per share - weighted average shares 11,823,317 11,764,753 Effect Exchange Act of potential delutive securities: Employee stock options - - Convertible redeemable preferred stock - 1,914,486 Warrants issued under secured term loan - 373,999 ------------- ------------ Denominator for diluted earnings per share - adjusted weighted average shares 11,823,317 14,053,238 ============= ============ Basic income (loss) per share $ (7.68) $ 2.50 ============= ============ Diluted income (loss) per share $ (7.68) $ 2.15 ============= ============1934

~~June~~For the Period Ended September 30, December 31, 2004 2003 -------- ------------ (In thousands) Assets: Prepaid expenses and other current assets (short-term) $ 2,282 $ 3,879 Prepaid aircraft rent (long-term) 146,175 144,088 -------- -------- Total prepaid aircraft rent $148,457 $147,967 ======== ======== Liabilities: Accrued expenses (short-term) $ 6,304 $ 11,529 Other deferred items (long-term) 39,524 27,976 -------- -------- Total accrued aircraft rent $ 45,828 $ 39,505 ======== ========2005

Cents per ASM Cents per ASM Three Months Ended June 30, Six Months Ended June 30, 2004 2003 2004 2003 ---------------------------- ------------------------- Consolidated operating revenues: 7.36 7.23 7.14 7.15 Consolidated operating expenses: Salaries, wages and benefits 2.02 1.84 1.97 1.81 Fuel and oil 1.62 1.27 1.54 1.34 Aircraft rentals 1.13 1.04 1.10 1.04 Handling, landing and navigation fees 0.57 0.58 0.58 0.58 Aircraft maintenance, materials and repairs 0.37 0.20 0.36 0.23 Other selling expenses 0.26 0.24 0.24 0.23 Crew and other employee travel 0.24 0.31 0.28 0.30 Depreciation and amortization 0.24 0.26 0.24 0.27 Advertising 0.20 0.19 0.19 0.19 Passenger service 0.19 0.20 0.20 0.20 Facilities and other rentals 0.13 0.11 0.12 0.11 Insurance 0.11 0.14 0.11 0.14 Commissions 0.11 0.08 0.11 0.10 Ground package cost 0.05 0.05 0.06 0.07 U.S. Government Funds - (0.69) - (0.35) Other 0.32 0.37 0.34 0.35 ----- ---- ----- ---- Total consolidated operating expenses 7.56 6.19 7.44 6.61 ----- ---- ----- ---- Consolidated operating income (loss) (0.20) 1.04 (0.30) 0.54 ===== ==== ===== ==== ASMs (in thousands) 5,310,459 5,370,153 10,893,281 10,654,863or

~~Three~~[ ] Transition ~~Months~~Report ~~Ended~~Pursuant ~~June~~to ~~30,~~Section --------------------------------------------------------------- 2004 2003 Inc (Dec) % Inc (Dec) --------------------------------------------------------------- Departures Jet 21,439 19,786 1,653 8.35 Departures SAAB 13~~,314~~ ~~13,084~~or 230 1.76 --------------------------------------------------------------- Total Departures 34,753 32,870 1,883 5.73 --------------------------------------------------------------- Block Hours Jet 64,417 61,716 2,701 4.38 Block Hours SAAB 12,956 12,797 159 1.24 --------------------------------------------------------------- Total Block Hours 77,373 74,513 2,860 3.84 --------------------------------------------------------------- RPMs Jet 15(000s) 3,749,521 3,732,628 16,893 0.45 RPMs SAAB (000s) 49,369 51,922 (2,553) (4.92) --------------------------------------------------------------- Total RPMs (000s) (a) 3,798,890 3,784,550 14,340 0.38 --------------------------------------------------------------- ASMs Jet (000s) 5,233,066 5,292,058 (58,992) (1.11) ASMs SAAB (000s) 77,393 78,095 (702) (0.90) --------------------------------------------------------------- Total ASMs (000s) (b) 5,310,459 5,370,153 (59,694) (1.11) --------------------------------------------------------------- Load Factor Jet (%) 71.65 70.53 1.12 1.59 Load Factor SAAB (%) 63.79 66.49 (2.70) (4.06) --------------------------------------------------------------- Total Load Factor (%) (c) 71.54 70.47 1.07 1.52 --------------------------------------------------------------- Passengers Enplaned Jet 2,815,650 2,658,408 157,242 5.91 Passengers Enplaned SAAB 284,551 295,799 (11,248) (3.80) --------------------------------------------------------------- Total Passengers Enplaned (d) ~~3,100,201~~of ~~2,954,207~~the ~~145,994~~Securities ~~4.94~~Exchange Act of --------------------------------------------------------------- Revenue $ (000s) 390,774 388,122 2,652 0.68 RASM in cents (e) 7.36 7.23 0.13 1.80 CASM in cents (f) 7.56 6.19 1.37 22.13 Yield in cents (g) 10.29 10.26 0.03 0.29 Average Aircraft in Service Lockheed L-1011 6.00 8.42 (2.42) (28.74) Boeing 737-800 32.50 30.20 2.30 7.62 Boeing 757-200 15.59 15.00 0.59 3.93 Boeing 757-300 12.00 10.11 1.89 18.69 SAAB 340B 16.00 16.00 - - Average Block Hours Flown per day Lockheed L-1011 6.77 7.34 (0.57) (7.77) Boeing 737-800 10.71 10.71 - - Boeing 757-200 12.22 12.04 0.18 1.50 Boeing 757-300 10.73 11.11 (0.38) (3.42) SAAB 340B 8.99 8.88 0.11 1.241934

~~Six~~For the Transition Months Ended June 30, ----------------------------------------------------------------- 2004 2003 Inc (Dec) % Inc (Dec) ----------------------------------------------------------------- Departures Jet 43,332 38,980 4,352 11.16 Departures SAAB 26,471 25,797 674 2.61 ----------------------------------------------------------------- Total Departures 69,803 64,777 5,026 7.76 ----------------------------------------------------------------- Block Hours Jet 132,426 122,532 9,894 8.07 Block Hours SAAB 25,914 25,220 694 2.75 ----------------------------------------------------------------- Total Block Hours 158,340 147,752 10,588 7.17 ----------------------------------------------------------------- RPMs Jet (000s) 7,273,958 7,057,275 216,683 3.07 RPMs SAAB (000s) 95,874 97,973 (2,099) (2.14) ----------------------------------------------------------------- Total RPMs (000s) (a) 7,369,832 7,155,248 214,584 3.00 ----------------------------------------------------------------- ASMs Jet (000s) 10,737,873 10,500,361 237,512 2.26 ASMs SAAB (000s) 155,408 154,502 906 0.59 ----------------------------------------------------------------- Total ASMs (000s) (b) 10,893,281 10,654,863 238,418 2.24 ----------------------------------------------------------------- Load Factor Jet (%) 67.74 67.21 0.53 0.79 Load Factor SAAB (%) 61.69 63.41 (1.72) (2.71) ----------------------------------------------------------------- Total Load Factor (%) (c) 67.65 67.15 0.50 0.74 ----------------------------------------------------------------- Passengers Enplaned Jet 5,378,751 5,036,086 342,665 6.80 Passengers Enplaned SAAB 546,413 557,933 (11,520) (2.06) ----------------------------------------------------------------- Total Passengers Enplaned (d) 5,925,164 5,594,019 331,145 5.92 ----------------------------------------------------------------- Revenue $ (000s) 778,107 761,751 16,356 2.15 RASM in cents (e) 7.14 7.15 (0.01) (0.14) CASM in cents (f) 7.44 6.61 0.83 12.56 Yield in cents (g) 10.56 10.65 (0.09) (0.85) Average Aircraft in Service Lockheed L-1011 6.00 9.21 (3.21) (34.85) Boeing 737-800 32.25 30.10 2.15 7.14 Boeing 757-200 15.30 15.33 (0.03) (0.20) Boeing 757-300 12.00 10.01 1.99 19.88 SAAB 340B 16.00 16.00 - - Average Block Hours Flown per day Lockheed L-1011 8.04 7.50 0.54 7.20 Boeing 737-800 11.05 10.55 0.50 4.74 Boeing 757-200 12.57 11.86 0.71 5.99 Boeing 757-300 10.93 10.80 0.13 1.20 SAAB 340B 9.00 8.76 0.24 2.74Period From ____to____

~~Three~~Commission file ~~Months Ended June 30,~~ number 000------------------------------------------------------------- 2004 2003 Inc (Dec) % Inc (Dec) ------------------------------------------------------------- Scheduled Service Departures 33,157 30,344 2,813 9.27 Block Hours 70,453 63,530 6,923 10.90 RPMs (000s) (a) 3,402,077 3,191,216 210,861 6.61 ASMs (000s) (b) 4,497,588 4,172,529 325,059 7.79 Load Factor (c) 75.64 76.48 (0.84) (1.10) Passengers Enplaned (d) 3,004,028 2,753,353 250,675 9.10 Revenue $ (000s) 300,750 278,009 22,741 8.18 RASM in cents (e) 6.69 6.66 0.03 0.41 Yield in cents (g) 8.84 8.71 0.13 1.49 Revenue per segment (h) 100.12 100.97 (0.85) (0.85) Military Charter Departures 1,283 1,602 (319) (19.91) Block Hours 5,771 7,707 (1,936) (25.12) ASMs (000s) (b) 720,284 947,338 (227,054) (23.97) Revenue $ (000s) 65,538 78,020 (12,482) (15.99) RASM in cents (e) 9.10 8.24 0.86 10.43 RASM excluding fuel escalation (j) 8.71 8.21 0.50 6.09 Commercial Charter Departures 302 915 (613) (66.99) Block Hours 1,122 3,255 (2,133) (65.53) ASMs (000s) (b) 91,123 248,534 (157,411) (63.34) Revenue $ (000s) 7,138 16,530 (9,392) (56.82) RASM in cents (e) 7.83 6.65 1.18 17.74 RASM excluding fuel escalation (i) 7.69 6.32 1.37 21.68 Percentage of Consolidated Revenues: Scheduled Service 77.0% 71.6% 5.4% 7.54 Military Charter 16.8% 20.1% (3.3%) (16.42) Commercial Charter 1.8% 4.3% (2.5%) (58.14)21642

Six Months Ended June 30, ------------------------------------------------------------- 2004 2003 Inc (Dec) % Inc (Dec) ------------------------------------------------------------- Scheduled Service Departures 66,281 59,250 7,031 11I.~~87 Block Hours 142,672 123,688 18,984 15~~R.~~35 RPMs (000s) (a) 6,482,014 5,875,697 606,317 10~~S.32 Employer ~~ASMs~~Identification ~~(000s) (b) 9,094,597 8,018,861 1,075,736 13~~No.42 Load Factor (c) 71.27 73.27 (2.00) (2.73) Passengers Enplaned (d) 5,708,277 5,137,816 570,461 11.10 Revenue $ (000s) 577,917 522,777 55,140 10.55 RASM in cents (e) 6.35 6.52 (0.17) (2.61) Yield in cents (g) 8.92 8.90 0.02 0.22 Revenue per segment $ (h) 101.24 101.75 (0.51) (0.50) Military Charter Departures 2,721 3,320 (599) (18.04) Block Hours 12,855 16,123 (3,268) (20.27) ASMs (000s) (b) 1,576,233 2,030,427 (454,194) (22.37) Revenue $ (000s) 146,260 164,215 (17,955) (10.93) RASM in cents (e) 9.28 8.09 1.19 14.71 RASM excluding fuel escalation (j) 8.94 7.96 0.98 12.31 Commercial Charter Departures 742 2,198 (1,456) (66.24) Block Hours 2,658 7,920 (5,262) (66.44) ASMs (000s) (b) 211,861 603,823 (391,962) (64.91) Revenue $ (000s) 18,106 42,642 (24,536) (57.54) RASM in cents (e) 8.55 7.06 1.49 21.10 RASM excluding fuel escalation (i) 8.39 6.66 1.73 25.97 Percentage of Consolidated Revenues: ~~Scheduled Service 74.3% 68.6% 5.7% 8.31 Military Charter 18.8% 21.6% (2.8%) (12.96) Commercial Charter 2.3% 5.6% (3.3%) (58.93)~~ 35-1617970

~~Cash~~ATA HOLDINGS Payments Currently Scheduled ------------------------------------------------------------------------------------- Total 3 Qtr- 4 Qtr 2005 2007 After As of 6/30/04 2004 -2006 -2008 2008 ----------- ----------- ----------- ----------- ------------ (in thousands) Current and long-term debt $ 497,595 $ 36,631 $ 101,354 $ 81,335 $ 278,275 Lease obligations 3,810,669 79,546 589,401 635,785 2,505,937 Expected future lease obligations (1) 581,121 654 10,668 59,373 510,426 Redeemable Preferred Stock (2) 50,000 - - - 50,000 ----------- ----------- ----------- ----------- ------------ Total contractual cash obligations $ 4,939,385 $ 116,831 $ 701,423 $ 776,493 $ 3,344,638 =========== =========== =========== =========== ============CORP.

(Exact name of registrant as specified in its charter)

State or other jurisdiction of incorporation or organization: Indiana

7337 West Washington Street, Indianapolis, Indiana 46251

(Address of principal executive offices)

(317) 282-4000

(Registrant's telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No _____

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.).

Yes No X

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.).

Yes No X

Applicable Only to Corporate Issuers

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date.

Common Stock, Without Par Value - 11,824,287 shares outstanding as of October 31, 2005

Part 1 - Financial Information

Item 1 - Financial Statements

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtors-in-Possession as of October 26, 2004)
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

	September 30,			December 31,
	2005			2004
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	75,367		$	139,652
Receivables, net of allowance for doubtful accounts
(2005 - $4,292; 2004 - $2,608)		122,445			118,807
Inventories, net		41,892			43,802
Assets held for sale		2,000			-
Prepaid expenses and other current assets		33,887			39,160
Total current assets		275,591			341,421

Property and equipment:
Flight equipment		176,000			198,888
Facilities and ground equipment		142,689			147,420
		318,689			346,308
Accumulated depreciation		(180,758	)		(163,549	)
		137,931			182,759

Restricted cash		30,662			32,355
Goodwill		6,987			8,488
Prepaid aircraft rent		154			52,031
Investment in BATA		5,222			6,930
Deposits and other assets		26,204			27,081
Total assets	$	482,751		$	651,065

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
Short term debt	$	41,000		$	41,000
Accounts payable		6,213			7,563
Air traffic liabilities		88,229			89,887
Accrued expenses		124,619			122,031
Total current liabilities		260,061			260,481

Deferred income		31,471			31,464

Liabilities subject to compromise		1,636,627			1,249,676

Commitments and contingencies

Convertible redeemable preferred stock,
subject to compromise; authorized and issued 300 shares		30,000			30,000

Shareholders' deficit:
Preferred stock; authorized 9,999,200 shares; none issued		-			-
Common stock, without par value; authorized 30,000,000 shares;
issued 13,535,727 - 2005 and 2004		66,013			66,013
Treasury stock; 1,711,440 shares - 2005 and 2004		(24,778	)		(24,778	)
Additional paid-in capital		18,166			18,166
Accumulated deficit		(1,534,809	)		(979,957	)
Total shareholders' deficit		(1,475,408	)		(920,556	)
Total liabilities and shareholders' deficit	$	482,751		$	651,065

See accompanying notes.

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtors-in-Possession as of October 26, 2004)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Operating revenues:
Scheduled service	$	174,951		$	285,978		$	505,968		$	863,895
Charter		105,292			96,219			324,257			260,585
Ground package		2,676			3,074			11,527			10,947
Other		7,868			15,948			28,179			43,899
Total operating revenues		290,787			401,219			869,931			1,179,326

Operating expenses:
Fuel and oil		87,773			96,931			249,116			265,058
Salaries, wages and benefits		64,161			106,349			224,264			321,411
Aircraft rentals		35,351			62,981			118,169			182,361
Handling, landing and navigation fees		20,943			29,847			73,096			93,300
Crew and other employee travel		12,687			15,835			36,069			45,819
Aircraft maintenance, materials and repairs		10,208			19,673			34,335			59,087
Passenger service		10,267			11,181			29,465			32,614
Depreciation and amortization		7,182			13,023			28,004			39,473
Other selling expenses		7,547			13,487			22,829			40,046
Commissions		6,666			7,096			20,999			19,592
Facilities and other rentals		3,640			6,765			16,280			19,878
Insurance		3,242			5,980			11,104			17,456
Advertising		2,515			9,364			8,599			29,591
Ground package cost		2,210			2,586			9,539			9,157
Aircraft impairments and retirements		-			-			403			-
Other		14,970			16,299			43,562			53,535
Total operating expenses		289,362			417,397			925,833			1,228,378

Operating income (loss)		1,425			(16,178	)		(55,902	)		(49,052	)

Other income (expense):
Reorganization expenses		(137,622	)		-			(495,447	)		-
Interest income		666			668			1,770			1,743
Interest expense		(1,571	)		(15,071	)		(4,753	)		(45,501	)
Loss on extinguishment of debt		-			-			-			(27,314	)
Other		(269	)		(323	)		(520	)		(786	)
Other expense		(138,796	)		(14,726	)		(498,950	)		(71,858	)

Loss before income taxes		(137,371	)		(30,904	)		(554,852	)		(120,910	)
Income taxes		-			-			-			-
Net loss		(137,371	)		(30,904	)		(554,852	)		(120,910	)
Preferred stock dividends		-			(375	)		-			(1,125	)
Loss available to common shareholders	$	(137,371	)	$	(31,279	)	$	(554,852	)	$	(122,035	)

Basic and diluted earnings per common share:
Average shares outstanding		11,824,287			11,824,144			11,824,287			11,823,595
Net loss per share	$	(11.62	)	$	(2.65	)	$	(46.92	)	$	(10.32	)

See accompanying notes.

ATA HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE PREFERRED STOCK (SUBJECT TO COMPROMISE)
AND SHAREHOLDERS' DEFICIT
(Dollars in thousands)

	Redeemable							Additional					Total
	Preferred		Common		Treasury			Paid-in		Accumulated			Shareholders'
	Stock		Stock		Stock			Capital		Deficit			Deficit
	(Subject to
	Compromise)
Balance as of December 31, 2004	$	30,000	$	66,013	$	(24,778	)	$	18,166	$	(979,957	)	$	(920,556	)

Loss available to common shareholders	$	-	$	-	$	-		$	-	$	(362,681	)	$	(362,681	)
Balance as of March 31, 2005	$	30,000	$	66,013	$	(24,778	)	$	18,166	$	(1,342,638	)	$	(1,283,237	)

Loss available to common shareholders	$	-	$	-	$	-		$	-	$	(54,800	)	$	(54,800	)
Balance as of June 30, 2005	$	30,000	$	66,013	$	(24,778	)	$	18,166	$	(1,397,438	)	$	(1,338,037	)

Loss available to common shareholders	$	-	$	-	$	-		$	-	$	(137,371	)	$	(137,371	)
Balance as of September 30, 2005	$	30,000	$	66,013	$	(24,778	)	$	18,166	$	(1,534,809	)	$	(1,475,408	)


See accompanying notes.

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtors-in-Possession as of October 26, 2004)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

	Nine Months Ended September 30,
	2005			2004
	(Unaudited)			(Unaudited)

Operating activities:

Net loss before reorganization expenses	$	(59,405	)	$	(120,910	)
Adjustments to reconcile net loss before reorganization expenses to net cash (used in) operating activities:

Depreciation and amortization		28,004			39,473
Loss on extinguishment of debt		-			27,314
Aircraft impairments and retirements		403			-
Other non-cash items		319			12,267
Changes in operating assets and liabilities:
Receivables		(3,811	)		(2,159	)
Inventories		(1,518	)		(6,109	)
Prepaid expenses and other current assets		195			(12,719	)
Accounts payable		(1,350	)		(3,541	)
Air traffic liabilities		(1,658	)		2,567
Liabilities subject to compromise		(13,677	)		-
Accrued expenses		1,704			11,734
Other deferred items		-			20,000
Net cash (used in) operating activities		(50,794	)		(32,083	)

Reorganization activities:
Reorganization expenses, net		(495,447	)		-
Impairment of assets held for sale		11,149			-
Prepaid expenses and other current assets		15,932			-
Liabilities subject to compromise		370,880			-
Accrued expenses		862			-
Other non-cash items		20,103			-
Proceeds from sales of property and equipment		6,000			-
Assets held for sale		(2,000	)		-
Receivables		173
Noncurrent prepaid aircraft rent		66,120			-
Net cash (used in) reorganization activities		(6,228	)		-

Investing activities:

Capital expenditures		(13,370	)		(21,381	)
Noncurrent prepaid aircraft rent		1,587			12,976
Additions to other assets		(2,693	)		(8,136	)
Proceeds from sales of property and equipment		2,457			323
Net cash (used in) investing activities		(12,019	)		(16,218	)

Financing activities:

Proceeds from long-term debt		-			1,500
Preferred stock dividends		-			(9,987	)
Payments on long-term debt and exchange offers		-			(58,277	)
Decrease in other restricted cash		4,756			11,712
Proceeds from stock option exercises		-			304
Net cash provided by (used in) financing activities		4,756			(54,748	)

Decrease in cash and cash equivalents		(64,285	)		(103,049	)
Cash and cash equivalents, beginning of period		139,652			160,644
Cash and cash equivalents, end of period	$	75,367		$	57,595

See accompanying notes.

ATA HOLDINGS CORP. AND SUBSIDIARIES
(Debtor and Debtors-in-Possession as of October 26, 2004)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)


Cash payments (receipts) for:
Interest	$	2,883	$	41,011
Income tax		23		(4,018	)

Financing and investing activities not affecting cash:
Accrued capitalized interest		-		524
Accrued preferred stock dividends		-		375
Additional new notes		-		12,991

ATA HOLDINGS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. The Company and the Chapter 11 Filing

Chapter 11 Reorganization. On October 26, 2004 (the “Petition Date”), ATA Holdings Corp. (the “Company”) and seven of its subsidiaries including ATA Airlines, Inc. (“ATA”), C8 Airlines, Inc., formally known as Chicago Express Airlines, Inc. (“C8”) and Ambassadair Travel Club, Inc. (“Ambassadair” and collectively, with the other seven entities, the “Debtors”), filed voluntary petitions for relief (the “Filing”) under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana (the “Bankruptcy Court”). The Debtors are developing a plan of reorganization to address their respective debts and other obligations, lower operating costs and restructure operations.

The Debtors continue to operate their respective businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and pursuant to the applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and applicable court orders, except for C8 which ceased operations in March 2005. Company received final approval to sell certain assets of Ambassadair and Amber Travel on November 17, 2005. The sale was consummated on November 18, 2005. As a debtor-in-possession, each of the Debtors is authorized under the provisions of Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without prior approval from the Bankruptcy Court. On October 29, 2004, the Bankruptcy Court granted the Debtors certain first day motions for various reliefs designed to stabilize operations and maintain relationships with customers, vendors, employees and others. The first day motions granted authority to the Debtors, among other things, to (a) pay pre-petition and post-petition employee wages, salaries and benefits and other employee obligations; (b) honor customer programs, including the frequent flyer program and ticketing program; and (c) honor pre-petition obligations related to interline, clearinghouse, and other similar agreements.

As required by the Bankruptcy Code, the United States Trustee has appointed an official committee of unsecured creditors (the "Official Committee"). The Official Committee and its legal representatives have a right to be heard on all matters that come before the Bankruptcy Court in each Debtor’s case. There can be no assurance that the Official Committee will support the Debtors' positions in the reorganization cases or any plan of reorganization, and disagreements between the Debtors and the Official Committee could protract the reorganization cases, could negatively impact the Debtors' ability to operate during the Chapter 11 cases, and could delay or prevent the Debtors' emergence from Chapter 11.

On October 29, 2004 the Bankruptcy Court entered an interim order which permitted ATA to use the unrestricted cash, eligible accounts receivable and other collateral pledged to secure ATA’s secured term loans (the “ATSB Loan”), a significant portion of which is guaranteed by the Air Transportation Stabilization Board (the “ATSB”). On December 10, 2004, the Bankruptcy Court entered a final order authorizing ATA’s continued use of the cash collateral through December 17, 2004. This final order has been extended for successive short periods. The final order has the effect of giving the ATSB Loan Lenders and ATSB (collectively, the “ATSB Loan Lenders”) a replacement lien on unrestricted cash and all other assets of the Debtors to secure diminution of pre-petition cash collateral and requires compliance by the Debtors with certain terms, such as the maintenance of minimum cash collateral balances and periodic reporting requirements. On April 19, 2005, the Bankruptcy Court approved a settlement agreement among the Debtors, the Official Committee and the ATSB Loan Lenders (the “Settlement Agreement”) under which the parties agreed that the ATSB Loan Lenders have an allowed, secured claim in respect of the ATSB Loan in the amount of $110.0 million and an allowed, general unsecured claim in respect of the remaining outstanding portion of the ATSB Loan of approximately $30.6 million. The Settlement Agreement also requires ATA to pay the ATSB Loan Lenders adequate protection payments of $2.3 million per quarter, beginning in the second quarter of 2005, and $4.5 million on the earlier of December 31, 2005 or the effective date of a plan of reorganization. The adequate protection payments will reduce the amount of the ATSB Loan Lenders’ secured claim. The Company has made the adequate protection payments in accordance with the Settlement Agreement. On October 31, 2005, the Bankruptcy Court approved another extension of the final order authorizing ATA’s continued use of the cash collateral through the earlier of November 21, 2005 or the occurrence of a material breach of the Settlement Agreement. Further extensions cannot be assured, and any significant restriction on ATA’s right to use cash collateral would be material and adverse to the ability of the Debtors to reorganize under Chapter 11.

The Filing triggered defaults on substantially all debt and lease obligations of the Debtors. Subject to certain exceptions under the Bankruptcy Code, the Filing automatically enjoined, or stayed, the continuation of any judicial or administrative proceedings or other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to the Petition Date. For example, creditor actions to obtain possession of property from the Debtors, or to create, perfect or enforce any lien against the property of the Debtors, or to collect on or otherwise exercise rights or remedies with respect to a pre-petition claim, are enjoined unless the Bankruptcy Court lifts the automatic stay or the Bankruptcy Code otherwise provides.

Notwithstanding the above general discussion of the automatic stay, the Debtors' right to retain and operate certain aircraft, aircraft engines and other equipment defined in section 1110 of the Bankruptcy Code that are leased or subject to a security interest or conditional sale contract are specifically governed by section 1110 of the Bankruptcy Code. That section provides, in relevant part, that unless the Debtors, prior to 60 days after the Petition Date, agree to perform all obligations under the lease, security agreement, or conditional sale contract and cure all defaults thereunder (other than defaults constituting a breach of provisions relating to the Filing, the Debtors' insolvency or other financial condition of the Debtors) within the time specified in section 1110, the right of the lessor, secured party or conditional vendor to take possession of such equipment in compliance with the provisions of the lease, security agreement, or conditional sale contract and to enforce any of its other rights or remedies under such lease, security agreement, or conditional sale contract is not limited or otherwise affected by the automatic stay, by any other provision of the Bankruptcy Code, or by any power of the Bankruptcy Court.

The section 1110 deadline for the Debtors was December 26, 2004. After the expiration of the original 1110 deadline, the Debtors must either perform, reject, or reach a negotiated agreement with lessors or secured parties. As of December 31, 2004, the Company operated 82 aircraft, including 76 aircraft that were financed with operating leases. As of September 30, 2005, the Company had returned 40 of the 76 leased aircraft and related engines to the lessors. The Company expects to return additional aircraft and related engines to the lessors before the effective date of a plan of reorganization. The Company has renegotiated long-term rates on 10 of the leased aircraft and related engines. Finally, the Company has cured existing defaults and is currently paying the contract rates required under the Bankruptcy Code with respect to the remaining 16 leased aircraft and related engines.

Under section 365 of the Bankruptcy Code, the Debtors may assume, assume and assign, or reject certain executory contracts and unexpired leases, including, without limitation, leases of real property, aircraft and aircraft engines, subject to the approval of the Bankruptcy Court and certain other conditions. Generally, the rejection of an executory lease or unexpired lease is treated as a pre-petition breach of the lease or contract in question and, subject to certain exceptions, relieves the Debtors of performing future obligations under such lease or contract but entitles the lessor or contract counterparty to pre-petition general unsecured claim for damages caused by such deemed breach. The lessor or contract counterparty may file a claim against the relevant Debtor’s estate for such damages. The assumption of an executory contract or unexpired lease generally requires a cure of most existing defaults under such executory contract or unexpired lease. The Company expects that additional liabilities subject to compromise will arise in the future as a result of damage claims resulting from the rejection of certain executory contracts and unexpired leases by the Debtors. However, the Company expects that the assumption of certain executory contracts and unexpired leases may convert certain liabilities subject to compromise to liabilities not subject to compromise.

The Debtors have undertaken to notify all known or potential creditors of the Chapter 11 cases for purposes of identifying and quantifying all pre-petition claims. Subject to certain exceptions under the Bankruptcy Code, the Chapter 11 filings automatically stayed the continuation of any judicial or administrative proceedings or other actions against the Debtors or their property to recover on, collect or secure a claim arising prior to October 26, 2004. The general deadline for filing by creditors of proofs of claim with the Bankruptcy Court was January 24, 2005, with a limited exception for governmental entities, which had until April 24, 2005. A proof of claim arising from the rejection of executory contracts and expired leases must be filed no later than thirty days from the effective date of the authorized rejection. The Company is currently engaged in an analysis of pre-petition claims. The ultimate numbers and allowed amounts of such claims are not presently known.

On September 30, 2005, the Company, ATA, ATA Leisure Corp. and ATA Cargo, Inc. filed a preliminary plan of reorganization with the Bankruptcy Court. The Reorganizing Debtors expect to file an amended plan of reorganization by November 23, 2005. In addition to being voted on by holders of impaired claims and equity interests, a plan of reorganization must satisfy certain requirements of the Bankruptcy Code and must be approved, or confirmed, by the Bankruptcy Court in order to become effective. A plan will be accepted by holders of claims against and equity interests in a debtor if (1) at least one-half in number and two-thirds in dollar amount of claims actually voting in each impaired class of claims vote to accept the plan and (2) at least two-thirds in amount of equity interests actually voting in each impaired class of equity interests vote to accept the plan. Under certain circumstances set forth in the provisions of section 1129(b) of the Bankruptcy Code, the Bankruptcy Court may confirm a plan even if such plan has not been accepted by all impaired classes of claims and equity interests. A class of claims or equity interests that does not receive or retain any property under the plan on account of such claims or interests is deemed to have voted to reject the plan. The requirements for confirming a plan, notwithstanding its rejection by one or more impaired classes of claims or equity interests, depends upon a number of factors, including the status and seniority of the claims or equity interests in the rejecting class, i.e., secured claims or unsecured claims, subordinated or senior claims, preferred or common stock.

Although the Reorganizing Debtors expect to finalize reorganization plans for emergence from Chapter 11 in early 2006, there can be no assurance that any reorganization plan will be confirmed by the Bankruptcy Court, or that any such plan will be consummated. The Reorganizing Debtors have incurred and will continue to incur significant costs associated with their respective reorganizations. The amount of these costs, which are being expensed as incurred, are expected to significantly affect their financial results. Four of the Debtors, Execujet, Ambassadair, Amber Travel and C8, are not expected to be reorganized.

The ultimate recovery, if any, to holders of common stock of the Company will not be determined until confirmation of a plan of reorganization for the Company. The plan of reorganization will likely result in holders of common stock receiving no distribution on account of their interest in the Company and cancellation of the outstanding shares. The commitments for post-reorganization financing and equity investment in a reorganized airline require that all outstanding equity of the Company be cancelled without any distributions to the holders of such equity.

Financial Statement Presentation. The accompanying consolidated financial statements, for the quarter and nine months ended September 30, 2005, of the Company have been prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code (“SOP 90-7”) and on a going-concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business.

SOP 90-7, which is applicable to companies in Chapter 11, generally does not require filers to change the manner in which their financial statements are prepared. However, it does require that the financial statements for periods subsequent to the Petition Date distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. Generally, the Company’s revenues, expenses (including professional fees), realized gains and losses, and provision for losses that can be directly associated with the reorganization and restructuring of the business must be reported separately as reorganization items in the consolidated statement of operations. The consolidated balance sheet must distinguish pre-petition liabilities subject to compromise from those pre-petition liabilities that are not subject to compromise and from post-petition liabilities. Liabilities that may be affected by the reorganization plan must be reported at the amounts expected to be allowed, even if they may be settled for different amounts. In addition, cash used by reorganization items must be disclosed separately in the consolidated statement of cash flows.

The Company has recognized the following reorganization expenses in the consolidated statement of operations (in thousands):

	Three Months Ended					Nine Months Ended
	September 30, 2005					September 30, 2005


Aircraft and engine lease rejection charges		$	669		$	304,883
Other agreement and lease rejection charges			406			35,750
ALPA claim			128,850			128,850
Impairment of assets held for sale			-			11,149
Professional fees			5,366			15,505
Interest income			(707	)		(1,958
Other			3,038			1,268
		$	137,622		$	495,447

The aircraft and engine lease rejection charges are non-cash charges comprised of the Company’s estimate of claims resulting from the rejection or return of the aircraft and engines as part of the bankruptcy process. They also include the write-off of assets and liabilities related to aircraft and engine leases that the Company has rejected, committed to return dates with the lessor or intends to reject as of September 30, 2005. The other agreement and lease rejection charges are non-cash charges which are comprised of the Company’s estimate of claims resulting from the rejection of non-aircraft agreements and leases. The estimates the Company recorded are subject to material adjustments as the Debtors proceed through the bankruptcy process.

The ALPA claim includes an unsecured pre-petition claim against ATA by the Air Line Pilots Association (“ALPA”) for the benefit of its members in the total amount of $128.9 million. On September 28, 2005, the cockpit crewmembers voted to ratify a new collective bargaining agreement effective October 1, 2005, which included among other wage and benefit concessions, the pre-petition claim. The Bankruptcy Court approved the claim on October 12, 2005.

The impairment of assets held for sale is a non-cash charge related to C8 which was a regional feeder carrier operating as ATA Connection and connecting small and medium-sized cities with either Chicago-Midway or Indianapolis. In the first quarter of 2005, the Company announced that it intended to sell or discontinue C8’s operations, including its DOT and FAA certificates. C8 discontinued flights on March 28, 2005. In accordance with Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“FAS 144”), the Company recorded an impairment charge of $11.3 million related to the C8 assets for sale. In addition, the Company classified the estimated value of these assets totaling $3.25 million as short-term assets held for sale on the consolidated balance sheet. Subsequently, on June 20, 2005, substantially all of C8 assets were sold to CSC Investment Group for $1.25 million. As of September 30, 2005, $2.0 million of short-term assets held for sale related to C8, but owned by ATA, remain on the consolidated balance sheet. The remaining assets were sold in November 2005.

The disposition of assets and liquidation or settlement of liabilities in the Chapter 11 cases are subject to significant uncertainty. While operating as debtors-in-possession under the protection of Chapter 11, and subject to the Bankruptcy Court approval or otherwise as permitted in the normal course of business, the Debtors may sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the consolidated financial statements. Further, a plan of reorganization could materially change the amounts and classifications reported in these consolidated financial statements, which do not give effect to any adjustments to the carrying value or amounts of liabilities that might result as a consequence of confirmation of a plan of reorganization.

MatlinPatterson Financing Commitment. On November 10, 2005, the Company filed with the U.S. Bankruptcy Court a motion to approve a commitment letter with MatlinPatterson Global Opportunities Partners II, L.P. and/or MatlinPatterson Global Opportunities Partners (Cayman) II, L.P. (“MatlinPatterson”), for debtor-in-possession (“DIP”) financing of $30.0 million. In addition to this DIP financing, MatlinPatterson would invest up to an additional $70.0 million in equity upon the Company’s emergence from its Chapter 11 case. The financing is subject to U.S. Bankruptcy Court approval, government approvals and other conditions specified by MatlinPatterson.

Under the commitment letter, MatlinPatterson would make the DIP financing available following approval by the Bankruptcy Court, which is scheduled for hearing on December 6, 2005. Upon emergence from Chapter 11, the DIP financing would be converted into equity, for a total equity investment by MatlinPatterson of at least $80 million and up to $100 million.

In connection with the proposed investment by MatlinPatterson, on November 16, 2005 the Reorganizing Debtors filed a motion (“Motion”) seeking approval of the transfer, exchange and surrender of certain gates at Chicago-Midway, an expanded and restated Codeshare Agreement, as defined below, and of certain amendments to the DIP Facility, as defined below, and the Southwest Airlines Co. (“Southwest”) bid proposal dated December 15, 2004. If approved, the amendments require that the Company’s plan of reorganization be confirmed by January 31, 2006. MatlinPatterson’s commitment to enter into the DIP financing transaction and to provide the financing upon emergence is conditioned upon an amended and restated Codeshare Agreement. Restructuring gates at Chicago-Midway is a condition to Southwest’s entry into an amended and restated Codeshare Agreement.

Codeshare Agreement. On December 23, 2004, Southwest and ATA entered into the Southwest-ATA Codeshare Agreement (the “Codeshare Agreement”), related to air transportation service to and from Chicago-Midway and other specified points. Under a codeshare arrangement, the codesharing air carriers have permission to book and sell tickets on each other's flights. ATA is the only air carrier with which Southwest has a codesharing agreement. Under the Codeshare Agreement both carriers have expanded their flight offerings to customers without making the significant investment required for new flights. Each airline receives a share of the ticket price for affected flights. As part of the Motion, the Company is seeking approval from the Bankruptcy Court for an expanded and restated Codeshare Agreement. ATA and Southwest began codeshare flights on February 4, 2005. As of September 30, 2005, 204 codeshare routes were operating.

Asset Sale. On December 23, 2004, the Company and Southwest executed a substantial portion of the transactions contemplated by an Asset Acquisition Agreement (the “Asset Acquisition Agreement”) by which ATA agreed to assign to Southwest a leasehold interest in six specified gates and a hangar facility at Chicago-Midway airport and related assets for $40.0 million, subject to certain adjustments. The Asset Acquisition Agreement was entered into after the completion of an auction process supervised by the Bankruptcy Court. ATA received $34.0 million of proceeds from the assignment of its leasehold interest in six specified gates and related assets on December 23, 2004. ATA received $6.0 million of proceeds from the assignment of its leasehold interest in the hangar facility and related assets on March 28, 2005. Almost all of the $40.0 million in proceeds was recorded as deferred gain on the Company’s balance sheet and is being amortized over the remaining eight year lease term at Chicago-Midway.

As part of the Motion, the Company would transfer additional gates to Southwest in return for a reduction of the outstanding balance of the DIP Facility, as defined below.

Southwest DIP Financing Arrangement and Emergence Financing. On December 23, 2004, ATA and Southwest entered into a Secured Debtor-in-Possession Credit and Security Agreement (the “DIP Facility”) that provides up to $40.0 million in cash to the Company, plus a letter of credit in the approximate amount of $7.0 million to secure two pre-petition loans obtained by ATA from the City of Chicago for the construction of a jet bridge extension (the “Chicago LOC”). The Company received $40.0 million under the DIP Facility on December 23, 2004. A closing fee of 2.5%, or $1.0 million, was treated as a principal advance under the DIP Facility.

The base interest rate, paid monthly, on amounts borrowed under the DIP Facility is the greater of (a) 8.0% per annum, or (b) the three-month LIBOR rate, plus 5.0% per annum, paid monthly. Southwest will also receive a guaranty fee of 3.0%, per annum, paid monthly, for any amounts guaranteed but not drawn under the Chicago LOC. During the term of the DIP Facility, the Company is subject to certain financial covenants. ATA obtained amendments to these financial covenants for the first eight months of 2005. ATA met the amended financial covenants in September 2005. Without the amendments, ATA would have been in violation of the financial covenants, which would have resulted in a default on the DIP Facility. The DIP Facility is guaranteed by the Company and its subsidiaries. As part of the Motion, the Company is seeking approval on further amendments to the DIP Facility including certain amendments of the covenants and extension of the Company’s date to have confirmed a plan of reorganization until January 31, 2006.

The Asset Acquisition Agreement also included a commitment by Southwest to provide an exit loan facility (the “Exit Facility”), subject to certain conditions, to the reorganized airline (“New ATA”). The Exit Facility is to be guaranteed by the Debtors and all other subsidiaries of New ATA. In addition, subject to certain conditions including successful emergence from bankruptcy and compliance with certain covenants and warranties, the Asset Acquisition Agreement included a commitment by Southwest to purchase, through an additional cash investment of $30.0 million, non-voting senior convertible preferred equity of New ATA (the “Preferred Equity”). Pursuant to the approval of the Motion, Southwest’s commitment to provide the Exit Facility and Preferred Equity will be terminated.

2. Basis of Presentation

The accompanying consolidated financial statements of ATA Holdings Corp. and subsidiaries have been prepared in accordance with instructions for reporting interim financial information on Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (“GAAP”). For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. Refer to “Note 1 - the Company and the Chapter 11 Filing” for financial statement presentation related to the Filing.

3. Earnings per Share

The following tables set forth the computation of basic and diluted earnings per share:

	Three Months Ended September 30,
	2005			2004
Numerator:
Loss before preferred stock dividends	$	(137,371,000	)	$	(30,904,000	)
Preferred stock dividends		-			(375,000	)
Loss available to common
shareholders - numerator for basic and
diluted earnings per share	$	(137,371,000	)	$	(31,279,000	)

Denominator:
Denominator for basic and diluted earnings per share
- weighted average shares		11,824,287			11,824,144

Basic and diluted loss per share	$	(11.62	)	$	(2.65	)



	Nine Months Ended September 30,
		2005			2004
Numerator:
Loss before preferred stock dividends	$	(554,852,000	)	$	(120,910,000	)
Preferred stock dividends		-			(1,125,000	)
Loss available to common
shareholders - numerator for basic and
diluted earnings per share	$	(554,852,000	)	$	(122,035,000	)

Denominator:
Denominator for basic and diluted earnings per share
- weighted average shares		11,824,287			11,823,595

Basic and diluted loss per share	$	(46.92	)	$	(10.32	)

In accordance with FASB Statement of Financial Accounting Standards No. 128, Earnings per Share (“FAS 128”), the impact of 1,914,486 shares of convertible redeemable preferred stock in the three and nine months ended September 30, 2005 and 2004 has been excluded from the computation of diluted earnings per share because their effect would be antidilutive. Also, the impact of 777,802 incremental shares from the assumed exercise of warrants issued in conjunction with the ATSB Loan were not included in the computation of diluted earnings per share for the nine months ended September 30, 2004, because their effect would be antidilutive. In addition, the impact of 112 employee stock options has been excluded from the computation of diluted earnings per share for the nine months ended September 30, 2004, because their effect would be antidilutive.

4. Commitments and Contingencies

The following commitments and contingencies arose prior to the Filing and are as of September 30, 2005. The full effect of the Chapter 11 filing and any plan of reorganization on these commitments and contingencies are not yet known.

ATA has a purchase agreement with the Boeing Company (“Boeing”) to purchase seven new Boeing 737-800s, which are currently scheduled for delivery between July 2007 and December 2007. These aircraft are powered by General Electric CFM56-7B27 engines. The manufacturer’s list price is $52.4 million for each 737-800, subject to escalation. ATA’s purchase price for each aircraft is subject to various discounts. According to a 2004 amendment to the purchase agreement with Boeing, if ATA does not have permanent financing for these aircraft suitable to ATA and does not have suitable pre-delivery deposit financing, and if Boeing does not elect to provide such financing suitable to ATA, these deliveries can be delayed for one year periods annually through December 31, 2010. Aircraft pre-delivery deposits are required for these aircraft, and ATA has historically funded these deposits for past aircraft deliveries using operating cash and pre-delivery deposit financing facilities. ATA can provide no assurance that it will be able to secure pre-delivery deposit financing facilities or permanent financing for any future aircraft purchases. As of September 30, 2005, ATA had $4.9 million in long-term pre-delivery deposits outstanding for future aircraft deliveries which were funded with operating cash. Upon delivery of the aircraft, pre-delivery deposits funded with operating cash would be returned to ATA.

ATA also has an agreement to purchase four spare CFM56-7B27 engines which are currently scheduled for delivery between 2005 and 2008.

As allowed under section 365 on the Bankruptcy Code, the Company may assume, assume and assign, or reject certain executory contracts subject to the approval of the Bankruptcy Court and certain other conditions. The Company’s ability to obtain financing at rates and terms similar to historical agreements, if at all, is not known. Therefore, the future obligations for these above deliveries cannot be reasonably estimated.

In the Company’s aircraft financing agreements, the Company typically indemnifies the financing parties, trustees acting on their behalf and other related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation and maintenance of the aircraft and for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties, except for their gross negligence or willful misconduct. The Company expects that it would be covered by insurance (subject to deductibles) for most tort liabilities and related indemnities under these aircraft leases.

In January 2002, a limited liability company subsidiary of the Company (the “Chicago LLC”) entered into an agreement to lease land from the City of Chicago (the “City”), which had been purchased by the City with Chicago Midway Airport Revenue Bonds (“MARB’s”). The Chicago LLC also entered into a redevelopment agreement with the City in January 2002 to develop real estate on the property. The City agreed to pay for the debt service on the MARB’s from the incremental tax revenue expected to be generated from the real estate developments. If the incremental tax revenue is insufficient to fund the MARB’s debt service, the City has the right to require the Chicago LLC to provide those funds as additional rent under the lease. ATA is a guarantor of the lease obligations of the Chicago LLC to the City of Chicago. The total amount of the debt service, including interest, from 2006 through 2021 is approximately $27.2 million. However, Section 502(b)(6) of the Bankruptcy Code limits damage claims to the lower of (1) 15% of the total rents due from the date of filing through the end of the lease, or (2) the rent reserved for the three years following the date of filing. The Company calculates the lower amount to be the rent reserved for the three years following the date of filing which is $3.5 million. The Company has considered the provisions of FASB Statement of Financial Accounting Standards No. 5, Accounting for Contingencies (“FAS 5”), and determined the contingency to be possible and has not recorded the claim. The Company is continuing to work with the City to find alternate uses for the property.

The following commitments and contingencies arose after the Filing and are as of September 30, 2005.

The Company executed definitive leases for three Boeing 737-300 aircraft in the first nine months of 2005. The Company expects to put these aircraft into service in the fourth quarter of 2005.

5. Liabilities Subject to Compromise

Liabilities subject to compromise refers to liabilities that will be accounted for under a plan of reorganization, including claims incurred prior to the Petition Date. These amounts result from known or potential claims to be resolved through the Chapter 11 process and such claims remain subject to future adjustment. Adjustments may result from negotiations, actions of the Bankruptcy Court, rejection of executory contracts and unexpired leases, the determination as to the value of any collateral securing claims, proofs of claims or other events. To date, such adjustments, as reflected in reorganization expense, have been material and the Company anticipates that future adjustments will be material as well. Settlement of these amounts will be established through the plan of reorganization.

At September 30, 2005 and December 31, 2004, the Company had liabilities subject to compromise consisting of the following:

	September 30,		December 31,
	2005		2004
	(Unaudited)
	(in thousands)

Aircraft-related accruals and deferred gains	$	894,512	$	640,788
Long-term debt, including accrued interest,
net of unamoritized issuance costs		453,896		456,334
ALPA Claim		128,850		-
Mandatorily redeemable preferred stock		50,000		50,000
Accounts payable		32,448		32,136
Other accrued expenses and liabilities		76,921		70,418
	$	1,636,627	$	1,249,676

6. Lease Commitments

The Company leases aircraft and aircraft engines, ground facilities, including terminal space and maintenance facilities, and ground equipment. As allowed under section 365 of the Bankruptcy Code, the Company may assume, assume and assign, or reject certain executory contracts and unexpired leases, including leases of real property, aircraft and aircraft engines, subject to the approval of the Bankruptcy Court and certain other conditions. Consequently, the Company anticipates that its obligations pertaining to these leases, and the amounts related thereto as discussed below, will change significantly as the Company progresses through its reorganization.

At September 30, 2005, scheduled future minimum lease payments under operating leases having initial non-cancelable lease terms of more than one year, as currently scheduled, were as follows:

			Facilities
	Flight		and Ground
	Equipment		Equipment		Total
	(in thousands)

4 Qtr 2005	$	28,330	$	2,741	$	31,071

2006		98,364		10,665		109,029

2007		99,507		10,624		110,131

2008		100,130		9,548		109,678

2009		98,987		8,557		107,544

Thereafter		917,248		18,572		935,820
	$	1,342,566	$	60,707	$	1,403,273

The Company’s aircraft operating leases require periodic cash payments that vary in amount and frequency. The Company accounts for aircraft rentals expense in equal monthly amounts over the life of each operating lease because straight-line expense recognition is most representative of the time pattern from which benefit from use of the aircraft is derived. Certain of the Company’s aircraft operating leases were originally structured to require significant cash payments in the early years of the lease in order to obtain more overall favorable lease rates. The amount of the cash payments in excess of the aircraft rent expense in these early years created a prepaid aircraft rent amount on the Company’s balance sheet. The portion of the prepaid aircraft rent schedule to be realized in the next twelve months is recorded as short-term prepaid expense while the remainder is recorded as long-term prepaid aircraft rent. Certain of the Company’s aircraft operating leases require more significant cash payments later in the lease term resulting in an accrued liability for aircraft rents on the Company’s balance sheet. As of September 30, 2005 and December 31, 2004, the entire liability that relates to leases that have not yet been accepted nor rejected has been recorded as a liability subject to compromise.

The table below summarizes the prepaid and accrued aircraft rents as of September 30, 2005 and December 31, 2004 that result from straight-line expense recognition as reported under the following captions on the Company’s balance sheets. Although much of the prepaid rent has been written-off, because the Company has either rejected those leases and returned the aircraft, or renegotiated the leases to reflect even monthly amounts, the amounts could still change significantly in the future due to the continued impact of the Filing and the development of a plan of reorganization, including additional possible rejection or restructuring of the related leases. These events could have a material impact on the amounts and classifications listed below.

	September 30,		December 31,
	2005		2004
	(Unaudited)
	(in thousands)
Assets:
Prepaid expenses and other current assets (short-term)	$	1,661	$	7,350
Prepaid aircraft rent (long-term)		154		52,031
Total prepaid aicraft rent	$	1,815	$	59,381

Liabilities:
Liabilities subject to compromise	$	26,986	$	21,931

7. Management Appointments

On August 12, 2005, the Company announced that James W. Hlavacek resigned from the Board of Directors of the Company effective August 15, 2005. On August 18, 2005, Mr. John G. Denison was appointed to the Board to fill the vacancy created by Mr. Hlavacek’s resignation. Mr. Hlavacek retired from the Company as Vice Chairman earlier in 2005.

On August 12, 2005, the Company announced the retirement of President and Chief Executive Officer J. George Mikelsons effective August 31, 2005. On August 24, 2005, the Bankruptcy Court approved a severance package between the Company and Mr. Mikelsons, which includes, among other things, a payment of $650,000 over a one-year period starting on September 14, 2005 and forgiveness of $400,000 of Mr. Mikelsons’ outstanding loan to the Company over two years if certain conditions are met. The severance payment and forgiveness of debt were both expensed in the third quarter to reorganization expenses. Mr. Mikelsons remains as non-executive Chairman of the Board until the earlier of the Company’s confirmed plan of reorganization or December 31, 2005. Mr. Denison, previously named President and the Chief Executive Officer of ATA, was also appointed to succeed Mr. Mikelsons as President and Chief Executive Officer of the Company.

8. Subsequent Events

On November 17, 2005 the Bankruptcy Court approved the sale of certain assets of Ambassadair and Amber Travel to Grueninger Cruises and Tours, Inc. The sale was consummated on November 18, 2005.

Item 2 - Management’s Discussion and Analysis of Financial Conditions and Results of Operations

Quarter and Nine Months Ended September 30, 2005, Versus Quarter and Nine Months Ended September 30, 2004

Overview

On October 26, 2004, the Company and seven of its subsidiaries, including ATA, C8 and Ambassadair, filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Indiana. In connection with the Filing, the Reorganizing Debtors are developing a plan of reorganization to address their debts and other obligations, lower operating costs and restructure operations. See “Notes to Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing.”

The Company, through its principal subsidiary, ATA, provides scheduled airline services to leisure, business, and other value-oriented travelers, and is a leading provider of charter services to the U.S. military. ATA has been operating for 33 years.

Since the Filing, the Company has been revising its business plans to provide the basis for a plan of reorganization to be proposed in the Chapter 11 cases. Key objectives incorporated in the revised business plans, which are continuing to be refined and changed in response to market conditions, include:

·	focusing on scheduled service from the Chicago-Midway Airport to maximize the benefit of the

codesharing agreement with Southwest Airlines Co. ("Southwest");

·	maintaining scheduled service to Hawaii, which also benefits from the codesharing agreement;

·	maintaining ATA’s position as a leading provider of military passenger charter services;

·	reducing ATA’s fleet of aircraft to economically efficient levels;

·	obtaining a significant capital infusion to continue as a going concern through its anticipated emergence

from Chapter 11;

·	reducing operating costs, including management and other employee expenses; and

·	rejecting burdensome contracts to reduce associated costs.

Since the Filing, the Company and ATA have taken a number of actions necessary to achieve these objectives, develop a viable plan of reorganization and emerge from the Chapter 11 cases. These actions include:

·	assigning ATA’s leasehold interest in six gates and a hangar facility at Chicago-Midway to Southwest for

$40.0 million;

·	establishing a codesharing agreement with Southwest for air transportation service to and from Chicago-

Midway and other specified points;

·	obtaining from Southwest $40.0 million in debtor-in-possession financing and $7.0 million Chicago

LOC;

·	announcing a commitment letter, subject to Bankruptcy Court approval, with MatlinPatterson for $30.0

million in additional debtor-in-possession financing and an additional $70.0 million in equity upon ATA’s

emergence from its Chapter 11 case;

·	announcing suspension of scheduled service from Indianapolis, Indiana, a market which has experienced

severe and on-going price and route competition;

·	ceasing station operations in several other scheduled service markets;

·	ceasing operations of ATA’s feeder carrier, C8 and marketing its assets;

·	reaching agreements with ATA’s aircraft and aircraft engine lessors for the rejection of leases and return

of non-economic aircraft and engines;

·	changing executive management, including appointing a new President and Chief Executive Officer, a

new Chief Financial Officer and a new Chief Commercial Officer;

·	signing a three-year collective bargaining agreement with the cockpit crewmembers containing wage

reductions of 18% effective October 1, 2005, until January 1, 2007, changes in medical benefit plan

and work rule concessions;

·	announcing outsourcing of the heavy maintenance program and the customer reservation call center;

·	signing a settlement agreement with the ATSB Loan Lenders on April 19, 2005; and

·	consummating the sale of certain assets of Ambassadair and Amber Travel subsidiaries.

Critical Accounting Policies

There have been no significant changes to the critical accounting policies since December 31, 2004. Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004. For more information on SOP 90-7, see “Notes to Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing.”

Results of Operations

For the quarter and nine months ended September 30, 2005, the Company had an operating income of $1.4 million and an operating loss of $55.9 million, respectively, as compared to operating losses of $16.2 million and $49.1 million in the same periods of 2004. The Company had a net loss of $137.4 million and $554.9 million in the third quarter and first nine months of 2005, respectively, as compared to a net loss of $30.9 million and $120.9 million in the same periods of 2004. The net loss for the nine months ended September 30, 2004 included a non-operating charge of $27.3 million related to a loss on extinguishment of debt from the exchange offers completed on January 30, 2004, and the net loss for the nine months ended September 30, 2005 included $495.4 million of reorganization expenses. For more information on reorganization expenses, see “Notes to Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing.”

Operating revenues decreased 27.5% to $290.8 million in the third quarter of 2005, as compared to $401.2 million in the same period of 2004 and decreased 26.2% to $870.0 million in the first nine months of 2005, as compared to $1.179 billion in the same period of 2004. Scheduled service revenues decreased $111.0 million between the third quarters of 2004 and 2005, or 38.8%, while charter revenues increased $9.1 million between the same periods, or 9.5%. Scheduled service revenues decreased $357.9 million between the first nine months of 2004 and 2005, or 41.4%, while charter revenues increased $63.7 million between the same periods, or 24.4%.

Operating expenses decreased 30.7% to $289.4 million in the third quarter of 2005, as compared to $417.4 million in the comparable period of 2004, and decreased 24.6% to $925.8 million in the first nine months of 2005, as compared to $1.228 billion in the same period of 2004.

Results of Operations in Cents Per ASM

The following table sets forth, for the periods indicated, operating revenues and expenses expressed as cents per available seat mile (“ASM”).

	Cents per ASM					Cents per ASM
	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2004			2005			2004

Consolidated operating revenues:		8.94		7.42			8.10			7.24

Consolidated operating expenses:
Fuel and oil		2.70		1.79			2.32			1.63
Salaries, wages and benefits		1.97		1.97			2.09			1.97
Aircraft rentals		1.09		1.17			1.10			1.12
Handling, landing and navigation fees		0.64		0.55			0.68			0.57
Crew and other employee travel		0.39		0.29			0.34			0.28
Aircraft maintenance, materials and repairs		0.31		0.36			0.32			0.36
Passenger service		0.32		0.21			0.27			0.20
Depreciation and amortization		0.22		0.24			0.26			0.24
Other selling expenses		0.23		0.25			0.21			0.25
Commissions		0.21		0.13			0.20			0.12
Facilities and other rentals		0.11		0.13			0.15			0.12
Advertising		0.08		0.17			0.08			0.18
Insurance		0.10		0.11			0.10			0.11
Ground package cost		0.07		0.05			0.09			0.06
Aircraft impairments and retirements		-		-			-			-
Other		0.46		0.30			0.41			0.33
Total consolidated operating expenses		8.90		7.72			8.62			7.54

Consolidated operating income (loss)		0.04		(0.30	)		(0.52	)		(0.30	)

ASMs (in thousands)		3,252,252		5,405,354			10,742,383			16,298,636

Consolidated Flight Operating and Financial Data

The following table sets forth, for the periods indicated, certain key operating and financial data for the consolidated flight operations of the Company. Data shown for “Jet” operations include the consolidated operations of Lockheed L-1011, Boeing 737-800, Boeing 757-200, and Boeing 757-300 aircraft in all of the Company’s business units. Data shown for “SAAB” operations include the operations of SAAB 340B propeller aircraft by C8 as the ATA Connection. C8 discontinued flights on March 28, 2005.

	Three Months Ended September 30,
	2005		2004		Inc (Dec)			% Inc (Dec)

Departures Jet		12,849		21,304		(8,455	)		(39.69	)
Departures SAAB		-		13,443		(13,443	)		(100.00	)
Total Departures		12,849		34,747		(21,898	)		(63.02	)

Block Hours Jet		38,997		64,561		(25,564	)		(39.60	)
Block Hours SAAB		-		12,773		(12,773	)		(100.00	)
Total Block Hours		38,997		77,334		(38,337	)		(49.57	)

RPMs Jet (000s)		2,389,173		3,960,047		(1,570,874	)		(39.67	)
RPMs SAAB (000s)		-		48,217		(48,217	)		(100.00	)
Total RPMs (000s) (a)		2,389,173		4,008,264		(1,619,091	)		(40.39	)

ASMs Jet (000s)		3,252,252		5,330,591		(2,078,339	)		(38.99	)
ASMs SAAB (000s)		-		74,763		(74,763	)		(100.00	)
Total ASMs (000s) (b)		3,252,252		5,405,354		(2,153,102	)		(39.83	)

Load Factor Jet (%)		73.46		74.29		(0.83	)		(1.12	)
Load Factor SAAB (%)		-		64.49		(64.49	)		(100.00	)
Total Load Factor (%) (c)		73.46		74.15		(0.69	)		(0.93	)

Passengers Enplaned Jet		1,560,378		2,811,011		(1,250,633	)		(44.49	)
Passengers Enplaned SAAB		-		290,376		(290,376	)		(100.00	)
Total Passengers Enplaned (d)		1,560,378		3,101,387		(1,541,009	)		(49.69	)

Revenue $ (000s)		290,787		401,219		(110,432	)		(27.52	)
RASM in cents (e)		8.94		7.42		1.52			20.49
CASM in cents (f)		8.90		7.72		1.18			15.28
Yield in cents (g)		12.17		10.01		2.16			21.58

Average Aircraft in Service
Lockheed L-1011		5.00		5.76		(0.76	)		(13.19	)
Boeing 737-800		21.54		33.00		(11.46	)		(34.73	)
Boeing 757-200		6.00		16.00		(10.00	)		(62.50	)
Boeing 757-300		9.41		12.00		(2.59	)		(21.58	)
SAAB 340B		-		16.00		(16.00	)		(100.00	)

Average Block Hours Flown per day
Lockheed L-1011		7.78		11.55		(3.77	)		(32.64	)
Boeing 737-800		9.53		11.35		(1.82	)		(16.04	)
Boeing 757-200		11.39		12.76		(1.37	)		(10.74	)
Boeing 757-300		12.32		10.83		1.49			13.76
SAAB 340B		-		8.77		(8.77	)		(100.00	)

See footnotes (a) through (g) on page 23.

	Nine Months Ended September 30,
	2005		2004		Inc (Dec)			% Inc (Dec)

Departures Jet		42,158		64,636		(22,478	)		(34.78	)
Departures SAAB		6,381		39,914		(33,533	)		(84.01	)
Total Departures		48,539		104,550		(56,011	)		(53.57	)

Block Hours Jet		129,201		196,987		(67,786	)		(34.41	)
Block Hours SAAB		6,305		38,687		(32,382	)		(83.70	)
Total Block Hours		135,506		235,674		(100,168	)		(42.50	)

RPMs Jet (000s)		6,977,544		11,234,005		(4,256,461	)		(37.89	)
RPMs SAAB (000s)		19,215		144,091		(124,876	)		(86.66	)
Total RPMs (000s) (a)		6,996,759		11,378,096		(4,381,337	)		(38.51	)

ASMs Jet (000s)		10,706,206		16,068,556		(5,362,350	)		(33.37	)
ASMs SAAB (000s)		36,177		230,080		(193,903	)		(84.28	)
Total ASMs (000s) (b)		10,742,383		16,298,636		(5,556,253	)		(34.09	)

Load Factor Jet (%)		65.17		69.91		(4.74	)		(6.78	)
Load Factor SAAB (%)		53.11		62.63		(9.52	)		(15.19	)
Total Load Factor (%) (c)		65.13		69.81		(4.68	)		(6.70	)

Passengers Enplaned Jet		4,621,326		8,189,762		(3,568,436	)		(43.57	)
Passengers Enplaned SAAB		111,698		839,789		(728,091	)		(86.70	)
Total Passengers Enplaned (d)		4,733,024		9,026,551		(4,296,527	)		(47.58	)

Revenue $ (000s)		869,931		1,179,326		(309,395	)		(26.23	)
RASM in cents (e)		8.10		7.24		0.86			11.88
CASM in cents (f)		8.62		7.54		1.08			14.32
Yield in cents (g)		12.43		10.36		2.07			19.98

Average Aircraft in Service
Lockheed L-1011		5.00		5.92		(0.92	)		(15.54	)
Boeing 737-800		22.76		32.51		(9.75	)		(29.99	)
Boeing 757-200		9.12		15.53		(6.41	)		(41.27	)
Boeing 757-300		11.13		12.00		(0.87	)		(7.25	)
SAAB 340B		-		16.00		(16.00	)		(100.00	)

Average Block Hours Flown per day
Lockheed L-1011		8.58		10.19		(1.61	)		(15.80	)
Boeing 737-800		9.48		11.44		(1.96	)		(17.13	)
Boeing 757-200		9.61		13.00		(3.39	)		(26.08	)
Boeing 757-300		11.40		11.14		0.26			2.33
SAAB 340B		-		8.86		(8.86	)		(100.00	)

See footnotes (a) through (g) on page 23.

(a) Revenue passenger miles (RPMs) represent the number of seats occupied by revenue passengers multiplied by the number of miles those seats are flown. RPMs are an industry measure of the total seat capacity actually sold by the Company.

(b) Available seat miles (ASMs) represent the number of seats available for sale to revenue passengers multiplied by the number of miles those seats are flown. ASMs are an industry measure of the total seat capacity offered for sale by the Company, whether sold or not.

(c) Passenger load factor is the percentage derived by dividing RPMs by ASMs. Passenger load factor is relevant to the evaluation of scheduled service because incremental passengers normally provide incremental revenue and profitability when seats are sold individually. In the case of commercial charter and military/government charter, load factor is less relevant because the right to use an entire aircraft is sold by the Company instead of individual seats. Since both costs and revenues are largely fixed for these types of charter flights, changes in load factor have less impact on business unit profitability. Consolidated load factors and scheduled service load factors for the Company are shown in the appropriate tables for industry comparability, but load factors for individual charter businesses are omitted from applicable tables.

(d) Passengers enplaned are the number of revenue passengers who occupied seats on the Company's flights.

(e) Revenue per ASM (expressed in cents) is total operating revenue divided by total ASMs. This measure is also referred to as “RASM.” RASM measures the Company's unit revenue using total available seat capacity. In the case of scheduled service, RASM is a measure of the combined impact of load factor and yield (see (g) below for the definition of yield).

(f) Cost per ASM (expressed in cents) is total operating expense divided by total ASMs. This measure is also referred to as “CASM.” CASM measures the Company's unit cost using total available seat capacity.

(g) Revenue per RPM (expressed in cents) is total operating revenue divided by total RPMs. This measure is also referred to as “yield.” Yield is relevant to the evaluation of scheduled service because yield is a measure of the average price paid by customers purchasing individual seats. Yield is less relevant to the commercial charter and military/government charter businesses because the right to use an entire aircraft is sold at one time for one price. Consolidated yields and scheduled service yields are shown in the appropriate tables for industry comparability, but yields for individual charter businesses are omitted from applicable tables.

Operating Revenues

Total operating revenues in the third quarter of 2005 decreased 27.5% to $290.8 million, as compared to $401.2 million in the third quarter of 2004; and operating revenues in the first nine months of 2005 decreased 26.2% to $870.0 million, as compared to $1.179 billion in the same period of 2004.

These decreases were due primarily to a $111.0 million and $357.9 million decrease in scheduled service revenues for the third quarter and first nine months of 2005 respectively, partially offset by a $9.1 million and $63.7 million increase in charter revenues for the third quarter and first nine months of 2005 respectively.

The following table sets forth, for the periods indicated, certain key operating and financial data for the scheduled service, military/government and commercial charter operations of the Company.



	Three Months Ended September 30,
	2005			2004			Inc (Dec)			% Inc (Dec)
Scheduled Service
Departures		11,232			32,713			(21,481	)		(65.67	)
Block Hours		31,455			68,645			(37,190	)		(54.18	)
RPMs (000s) (a)		1,859,644			3,448,905			(1,589,261	)		(46.08	)
ASMs (000s) (b)		2,359,851			4,383,676			(2,023,825	)		(46.17	)
Load Factor (c)		78.80			78.68			0.12			0.15
Passengers Enplaned (d)		1,468,849			2,974,566			(1,505,717	)		(50.62	)
Revenue $ (000s)		174,951			285,978			(111,027	)		(38.82	)
RASM in cents (e)		7.41			6.52			0.89			13.65
Yield in cents (g)		9.41			8.29			1.12			13.51
Revenue per passengers enplaned $		119.11			96.14			22.97			23.89

Military Charter
Departures		1,575			1,656			(81	)		(4.89	)
Block Hours		7,370			7,403			(33	)		(0.45	)
ASMs (000s) (b)		877,846			910,129			(32,283	)		(3.55	)
Revenue $ (000s)		102,923			88,419			14,504			16.40
RASM in cents (e)		11.72			9.71			2.01			20.70
RASM excluding fuel escalation (i)		11.02			9.03			1.99			22.04

Commercial Charter
Departures		42			332			(290	)		(87.35	)
Block Hours		173			1,115			(942	)		(84.48	)
ASMs (000s) (b)		14,556			94,777			(80,221	)		(84.64	)
Revenue $ (000s)		2,369			7,799			(5,430	)		(69.62	)
RASM in cents (e)		16.28			8.23			8.05			97.81
RASM excluding fuel escalation (h)		16.22			7.78			8.44			108.48

Percentage of Consolidated Revenues:
Scheduled Service		60.2	%		71.3	%		(11.1	)%		(15.69	)
Military Charter		35.4	%		22.0	%		13.4	%		60.91
Commercial Charter		0.8	%		1.9	%		(1.1	)%		(57.89	)

See footnotes (a) through (g) on page 23 and (h) through (i) on page 25.



	Nine Months Ended September 30,
	2005			2004			Inc (Dec)			% Inc (Dec)
Scheduled Service
Departures		42,845			98,994			(56,149	)		(56.72	)
Block Hours		109,243			211,317			(102,074	)		(48.30	)
RPMs (000s) (a)		5,417,623			9,930,919			(4,513,296	)		(45.45	)
ASMs (000s) (b)		7,772,237			13,478,273			(5,706,036	)		(42.34	)
Load Factor (c)		69.70			73.68			(3.98	)		(5.40	)
Passengers Enplaned (d)		4,423,261			8,682,843			(4,259,582	)		(49.06	)
Revenue $ (000s)		505,968			863,895			(357,927	)		(41.43	)
RASM in cents (e)		6.51			6.41			0.10			1.56
Yield in cents (g)		9.34			8.70			0.64			7.36
Revenue per passengers enplaned $		114.39			99.49			14.90			14.98

Military Charter
Departures		5,169			4,377			792			18.09
Block Hours		24,504			20,258			4,246			20.96
ASMs (000s) (b)		2,830,653			2,486,362			344,291			13.85
Revenue $ (000s)		313,676			234,679			78,997			33.66
RASM in cents (e)		11.08			9.44			1.64			17.37
RASM excluding fuel escalation (i)		10.74			8.97			1.77			19.73

Commercial Charter
Departures		425			1,074			(649	)		(60.43	)
Block Hours		1,403			3,773			(2,370	)		(62.81	)
ASMs (000s) (b)		107,770			306,638			(198,868	)		(64.85	)
Revenue $ (000s)		10,581			25,905			(15,324	)		(59.15	)
RASM in cents (e)		9.82			8.45			1.37			16.21
RASM excluding fuel escalation (h)		9.75			8.31			1.44			17.33

Percentage of Consolidated Revenues:
Scheduled Service		58.2	%		73.3	%		(15.1	)%		(20.74	)
Military Charter		36.1	%		19.9	%		16.2	%		93.62
Commercial Charter		1.2	%		2.2	%		(1.0	)%		(39.13	)

See footnotes (a) through (g) on page 23.

(h) Commercial charter contracts generally provide that the tour operator will reimburse the Company for certain fuel cost increases, which, when earned, are accounted for as additional revenue. A separate RASM calculation, excluding the impact of fuel reimbursements, is provided as a separate measure of unit revenue changes.

(i) Military/government reimbursements to the Company are calculated based upon a “cost plus” formula, including an assumed average fuel price for each contract year. If actual fuel prices differ from the contract rate, revenues are adjusted up or down to neutralize the impact of the change on the Company. A separate RASM calculation is provided, excluding the impact of the fuel price adjustments.

Scheduled Service Revenues. Scheduled service revenues in the third quarter of 2005 decreased 38.8% to $175.0 million from $286.0 million in the third quarter of 2004, and in the nine months ended September 30, 2005 decreased 41.4% to $506.0 million from $863.9 million in the same period of 2004. In the three and nine months ended September 30, 2005, the Company operated fewer jet aircraft than in the three and nine months ended September 30, 2004, due to aircraft being returned to lessors as part of its reorganization under Chapter 11.

Approximately 49.8% of ATA’s scheduled service capacity was generated by flights either originating or terminating at Chicago-Midway in the third quarter of 2005, as compared to 63.2% in the third quarter of 2004. The Hawaiian market generated approximately 35.1% of scheduled service capacity in the third quarter of 2005, as compared to 15.7% in the third quarter of 2004. Another 8.3% of scheduled service capacity was generated in the Indianapolis market in the third quarter of 2005, as compared to 13.0% in the third quarter of 2004. On November 1, 2005, ATA announced the suspension of scheduled service from Indianapolis.

Military/Government Charter Revenues. Military/government charter revenues increased 16.4% to $102.9 million in the third quarter of 2005 from $88.4 million in the third quarter of 2004, and in the nine months ended September 30, 2005, military/government charter revenue increased 33.7% to $313.7 million from $234.7 million in the same period of 2004. The increase in revenue in both periods of 2005, as compared to the same periods of 2004, is due to a change in the mix of aircraft flying, as narrow body aircraft, which result in a higher yield, continued to replace retired wide body aircraft. Also, for the nine months ended September 30, 2005, military/government charter activity increased, as compared to the same period of 2004.

Commercial Charter Revenues. Commercial charter revenues decreased 69.2% to $2.4 million in the third quarter of 2005 from $7.8 million in the third quarter of 2004, and in the nine months ended September 30, 2005, commercial charter revenue decreased 59.1% to $10.6 million from $25.9 million in the same period of 2004. The majority of the decline in commercial charter revenues was due to the retirement of certain Lockheed L-1011 aircraft that the Company has traditionally used in commercial charter flying. Because aircraft utilization is typically much lower for commercial charter, as compared to scheduled service flying, the Company’s replacement fleets of Boeing 737-800 and Boeing 757-300 aircraft are economically disadvantaged when used in the charter business, because of their higher fixed-ownership cost.

Other Revenues. Other revenues are comprised of the consolidated revenues of certain affiliated companies, together with miscellaneous categories of revenue associated with scheduled services operations of the Company, such as cancellation and administration service fees and cargo revenue. Other revenues decreased 50.3% to $7.9 million in the third quarter of 2005 from $15.9 million in the third quarter of 2004, and in the nine months ended September 30, 2005, other revenues decreased 35.8% to $28.2 million, as compared to $43.9 million in the same period of 2004, primarily related to the decrease in scheduled service activity between periods.

Operating Expenses

Fuel and Oil. Fuel and oil expense decreased 9.4% to $87.8 million in the third quarter of 2005, as compared to $96.9 million in the same period of 2004, and decreased 6.0% to $249.1 million in the nine months ended September 30, 2005, as compared to $265.1 million in the same period of 2004.

During the quarter and nine months ended September 30, 2005, the system-wide block hours decreased by 49.6% and 42.5%, respectively, compared to the same periods of 2004, resulting in a decrease in fuel and oil expense of approximately $37.1 million and $89.2 million, respectively, between those periods. These decreases were partially offset by an increase in the average cost per gallon of jet fuel. During the quarter and nine months ended September 30, 2005, the average cost per gallon of jet fuel consumed increased by 46.0% and 40.8%, respectively, compared to the same periods of 2004, resulting in an increase in fuel and oil expense of approximately $27.7 million and $73.3 million, respectively, between those periods.

The Company also benefits from fuel reimbursement clauses and guarantees in its military/government and commercial charter contracts, as well as bulk scheduled service, but the benefit of these price guarantees is accounted for as revenue when realized.

Salaries, Wages and Benefits. Salaries, wages and benefits include the cost of salaries and wages paid to the Company’s employees, together with the Company’s cost of employee benefits and payroll-related local, state and federal taxes. Salaries, wages and benefits expense in the third quarter of 2005 decreased 39.6% to $64.2 million from $106.3 million in the third quarter of 2004, and in the nine months ended September 30, 2005, salaries, wages and benefits expense decreased 30.2% to $224.3 million, as compared to $321.4 million in the same period of 2004.

Salaries, wages and benefits decreased in the third quarter and first nine months of 2005, as compared to the same periods of 2004, as a result of the reduction of flight activity and increased efficiencies. Also contributing to the decrease, ATA signed a letter of agreement in February 2005 with its cockpit crewmembers who are represented by Air Line Pilots Association (“ALPA”). Under this agreement the cockpit crewmembers agreed to an approximate 20% pay reduction and 50% reduction in contributions to the Cockpit Crewmember Money Purchase Plan for the period of January 31, 2005 through May 31, 2005. In June 2005, the cockpit crewmembers extended this agreement through September 30, 2005, and the pay reduction was set at 18% rather than 20%. On September 28, 2005, the cockpit crewmembers voted to ratify a new three-year collective bargaining agreement which became effective October 1, 2005, and amendable on September 30, 2008. Under the new agreement, the cockpit crewmembers agreed to an 18% reduction in wages until January 1, 2007, modifications to the Cockpit Crewmember Money Purchase Plan, and conversion to a new health insurance plan. The new agreement also provides the cockpit crewmembers with additional future wage compensation and incentives, as well as stock options representing 4% of the shares of the New ATA. As a result of the pay reduction, the Company recorded a reduction in the vacation pay liability accrual of $1.5 million reflecting the new rates of pay.

In October 2004, ATA and its cabin crewmembers who are represented by the Association of Flight Attendants (“AFA”) concluded an amendment to the AFA agreement. Under the amended AFA agreement, the cabin crewmembers agreed to reduce their base hourly pay rate by 10% for the period of October 15, 2004 through October 15, 2006. In addition, the Company also implemented pay reductions and indefinite pay freezes for certain of its non-crewmember employees.

Aircraft Rentals. Aircraft rentals expense in the third quarter of 2005 decreased 43.8% to $35.4 million from $63.0 million in 2004, and decreased 35.2% to $118.2 million in the nine months ended September 30, 2005, as compared to $182.4 million in the same period of 2004. These decreases were partially attributable to the short-term renegotiation of aircraft lease rates related to Boeing 757-300 and Boeing 757-200 aircraft after the Filing. In addition, the Company operated an average of 25 and 18, respectively, fewer leased jet aircraft in the three and nine months of 2005 as compared to the same periods of 2004 due to aircraft being returned to the lessors as part of the Chapter 11 reorganization.

Handling, Landing and Navigation Fees. Handling and landing fees include the costs incurred by the Company at airports to land and service its aircraft and to handle passenger check-in, security, cargo and baggage where the Company elects to use third-party contract services in lieu of its own employees. Where the Company uses its own employees to perform ground handling functions, the resulting cost appears within salaries, wages and benefits. Air navigation fees are incurred when the Company's aircraft fly through certain foreign airspace.

Handling, landing and navigation fees decreased by 29.9% to $20.9 million in the third quarter of 2005, as compared to $29.8 million in the same period of 2004, and decreased by 21.7% to $73.1 million in the nine months ended September 30, 2005, as compared to $93.3 million in the same period of 2004. The decreases in handling, landing and navigation fees between periods was primarily due to a 39.7% and 34.8% decrease in system-wide jet departures in the third quarter and first nine months of 2005, respectively, as compared to the same periods of 2004. These decreases were partially offset by an increase in cost per departure for handling and landing between periods, mainly due to less frequent flying to schedule service stations.

Crew and Other Employee Travel. Crew and other employee travel is primarily the cost of air transportation, hotels and per diem reimbursements to cockpit and cabin crewmembers incurred to position crews away from their bases to operate Company flights throughout the world. The cost of crew and other employee travel decreased 19.6% to $12.7 million in the third quarter of 2005, as compared to $15.8 million in the third quarter of 2004, and decreased 21.2 % to $36.1 million in the nine months ended September 30, 2005, as compared to $45.8 million in the same period of 2004. These decreases in the third quarter and first nine months of 2005 were primarily due to the decrease in system-wide jet departures of 39.7% and 34.8%, respectively, between periods. These decreases were partially offset by increases in crew travel expense between both periods resulting from increased expansion military/government flying.

Aircraft Maintenance, Materials and Repairs. This expense includes the cost of expendable aircraft spare parts, repairs to repairable and rotable aircraft components, contract labor for maintenance activities, and other non-capitalized direct costs related to fleet maintenance, including spare engine leases, parts loan and exchange fees, and related shipping costs. It also includes the costs incurred under hourly engine maintenance agreements the Company had on certain of its aircraft fleets. These agreements provided for the Company to pay monthly fees based on a specified rate per engine flight hour, in exchange for major engine overhauls and maintenance. Aircraft maintenance, materials and repairs expense decreased 48.2% to $10.2 million in the third quarter of 2005, as compared to $19.7 million in the third quarter of 2004, and decreased 42.0% to $34.3 million in the nine months ended September 30, 2005, as compared to $59.1 million in the same period of 2004. The Company rejected its hourly engine maintenance agreements related to its Boeing 757-200 and Boeing 757-300 aircraft in April 2005, resulting in less expense between both periods. The Company intends to engage an outside firm to perform the required engine overhauls related to these fleets. In addition, the decline in aircraft maintenance, materials and repairs is due to the smaller fleet in the third quarter and first nine months of 2005, as compared to 2004.

Passenger Service. Passenger service expense includes the onboard costs of meal and non-alcoholic beverage catering, the cost of alcoholic beverages and the cost of onboard entertainment programs, together with certain costs incurred for mishandled baggage and passengers inconvenienced due to flight delays or cancellations. For the third quarters of 2005 and 2004, catering represented 86.5% and 83.0%, respectively, of total passenger service expense, while catering represented 86.4% and 81.9%, respectively, of total passenger service expense for the nine month periods ended September 30, 2005 and 2004.

The total cost of passenger service decreased 8.0% to $10.3 million in the third quarter of 2005, as compared to $11.2 million in the third quarter of 2004 and decreased 9.5% to $29.5 million in the nine months ended September 30, 2005, as compared to $32.6 million in the same period of 2004. These decreases were mainly attributable to the decrease in scheduled service passengers enplaned between periods.

Depreciation and Amortization. Depreciation reflects the periodic expensing of the recorded cost of owned airframes and engines, leasehold improvements and rotable parts for all fleet types, together with other property and equipment owned by the Company. Depreciation and amortization expense decreased 44.6% to $7.2 million in the third quarter of 2005, as compared to $13.0 million in the third quarter of 2004, and decreased 29.1% to $28.0 million in the nine months ended September 30, 2005, as compared to $39.5 million in the same period of 2004.

In the fourth quarter of 2004, the Company recorded a significant impairment charge against the L1011-500 fleet. As a result, the fleet’s depreciable value in the third quarter and first nine months of 2005 is considerably less than its depreciable value in the third quarter and first nine months of 2004. At that same time, the depreciable life of the fleet was shortened to reflect the most current planned fleet retirement schedule. The fleet’s lower depreciable value offset by the shorter depreciable life resulted in $3.9 million and $6.4 million less depreciation expense in the third quarter and first nine months of 2005, respectively, as compared to the same periods of 2004. The decrease in depreciation and amortization expense was also attributable to the retirement of one L-1011-50 aircraft in late 2004. Due to this retirement, the Company recorded $0.2 million and $1.8 million less in depreciation in the third quarter and first nine months of 2005, respectively, as compared to the same periods of 2004.

In the quarter and nine months ended September 30, 2005, depreciation expense also decreased $0.8 million and $1.8 million, respectively, as compared to the same periods of 2004, as assets associated with furniture and fixtures, computer hardware and software, equipment, and buildings became fully depreciated.

Other Selling Expenses. Other selling expenses are comprised primarily of booking fees paid to computer reservation systems (“CRS”), credit card discount expenses incurred when selling to customers using credit cards for payment, and toll-free telephone services provided to customers who contact the Company directly to book reservations. Other selling expenses decreased 44.4% to $7.5 million in the third quarter of 2005, as compared to $13.5 million in the third quarter of 2004, and decreased 43.0% to $22.8 million in the nine months ended September 30, 2005, as compared to $40.0 million in the same period in 2004, consistent with the decline in scheduled service revenue.

Commissions. The Company incurs commissions expense in association with the sale by travel agents of single seats on scheduled service. In addition, the Company incurs commissions to secure some commercial and military/government charter business. Commissions expense decreased 5.6% to $6.7 million in the third quarter of 2005, as compared to $7.1 million in the third quarter of 2004, and increased 7.1% to $21.0 million in the nine months ended September 30, 2005 as compared to $19.6 million in the same period of 2004. Commissions expense related to the military/government charter business increased $0.8 million and $4.6 million in the third quarter and nine months ended September 30, 2005, respectively, directly relating to the increase in military/government flying. Commissions expense related to the scheduled service business decreased $1.1 million and $3.0 million in the third quarter and nine months ended September 30, 2005, respectively, directly relating to the decrease in that type of flying.

Facilities and Other Rentals. Facilities and other rentals include the cost of all ground facilities that are leased by the Company such as airport space, regional sales offices and general offices. The cost of facilities and other rentals was $3.6 million in the third quarter of 2005, as compared to $6.8 million in the third quarter of 2004, and decreased 18.1% to $16.3 million in the nine months ended September 30, 2005, as compared to $19.9 million in the same period of 2004. The decrease in both periods was primarily attributable to exiting or reducing lease space in certain airport locations as part of the Company’s restructuring.

Insurance. Insurance expense represents the Company’s cost of hull and liability insurance and the costs of general insurance policies held by the Company, including workers’ compensation insurance premiums and claims handling fees. The total cost of insurance decreased 46.7% to $3.2 million in the third quarter of 2005, as compared to $6.0 million in the second quarter of 2004, and decreased 36.6% to $11.1 million in the nine months ended September 30, 2005, as compared to $17.5 million in the same period of 2004. The decrease in insurance expense between periods was due to the reduction of fleet size and revenue passenger miles.

Advertising. Advertising expense decreased 73.4% to $2.5 million in the third quarter of 2005, as compared to $9.4 million in the same period of 2004, and decreased 70.9% to $8.6 million in the nine months ended September 30, 2005, as compared to $29.6 million in the same period of 2004. The decrease in costs between both periods was primarily due to a reduction in marketing efforts after the Chapter 11 filing and due to operating and advertising in fewer markets due to the Company’s route changes.

Other Operating Expenses. Other operating expenses decreased 8.0% to $15.0 million in the third quarter of 2005, as compared to $16.3 million in the third quarter of 2004, and decreased 18.5% to $43.6 million in the nine months ended September 30, 2005 as compared to $53.5 million in the same period of 2004. This decrease was attributable to various changes in other expenses comprising this line item, none of which was individually significant.

Interest Expense. Interest expense in the quarter and the nine months ended September 30, 2005 decreased to $1.6 million and $4.8 million, respectively, as compared to $15.1 million and $45.5 million in the same periods of 2004. In accordance with SOP 90-7, following its Chapter 11 filing, the Company did not record interest expense with respect to pre-petition unsecured debt or secured debt in which the collateral value is less than the principal amount of the debt.

Loss on Extinguishment of Debt. On January 30, 2004, the Company completed exchange offers and issued Senior Notes due 2009 (“2009 Notes”) and cash consideration for certain of its $175.0 million 10 ½% Senior Notes due August in 2004 (“2004 Notes”) and issued Senior Notes due 2010 (“2010 Notes” and, together with the 2009 Notes, “New Notes”) and cash consideration for certain of its $125.0 million 9 5/8% Senior Notes due in December 2005 (“2005 Notes” and, together with the 2004 Notes, “Existing Notes”). The Company accepted $260.3 million of Existing Notes tendered for exchange, issuing $163.1 million in aggregate principal amount of 2009 Notes and delivering $7.8 million in cash in exchange for $155.3 million in aggregate principal amount of 2004 Notes tendered, and issuing $110.2 million in aggregate principal amount of 2010 Notes and delivering $5.2 million in cash in exchange for $105.0 million in aggregate principal of 2005 Notes. As a result of this transaction, the Company recorded a non-operating loss on extinguishment of debt of $27.3 million in the first quarter of 2004 in accordance with FASB Emerging Issues Task Force Issue No. 96-19, Debtor’s Accounting for Modification of Exchange of Debt Terms (“EITF 96-19”). The loss mainly related to the accounting for the $13.0 million cash consideration paid at closing of the exchange offers and the $13.0 million of incremental notes issued during the exchange offers.

Reorganization Expense. In accordance with SOP 90-7, the Company’s revenues, expenses (including professional fees), realized gains and losses, and provision for losses that can be directly associated with the reorganization and restructuring of the business are reported separately as reorganization items in the consolidated statement of operations.

The Company recognized reorganization expense of $137.6 million in the third quarter of 2005 and $495.4 million in the nine months ended September 30, 2005. No reorganization expense was recorded in the same periods of 2004. See “Notes to the Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing.” for further information.

Income Taxes. The Company did not record any income tax expense or benefit in the quarter and the nine months ended September 30, 2005 applicable to its $137.4 million and $554.9 million, respectively in pre-tax loss for those periods, nor did it record any income tax expense or benefit in the third quarter or nine months ended September 30, 2004 applicable to $30.9 million and $120.9 million, respectively, in pre-tax loss for those periods.

As of September 30, 2005, the Company had incurred a three-year cumulative loss. Because of this cumulative loss and the presumption under GAAP that net deferred tax assets should be fully reserved if it is more likely than not that they will not be realized through carrybacks or other strategies, the Company had recorded a full valuation allowance against its net deferred tax asset.

Liquidity and Capital Resources

As of September 30, 2005, the Company had unrestricted cash of $75.4 million and restricted cash of $33.9 million of which $3.2 million is classified as prepaid expenses and other current assets and $30.7 million is primarily securing letters of credit. In addition, $63.8 million of cash on advance ticket sales had been withheld by the Company’s bank card processors and was recorded as a receivable on the Company’s balance sheet as of September 30, 2005. The airline industry continues to be adversely affected by historically high fuel prices and intense price competition.

Based on its current financial projections, the Company believes that it will require a capital infusion of approximately $100 million. The Company retained advisors to assist in raising the necessary capital and is seeking $100.0 million in financing in the expectation of emergence from Chapter 11. On November 10, 2005, the Company filed with the U.S. Bankruptcy Court a motion to approve a commitment letter with MatlinPatterson for additional debtor-in-possession financing of $30.0 million and an additional $70.0 million in equity upon the Company’s emergence from its Chapter 11 case. Under the proposed commitment, the DIP financing would not be available until approval of the new DIP facility the Bankruptcy Court, which is scheduled for hearing on December 6, 2005. The Company believes up to $30.0 million in additional funds may be required to provide the liquidity necessary to continue as a going concern through its anticipated emergence from Chapter 11. If these funds are not provided under the MatlinPatterson commitment, they may come from other additional debtor-in-possession financing, deferred debt payments, improved working capital, assets sales or operating cash flow improvements. The current financial projections assume the Company accomplishes certain objectives, such as, but not limited to, continuing successful codeshare operations with Southwest at projected levels, achieving estimated savings through outsourcing efforts and agreements with unions to achieve necessary cost savings. Additional capital will be required to the extent that these objectives are not successfully accomplished in whole or in part. No assurance can be made that the Company will succeed in securing the additional capital. In addition, if the Company is not able to finalize, obtain confirmation of, and implement a plan of reorganization, it is not likely to be able to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern. A plan of reorganization could materially change the amounts currently disclosed in the consolidated financial statements.

The potential for continuing adverse publicity associated with the Filing and the resulting uncertainty regarding the Company’s future prospects may hinder the Company’s ongoing business operations and its ability to operate, fund and execute its business plan by: impairing relations with existing and potential customers; negatively impacting the ability of the Company to attract and maintain employees; limiting the Company’s ability to obtain trade credit; and impairing present and

future relationships with vendors and service providers. See “Notes to the Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing ” for further details regarding the Filing.

Statement of Cash Flow Overview

In the nine months ended September 30, 2005, net cash used in operating activities was $50.8 million, as compared to $32.1 million for the same period of 2004. The change in cash used in operating activities between periods primarily resulted from unfavorable changes in operating assets and liabilities, partially offset by a less significant operating loss in the first nine months of 2005 and a non-cash charge in 2004 relating to extinguishment of debt.

Net cash used in reorganization activities was $6.2 million in the first nine months of 2005, which mainly consisted of the payment of professional fees related to the reorganization, partially offset by the proceeds from the assignment of the Company’s leasehold interest in the hangar at the Chicago-Midway Airport and the sale of C8 assets.

Net cash used in investing activities was $12.0 million in the first nine months of 2005, as compared to $16.2 million in the same period of 2004. Such amounts included capital expenditures totaling $13.4 million in the first nine months of 2005, as compared to $21.4 million in the same period of 2004.

Net cash provided by financing activities was $4.8 million in the nine months ended September 30, 2005, as compared to net cash used by financing activities of $54.7 million in the same period of 2004. The Company reduced its restricted cash balance by $4.8 million in the first nine months of 2005, and $11.7 million in the first nine months of 2004. Upon completion of the exchange offers on January 30, 2004, the Company paid all accrued preferred dividends in arrears totaling $9.2 million. In addition, in the first nine months of 2004, the Company also paid $13.0 million as cash consideration for the completion of the exchange offers and made other scheduled debt payments of $45.3 million.

For further details on Liquidity and Capital Resources see “Notes to the Consolidated Financial Statements - Note 1 - The Company and the Chapter 11 Filing.”

Debt and Operating Lease Cash Payment Obligations. The Company is required to make cash payments in the future on debt obligations and operating leases. The Company is obligated on a number of long-term operating leases, which are considered financing and not recorded on the balance sheet under GAAP. The Company does not guarantee the debt of any other party which is not a subsidiary. The following table summarizes the Company’s contractual debt principal payments and operating lease obligations and their currently expected impact on liquidity and cash flows. This information does not include cash payments for amounts classified as liabilities subject to compromise.

	Cash Payments Currently Scheduled (2)

			4 Qtr						2008-		After
	Total		2005		2006		2007		2009		2009
			(in thousands)
Current and long-term debt (1)	$	41,000	$	41,000	$	-	$	-	$	-	$	-

Lease obligations (2)		1,403,273		31,071		109,029		110,131		217,222		935,820
Total contractual cash obligations	$	1,444,273	$	72,071	$	109,029	$	110,131	$	217,222	$	935,820

(1) Represents payments under DIP Facility to Southwest.

(2) The Company leases aircraft and aircraft engines, ground facilities, including terminal space and maintenance facilities, and ground equipment. As allowed under section 365 of the Bankruptcy Code, the Company may assume, assume and assign, or reject certain executory contracts and unexpired leases, including leases of real property, aircraft and aircraft engines, subject to the approval of the Bankruptcy Court and certain other conditions. Consequently, the Company anticipates that its liabilities pertaining to these leases, and the amounts related thereto as discussed below, will change significantly as the Company progresses through reorganization.

Aircraft and Fleet Transactions. ATA has a purchase agreement with the Boeing Company (“Boeing”) to purchase seven new Boeing 737-800s, which are currently scheduled for delivery between July 2007 and December 2007. These aircraft are powered by General Electric CFM56-7B27 engines. The manufacturer’s list price is $52.4 million for each 737-800, subject to escalation. ATA’s purchase price for each aircraft is subject to various discounts. According to a 2004 amendment to the purchase agreement with Boeing, if ATA does not have permanent financing for these aircraft suitable to ATA and does not have suitable pre-delivery deposit financing, and if Boeing does not elect to provide such financing suitable to the ATA, these deliveries can be delayed for one year periods annually through December 31, 2010. Aircraft pre-delivery deposits are required for these aircraft, and ATA has historically funded these deposits for past aircraft deliveries using operating cash and pre-delivery deposit financing facilities. ATA can provide no assurance that it will be able to secure pre-delivery deposit financing facilities or permanent financing for any future aircraft purchases. As of September 30, 2005, ATA had $4.9 million in long-term pre-delivery deposits outstanding for future aircraft deliveries which were funded with operating cash. Upon delivery of the aircraft, pre-delivery deposits funded with operating cash would be returned to ATA.

ATA also has an agreement to purchase four spare CFM56-7B27 engines which are currently scheduled for delivery between 2005 and 2008.

In January 2002, the Chicago LLC entered into the Lease to lease land from the City, which had been purchased by the City with MARB’s. The Chicago LLC also entered into an agreement with the City in January 2002 to develop real estate on the property. The City agreed to pay for the debt service on the MARB’s from the incremental tax revenue expected to be generated from the real estate developments. If the incremental tax revenue is insufficient to fund the MARB’s debt service, the City has the right to require the Chicago LLC to provide those funds as additional rent under the lease. ATA is a guarantor of the lease obligations of the Chicago LLC to the City of Chicago. The total amount of the debt service, including interest, from 2006 through 2021 is approximately $27.2 million. The Company is continuing to work with the City to find alternate uses for the property. However, Section 502(b)(6) of the Bankruptcy Code limits damage claims to the lower of (1) 15% of the total rents due from the date of filing through the end of the lease, and (2) the rent reserved for the three years following the date of filing which is approximately $3.5 million.

The Company executed definitive leases for three Boeing 737-300 aircraft in the first nine months of 2005. The Company expects to put these aircraft into service in the fourth quarter of 2005.

ATSB Financing. In November 2002, ATA obtained the $168.0 million ATSB Loan. Interest is payable monthly at LIBOR plus a margin. Guarantee fees of 5.6% of the outstanding guaranteed principal balance in 2004, escalating to 9.5% of the outstanding guaranteed principal balance in 2005 through 2008, are payable quarterly.

The ATSB Loan is subject to certain restrictive covenants and is collateralized primarily by a substantial portion of ATA’s unrestricted cash, certain receivables, certain aircraft, spare engines, and parts. The aircraft, spare engines and parts consist of two Lockheed L-1011-500 aircraft, two SAAB 340B aircraft, 20 Rolls Royce RB211 spare engines and Boeing 757-200, Boeing 757-300 and Boeing 737-800 rotables.

On April 19, 2005, the Bankruptcy Court approved the Settlement Agreement, under which the parties agreed that the ATSB Loan Lenders have an allowed, secured claim in respect of the ATSB Loan in the amount of $110 million and an allowed, general unsecured claim in respect of the remaining outstanding portion of the ATSB Loan of approximately $30.6 million. The Settlement Agreement also requires ATA to pay the ATSB Loan Lenders adequate protection payments of $2.3 million per quarter, beginning in the second quarter of 2005, and $4.5 million on the earlier of December 31, 2005 or the effective date of a plan of reorganization. The adequate protection payments reduce the amount of the ATSB Loan Lenders’ secured claim. The Company has made the adequate protection payments in accordance with the Settlement Agreement.

Card Agreement. The Company accepts charges to most major credit and debit cards (“cards”) as payment from its customers. As of September 30, 2005, approximately 90% of scheduled service and vacation package sales are purchased using these cards. The Company maintains an agreement with a bank for the processing and collection of charges for Visa and Mastercard as well as agreements with American Express Travel Related Services Company, Inc for the American Express Card and Discover Card Services, Inc. for the Discover Card (collectively referred to as the “Credit Card Providers”). Under these agreements, a sale is traditionally charged to the purchaser’s card account and is paid to the Company in cash within a few days or weeks of the date of purchase, although the Company may provide the purchased transportation days, weeks or months later.

According to the agreements, the Credit Card Providers can retain cash collected by them on processed card charges as a deposit. If the Company fails to perform pre-paid services which are purchased by a charge to a card, the purchaser may be entitled to obtain a refund which, if not paid by the Company, is the obligation of the Credit Card Providers. The deposit secures this potential obligation of the Credit Card Providers to make such refunds. The Credit Card Providers have exercised their rights to withhold distributions and as of September 30, 2005 had retained $63.8 million of the Company’s unflown sales as compared to $69.2 million at September 30, 2004.

Letters of Credit and Surety Bonds. The Company provides letters of credit or surety bonds to certain airport authorities and selected other parties, to secure the Company’s obligation to these parties. As of September 30, 2005, the Company’s non-current restricted cash balance on the Company’s balance sheet was $30.7 million and primarily included cash pledged to secure its letters of credit.

The DOT requires the Company to provide a surety bond or an escrow to secure potential refund claims of charter customers who have made prepayments to the Company for future transportation. The Company has an escrow arrangement which requires the Company to place advance receipts for certain charter flights into escrow until the flight operates. Once the flight occurs the Company is paid from the escrow account those advance deposits specific to that completed flight. As of September 30, 2005, the Company has $3.2 million in advance charter receipts deposited in escrow, which was included in prepaid expenses and other current assets on the Company’s balance sheet as of that date.

Forward-Looking Information and Risk Factors

Information contained within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking information which can be identified by forward-looking terminology such as “believes,”“expects,”“may,”“will,”“should,”“anticipates,” or the negative thereof, or other variations in comparable terminology. Such forward-looking information is based upon management's current knowledge of factors affecting the Company’s business. The differences between expected outcomes and actual results can be material, depending upon the circumstances. Where the Company expresses an expectation or belief as to future results in any forward-looking information, such expectation or belief is expressed in good faith and is believed to have a reasonable basis. The Company can provide no assurance that the statement of expectation or belief will result or will be achieved or accomplished.

Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different. Such factors include, but are not limited to, the following:

·	the ability to develop and execute a revised business plan for profitable operations, including restructuring flight

schedules, maintaining the support of employees, resizing the fleet of aircraft, and outsourcing of certain

activities;

·	the ability to obtain additional capital of up to $30.0 million to continue as a going concern through

emergence from Chapter 11 and new capital as part of a plan of reorganization for New ATA;

·	the ability to achieve projected profitability from the Codeshare Agreement;

·	risks associated with third parties seeking and obtaining Bankruptcy Court approval to terminate or shorten the

exclusivity period, to propose and confirm one or more plans of reorganization, for the appointment of a Chapter

11 trustee or to convert one or more of the cases to a Chapter 7 case;

·	the ability to attract and retain employees;

·	the ability to obtain and maintain normal terms with vendors and service providers;

·	the ability to maintain contracts that are critical to its operations;

·	the potential adverse effects of the Chapter 11 reorganization on liquidity or results of operations;

·	the ability to attract and retain customers;

·	demand for transportation in markets in which the Company operates;

·	economic conditions;

·	the effects of any hostilities or act of war;

·	salary costs;

·	aviation fuel costs;

·	competitive pressures on pricing (particularly from low-cost competitors);

·	weather conditions;

·	government legislation and regulation; and

·	other risks and uncertainties listed from time to time in reports the Company periodically files with the Securities

and Exchange Commission.

The Company is under no obligation to update, and will not undertake to update, its forward-looking statements to reflect future events or changes in circumstances.

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

The Company’s results of operations are significantly impacted by changes in the price of aircraft fuel. The price of fuel is subject to political, economic and market factors that are generally outside of the Company’s control. Continued significant increases in fuel costs could materially and adversely affect the Company’s liquidity, results of operations and financial condition. There have been no material changes in market risk from the information provided in Item 7A, Quantitative and Qualitative Disclosures About Market Risk, of ATA Holdings Corp.’s Annual Report on Form 10-K for the year 2004.

Item 4 - Controls and Procedures

The Company conducted an evaluation (under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer), pursuant to Rule 13a-15 promulgated under the Securities Exchange Act of 1934 (“Exchange Act”), as amended, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of September 30, 2005. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2005, the controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2005 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - Other Information

Item 1 - Legal Proceedings

On the Petition Date, the Company and seven of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in Bankruptcy Court. As debtors-in-possession, the Debtors are authorized under Chapter 11 to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the approval of the Bankruptcy Court. As of the Petition Date, virtually all pending litigations are stayed, and absent further order of the Bankruptcy Court, no party, subject to certain exceptions, may take any action, again subject to certain exceptions, to recover on pre-petition claims against the Debtors. In addition, the Debtors may reject pre-petition executory contracts and unexpired lease obligations and parties affected by these rejections may file claims with the Bankruptcy Court. At this time, it is not possible to predict the outcome of the Chapter 11 process or its effect on the Company’s business. No new material legal proceedings have commenced during the time period covered by this interim report. In addition, there have been no significant developments in the pending legal proceedings as previously reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3 - Defaults Upon Senior Securities

As a result of the Filing, the Company is in default and subject to immediate acceleration of all balances under the terms of the agreements of certain of its debt instruments, including its unsecured senior notes and ATSB loan. The Filing also triggered defaults on substantially all lease obligations of the Company.

Item 4 - Submission of Matters to a Vote of Security Holders

None

Item 5 - Other Information

None

Item 6 - Exhibits

Exhibits are filed as a separate section of this report as set forth in the Index to Exhibits attached to this report.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ATA Holdings Corp

(Registrant)

Date November 21, 2005 by /s/ Francis J. Conway

Francis J. Conway

Executive Vice President and Chief Financial Officer

On behalf of the Registrant

Index to Exhibits

Exhibit No.

10.1 Seventh Amendment to Credit Agreement dated as of July 31, 2005 between ATA Airlines Inc., as Debtor and Debtor-in-Possession under Chapter 11 of the Bankruptcy Code, as the Borrower, ATA Holdings Corp., as guarantor, Ambassadair Travel Club Inc., as guarantor, ATA Leisure Corp., as guarantor, Amber Travel Inc., as guarantor, American Trans Air Execujet Inc., as guarantor, ATA Cargo Inc., as guarantor, C8, as guarantor, any other subsidiary of ATA Holdings Corp., as guarantor and Southwest Airlines Co. as Lender.

10.2 Severance Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated August 31, 2005)

10.3 Non-Competition and Confidentiality Agreement between ATA Holdings Corp. and J. George Mikelsons dated August 31, 2005 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K dated August 31, 2005)

10.4 Employment Agreement between ATA Holdings Corp. and John G. Denison dated October 20, 2005 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K dated October 20, 2005)

31.1 CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2 CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Filing Compare · ATA HOLDINGS CORP