PROSPECTUS
[LOGO]
78,988 SHARES
AMTRAN, INC.
COMMON STOCK
_______________
AMTRAN, INC.
7337 WEST WASHINGTON STREET
INDIANAPOLIS, INDIANA 46231
(317) 247-4000
________________
This prospectus covers the sale of up to 78,988 shares of
common stock of Amtran, Inc.
Our common stock trades on the Nasdaq National Market tier of
the Nasdaq Stock Market under the symbol "AMTR." On September
17, 1999, the last sale price of our common stock as reported by
Nasdaq was $20.00 per share.
The shareholders named in this prospectus are offering these
shares for sale. Any or all of these shares may be sold, from
time to time, by means of ordinary brokerage transactions or
otherwise. We will receive none of the proceeds of the sale of
these shares.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 4.
__________________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
___________________
The date of this prospectus is September 21, 1999.
We have not authorized anyone (including any salesman or
broker) to give oral or written information about this offering
that is different from the information included in this
prospectus or that is not included in this prospectus.
TABLE OF CONTENTS
PAGE
Where You Can Find More Information...........................3
Risk Factors..................................................4
About Amtran.................................................12
Use of Proceeds..............................................12
Selling Shareholders.........................................13
Plan of Distribution.........................................13
Legal Matters................................................14
Experts......................................................15
References in this prospectus to "we," "us," "our" and
"Amtran" refer to Amtran, Inc. and its subsidiaries.
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires Amtran to file information
with the Securities and Exchange Commission concerning its
business and operations. Accordingly, Amtran files annual,
quarterly and special reports, proxy statements and other
information with the Commission. You can inspect and copy this
information at the public reference facility maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. You can also do so at the following
regional offices of the Commission:
<circle>New York Regional Office, Seven World Trade Center,
Suite 1300, New York, New York 10048
<circle>Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661
You can get additional information about the operation of the
Commission's public reference facilities by calling the
Commission at 1-800-SEC-0330. The Commission also maintains a
web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding companies
that, like Amtran, file information electronically with the
Commission. You can also inspect information about Amtran at the
offices of the National Association of Securities Dealers, Inc.,
at 1735 K Street, Washington, D.C. 20006.
The Commission allows Amtran to "incorporate by reference" the
information we file with them, which means that we can disclose
important information to you by referring you to the other
information we have filed with the Commission. The information
that we incorporate by reference is considered to be part of this
prospectus, and later information that we file with the
Commission will automatically update and supersede the
information we've included in this prospectus. We incorporate by
reference the documents listed below. We also incorporate by
reference any future filings Amtran makes with the Commission
under Section 13(a), 13(c) or 15(d) of the Securities Exchange
Act of 1934 until the selling shareholders sell all of the shares
or until the offering of the shares is otherwise ended. This
prospectus is part of a registration statement that we filed with
the Commission (Registration No. 333-86791).
FILINGS PERIOD
Annual Report on Form 10-K Year ended December 31, 1998
Quarterly Report on Form 10-Q Quarter ended March 31, 1999
Quarter ended June 30, 1999
Proxy Statement Filed April 9, 1999
The description of Amtran common stock set forth in the
Registration Statement on Form 8-A (File No. 0-21642), filed with
the Commission on April 28, 1993, including any amendment or
report filed with the Commission for the purpose of updating such
description.
You can request a free copy of these filings by writing or
calling us at the following address:
Amtran, Inc.
7337 West Washington Street
Indianapolis, Indiana 46231
Attention: Kenneth K. Wolff
(317) 247-4000
You should rely only on the information incorporated by
reference or provided in this prospectus or any supplement to
this prospectus. We have not authorized anyone else to provide
you with different information or additional information. The
selling shareholders will not make an offer of these shares in
any state where the offer is not permitted. You should not
assume that the information in this prospectus, or any supplement
to this prospectus, is accurate at any date other than the date
indicated on the cover page of these documents.
RISK FACTORS
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. THIS SECTION
DESCRIBES SOME, BUT NOT ALL, OF THESE RISKS. THE ORDER IN WHICH
THESE RISKS ARE LISTED DOES NOT NECESSARILY INDICATE THEIR
RELATIVE PRIORITY. YOU SHOULD CAREFULLY CONSIDER THESE RISKS AND
OTHER INFORMATION IN THIS PROSPECTUS BEFORE INVESTING IN OUR
COMMON STOCK.
THIS PROSPECTUS, INCLUDING INFORMATION IN OUR PUBLIC DOCUMENTS
INCORPORATED BY REFERENCE, CONTAINS FORWARD-LOOKING STATEMENTS
WITH RESPECT TO OUR FINANCIAL CONDITION, RESULTS OF OPERATIONS,
PLANS, OBJECTIVES, FUTURE PERFORMANCE AND BUSINESS. THESE
STATEMENTS INCLUDE WORDS SUCH AS "BELIEVE," "EXPECT,"
"ANTICIPATE," "INTEND," "ESTIMATE" OR SIMILAR EXPRESSIONS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE RISKS, UNCERTAINTIES AND
ASSUMPTIONS, INCLUDING, AMONG OTHERS, THOSE DESCRIBED UNDER "RISK
FACTORS." ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS.
WE ARE HIGHLY LEVERAGED.
At June 30, 1999, on a consolidated basis, we had
approximately $254.5 million of outstanding debt, approximately
$24 million of which was secured. Our total shareholders' equity
on a consolidated basis as of June 30, 1999, was approximately
$137.2 million. In addition, we have substantial obligations
under operating leases for aircraft. These debt and lease
obligations represent significant financial leverage, even in the
highly leveraged airline industry.
The degree to which we are leveraged could, among other
things:
<circle>impair our ability to obtain additional financing
for working capital, capital expenditures, acquisitions
or other purposes;
<circle>make us more vulnerable than some of our
competitors in a prolonged economic downturn;
<circle>restrict our ability to exploit new business
opportunities and limit our flexibility to respond to
changing business conditions; and
<circle>affect our competitive position since we may be
more highly leveraged than some of our competitors.
WE MAY BE UNABLE TO FINANCE ONGOING CAPITAL EXPENDITURES AND DEBT
SERVICE.
We require significant levels of capital investment for
aircraft, engine, and airframe maintenance to maintain our
competitive position and expand our operations. We also
generally expect to refinance our long term debt at or prior to
its maturity. We currently expect that capital expenditures for
scheduled maintenance for all of 1999 will total approximately
$110.4 million. We also expect to incur capital expenditures in
all of 1999 of approximately $143.8 million for acquisitions of
additional aircraft and renovations of the Chicago-Midway
terminal and hangar and the Indianapolis maintenance and
operations center, and approximately $11.8 million in other
capital expenditures. If we are unable to obtain sufficient
financing for capital expenditures and to refinance maturing
debt, our operations and ability to pay debt service may be
adversely affected.
OUR FINANCING AGREEMENTS AND OPERATING LEASES RESTRICT OUR
FINANCIAL AND OPERATING ACTIVITIES AND IF WE FAIL TO COMPLY WITH
THESE RESTRICTIONS, OUR DEBT OBLIGATIONS COULD BE ACCELERATED AND
OUR OPERATING LEASES COULD BE TERMINATED.
The agreements relating to our outstanding indebtedness and
some of our aircraft operating leases impose significant
operating and financial restrictions on us. For example, the
existing bank credit facility is collateralized by liens on some
Lockheed L-1011 aircraft and engines owned by us and requires us
to maintain compliance with specified financial ratios. In
addition, the credit facility and the indenture relating to our
10.5% senior notes due 2004 prohibit or restrict in many respects
our ability to incur additional indebtedness, create material
liens on our assets, sell assets or engage in mergers or
consolidations, redeem or repurchase outstanding debt, make
specified investments, pay cash dividends or engage in other
significant transactions. The indenture for our 9.625% notes due
2005 contains similar restrictions. Our indentures generally do
not limit our ability to enter into aircraft leases accounted for
as operating leases.
Our ability to comply with any of these restrictions and with
loan repayment provisions will depend upon our future
performance, which will be subject to prevailing economic
conditions and other factors, including factors beyond our
control. A failure to comply with any of these obligations could
result in an event of default under one or more of these
agreements and operating leases, which could permit acceleration
of the debt under our principal financing agreements and
termination of our aircraft operating leases, some of which
contain cross-default or cross-acceleration provisions.
A CHANGE OF CONTROL OF OUR COMPANY WILL ACCELERATE OUR PAYMENT
OBLIGATIONS UNDER OUR NOTES AND CREDIT FACILITIES.
Upon a change of control of Amtran, holders of our 10.5% notes
due 2004 and 9.625% notes due 2005 may require us to repurchase
all or a portion of such notes that they hold at 101% of the
principal amount of those notes, together with accrued and unpaid
interest to the date of repurchase. In these circumstances, we
may not have the financial resources to repay these notes and any
other indebtedness that would become payable upon the occurrence
of a change of control.
THE HIGH LEVEL OF COMPETITION IN OUR INDUSTRY PLACES PRESSURE ON
OUR PROFIT MARGINS AND WE MAY NOT BE ABLE TO COMPETE
SUCCESSFULLY.
Our products and services face varying degrees of competition
in diverse markets.
COMPETITION FOR SCHEDULED SERVICES
In scheduled service, we compete both against the major U.S.
scheduled service airlines and, from time to time, against
smaller regional or start-up airlines. Competition is generally
on the basis of price, frequency, quality of service and
convenience. All of the major U.S. scheduled airlines are larger
and most have greater financial resources than we do. Where we
seek to expand our service by adding routes or frequency,
competing airlines may respond with intense price competition.
In addition, when other airlines seek to establish a presence in
a market, they may engage in significant price discounting.
Because of our size relative to the major airlines, we are less
able to absorb losses from these activities than many of our
competitors.
COMPETITION FOR COMMERCIAL CHARTER SERVICES
In the commercial charter market, we compete both against the
major U.S. scheduled airlines, as well as against smaller U.S.
charter airlines. We also compete against several European and
Mexican charter and scheduled airlines, many of which are larger
and have substantially greater financial resources than we do.
The scheduled carriers compete for leisure travel customers with
our commercial charter operations in a variety of ways, including
wholesaling discounted seats on scheduled flights to tour
operators, promoting to travel agents prepackaged tours for sale
to retail customers and selling discounted, excursion airfare-
only products to the public. As a result, all charter airlines,
including us, generally must compete for customers against the
lowest revenue-generating seats of the scheduled airlines.
During periods of dramatic fare cuts by the scheduled airlines,
we are forced to respond competitively to these deeply discounted
seats.
We also compete directly against other charter airlines. In
the United States, these charter airlines are smaller in size
than we are. In Europe, several charter airlines are at least as
large or larger than we are. Some of these charter airlines are
affiliates of major scheduled airlines or tour operators. As a
result, in addition to greater access to financial resources,
these charter airlines may have greater distribution
capabilities, including, in some cases, exclusive or preferential
relationships with affiliated tour operators.
COMPETITION FOR MILITARY/GOVERNMENT CHARTER SERVICES
The allocation of U.S. military air transportation contracts
is based upon the number and type of aircraft a carrier, alone or
through a teaming arrangement, makes available for use to the
military. The formation of competing teaming arrangements that
have larger partners than those in which we participate, an
increase by other air carriers in their commitment of aircraft to
the military, or the withdrawal of our current partners, could
adversely affect our U.S. military charter business.
THE LOW MARGINS AND HIGH FIXED COSTS ASSOCIATED WITH OUR INDUSTRY
MAKE US VULNERABLE TO SHORTFALLS FROM EXPECTED REVENUE LEVELS.
The airline industry as a whole and scheduled service in
particular are characterized by low gross profit margins and high
fixed costs. The costs of operating each flight do not vary
significantly with the number of passengers carried and,
therefore, a relatively small change in the number of passengers
or in pricing or traffic mix could, in the aggregate, have a
significant effect on operating and financial results.
Accordingly, a shortfall from expected revenue levels could have
a significant effect on earnings.
OUR EARNINGS HAVE BEEN VOLATILE AND SIGNIFICANT FLUCTUATIONS IN
OUR EARNINGS COULD HAVE AN ADVERSE IMPACT ON THE MARKET FOR OUR
COMMON STOCK.
For the years ended December 31, 1996, 1997 and 1998, we had a
net loss of $26.7 million, net income of $1.6 million and net
income of $40.1 million, respectively. The substantial net loss
in 1996 reflected a number of factors, including:
<circle>a significant increase in competition from larger
carriers in the scheduled service markets served by us;
<circle>the negative impact on low fare carriers resulting
from unfavorable media coverage of the effects of the
ValuJet accident in Florida and, to a lesser extent, our
own decompression incident;
<circle>a significant increase in fuel costs; and
<circle>a federal excise tax on jet fuel that became
effective on October 1, 1995.
In response, we implemented significant changes to our business
in 1996 and 1997. Although we recorded net income for 1997 and
1998, we cannot assure you that this profitability will continue.
Moreover, because of the cyclicality of the airline industry, we
expect that our results of operations will continue to be subject
to volatility.
BECAUSE OF THE SEASONALITY OF OUR BUSINESS, PERIOD TO PERIOD
COMPARISONS OF OUR RESULTS OF OPERATIONS MAY NOT BE MEANINGFUL.
Seasonal factors significantly affect our business, typically
resulting in significant fluctuation in quarterly operating
results. Historically, we have experienced reduced demand during
the fourth quarter, as demand for leisure airline services during
this period is lower relative to other times of the year. In
1998, our results for the first three quarters were significantly
stronger than we have experienced in any comparable first three
quarters of any prior year. Also in 1998, we experienced our
first profitable fourth quarter since becoming a public company
in 1993. We cannot assure you that the level of profitability
achieved in 1998 will be maintained in subsequent years.
SIGNIFICANT INCREASES IN THE COST OF AIRCRAFT FUEL COULD
MATERIALLY AFFECT OUR OPERATING RESULTS.
Because fuel costs are a significant portion of our operating
costs (approximately 20.0% for 1997 and 16.3% for 1998),
significant changes in fuel costs would materially affect our
operating results. Fuel prices continue to be impacted by, among
other factors, political and economic influences that we cannot
control. If a fuel supply shortage resulting from a disruption
of oil imports or other events occurred, then higher fuel prices
or the curtailment of scheduled service could result. However,
we have been able to reduce some of the risks associated with a
rise in fuel costs. For 1997 and 1998, we derived approximately
52.5% and 44.4% of our total operating revenues from contracts
which enabled us to pass through increases in fuel costs,
including contracts with the U.S. military. We are exposed to
increases in fuel costs associated with tour operators that occur
within 14 days of flight time, to all increases associated with
our scheduled service, other than bulk seat sales, and to
increases affecting contracts that do not include fuel cost
escalation provisions. We are also exposed to the risk that a
substantial rise in fuel costs could cause a reduction in leisure
travel and/or the cancellation or renegotiation of previously-
booked commitments from tour operators.
MR. J. GEORGE MIKELSONS HAS EFFECTIVE CONTROL OVER ANY MATTER
SUBMITTED TO A VOTE OF OUR STOCKHOLDERS.
J. George Mikelsons, Chairman of the Board, currently owns
approximately 69.0% of our outstanding common stock, and
possesses control of our company. Consequently, he has the
effective ability to elect all of our directors and to effect or
prevent specified corporate transactions which require majority
approval, including mergers, going-private transactions and other
business combinations. In addition, Mr. Mikelsons has the right
to require us to register his shares of common stock for sale
under the Securities Act.
WE ARE A HOLDING COMPANY AND WE RELY ON DIVIDENDS AND OTHER
PAYMENTS FROM OUR SUBSIDIARIES TO FUND OUR OBLIGATIONS.
As a holding company, we derive all of our operating income
from our subsidiaries, including American Trans Air, Inc., or
ATA, a passenger airline. As our operations are conducted
principally through ATA and our other subsidiaries which provide
airline related services, we must rely on dividends and other
payments from our subsidiaries to provide us with the funds
necessary to meet our obligations. Our subsidiaries are separate
and distinct legal entities and will have no obligation,
contingent or otherwise, to pay any dividend or to make any other
distribution to us, or to otherwise make funds available to us.
The ability of our subsidiaries to make such payments will be
subject to, among other things, the availability of sufficient
cash, and will be subject to restrictive covenants in the
documents governing our current and future credit facilities and
debt agreements.
THE EXISTENCE OF A SIGNIFICANT DISPUTE WITH ANY SIZABLE NUMBER OF
OUR EMPLOYEES COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR
OPERATIONS.
Our flight attendants are represented by the Association of
Flight Attendants and our cockpit crews are represented by the
Air Line Pilots Association. The current collective bargaining
agreement with the Association of Flight Attendants became
amendable, but did not expire, in December 1998 and the current
collective bargaining agreement with the Air Line Pilots
Association becomes amendable, but does not expire, in September
2000. We commenced negotiations with the Association of Flight
Attendants in the third quarter of 1998 to amend our existing
collective bargaining agreement, but we cannot assure you that
there will not be work stoppages or other disruptions.
LOSS OF OR DEFAULT BY ONE OR MORE OF OUR MAJOR CUSTOMERS COULD
HURT OUR BUSINESS BY REDUCING OUR REVENUES.
If a customer which has contracted with us cancels or defaults
on its contract or contracts, we may be unable to obtain other
business to cover the resulting loss in revenues. If the size of
the contract or contracts is significant enough, that default or
cancellation could have a material adverse effect on us.
Our largest customer during each of 1996, 1997 and 1998 was
the U.S. military, accounting for approximately 11.2%, 16.8% and
13.3% of our total operating revenues. In 1997 and 1998, our
five largest non-military customers accounted for approximately
16.2% and 14.4% of total operating revenues, and our ten largest
non-military customers accounted for approximately 20.8% and
17.5% of total operating revenues for the same periods. No
single non-military customer accounted for more than 10% of total
operating revenues during this period.
WE RELY ON TRAVEL AGENTS AND TOUR OPERATORS FOR TICKET SALES AND
ANY EFFORT BY TRAVEL AGENCIES OR TOUR OPERATORS TO FAVOR ANOTHER
AIRLINE OR TO DISFAVOR US COULD ADVERSELY IMPACT US.
Approximately 71% of our revenues for 1997 and 68% of our
revenues for 1998 were derived from tickets sold by travel agents
or tour operators. Travel agents and tour operators generally
have a choice between one or more airlines when booking a
customer's flight. Our relations with travel agencies and tour
operators could be affected by, among other things, override
commissions offered by other airlines, by an increase in our
arrangements with other distributors of its tickets or by the
introduction of alternative methods of selling tickets. Although
management intends to continue to offer attractive and
competitive products to travel agencies and tour operators and to
maintain favorable relations with travel agencies and tour
operators, we cannot assure you that travel agencies or tour
operators will not disfavor us or favor other airlines in the
future. Any effort by travel agencies or tour operators to favor
another airline or to disfavor us could adversely impact us.
THE INDUSTRY THAT WE OPERATE IN IS VULNERABLE TO CHANGES IN
GENERAL ECONOMIC CONDITIONS.
The condition of the U.S. and European economies, including
fluctuations in currency exchange rates, may impact the demand
for leisure travel and our competitive pricing position and
influence the profitability of our operations. The vast majority
of our commercial charter and scheduled airline business is
leisure travel. Because leisure travel is discretionary, we have
historically tended to experience somewhat weaker financial
results during economic downturns and other events affecting
international leisure travel, such as the Persian Gulf War.
Nevertheless, our performance during these periods has been
significantly better than that of the U.S. airline industry as a
whole.
OUR BUSINESS AND OUR INDUSTRY ARE HIGHLY REGULATED AND GOVERNMENT
REGULATIONS MAY MATERIALLY LIMIT OUR OPERATIONS.
We are subject to regulation by the Department of
Transportation and the Federal Aviation Administration under the
provisions of the Federal Aviation Act of 1958, as amended, and
by various other governmental agencies. The Department of
Transportation regulates principally economic issues affecting
air service, including, among other matters, air carrier
certification and fitness, insurance, certain leasing
arrangements, allocation of route rights and authorization of
proposed scheduled and commercial and military charter
operations, allocation of landing slots, departure slots in
certain instances, consumer protection and competitive practices.
The Federal Aviation Administration primarily regulates flight
operations, especially matters affecting air safety, including,
among other matters, airworthiness requirements for each type of
aircraft we operate and pilot and crew certification. We believe
we are in compliance with all requirements necessary to maintain
in good standing our operating authority granted by the
Department of Transportation and our air carrier operating
certificate issued by the Federal Aviation Administration. A
modification, suspension or revocation of any of our Department
of Transportation or Federal Aviation Administration
authorizations or certificates could have a material adverse
effect upon us.
In the last several years, the Federal Aviation Administration
has issued a number of maintenance directives and other
regulations relating to, among other things, collision avoidance
systems, airborne windshear avoidance systems, noise abatement
and increased inspection requirements. We expect to continue to
incur expenditures for the purpose of complying with the Federal
Aviation Administration's noise and aging aircraft regulations.
We hold several Certificates of Public Convenience and
Necessity, as well as other forms of authority issued by the
Department of Transportation and an operating certificate issued
by the Federal Aviation Administration. Each of those
authorities is subject to continued compliance with applicable
stated rules and regulations pertaining to the airline industry,
including any new rules or regulations that may be adopted in the
future.
We are subject to the jurisdiction of the Federal
Communications Commission regarding the use of radio facilities.
In addition, we are subject to regulation on our international
flights by the Commerce Department, the Customs Service, the
Immigration and Naturalization Service, and the Animal and Plant
Health Inspection Service of the Department of Agriculture.
Also, while our aircraft are in foreign countries on
international flights, we must comply with the requirements of
similar authorities in those countries. We are also subject to
compliance with standards for aircraft exhaust emissions
promulgated by the Environmental Protection Agency pursuant to
the Clean Air Act of 1970, as amended. We are also subject to
regulations adopted by the various local authorities which
operate the airports we serve throughout our route network,
including but not limited to aircraft noise regulations and
curfews. While we intend to maintain all appropriate government
licenses and to comply with all appropriate standards, we cannot
assure you that we can maintain those licenses or that those
standards will not change in the future.
Under the Airport Noise and Capacity Act of 1990 and related
Federal Aviation Administration regulations, our aircraft must
comply with specified Stage 3 noise restrictions by specified
deadlines. These regulations required that we achieve a 75%
Stage 3 fleet by December 31, 1998, and will prohibit us from
operating any Stage 2 aircraft after December 31, 1999. As of
December 31, 1998, 83.3% of our fleet met Stage 3 requirements.
We expect to meet future Stage 3 fleet requirements through
Boeing 727-200 hushkit modifications, combined with additional
future deliveries of Stage 3 aircraft.
At our aircraft line maintenance facilities, we use materials
which are regulated as hazardous under federal, state and local
law. We are required to maintain programs to protect the safety
of our employees who use these materials and to manage and
dispose of any waste generated by the use of these materials in
compliance with those laws. More generally, we are also subject
at these facilities to federal, state and local regulations
relating to protection of the environment and to discharge of
materials into the environment. We do not expect that the costs
associated with ongoing compliance with any such regulations at
these facilities will have a material adverse effect upon our
capital expenditures, earnings or competitive position.
Additionally, laws and regulations have been proposed from
time to time which could significantly increase the cost of
airline operations by, for instance, imposing additional
requirements or restrictions on operations. Laws and regulations
also have been considered from time to time that would prohibit
or restrict the ownership and/or transfer of airline routes or
takeoff and landing slots. Also, the award of international
routes to U.S. carriers, and the retention of these routes, is
regulated by treaties and related agreements between the United
States and foreign governments which are amended from time to
time. We cannot predict what laws and regulations will be
adopted or what changes to international air transportation
treaties will be effected, if any, or how they will affect us.
BONDING AND ESCROW REQUIREMENTS IMPOSED ON US BY THE DEPARTMENT
OF TRANSPORTATION COULD REDUCE OUR LIQUIDITY AND CAUSE US TO FUND
HIGHER LEVELS OF WORKING CAPITAL.
Under current Department of Transportation regulations
relating to commercial charter transportation originating in the
United States, commercial charter airline tickets must generally
be paid for in cash and all funds from the sale of commercial
charter seats, and in some cases the costs of land arrangements
must be placed into escrow by the tour operator or protected by a
surety bond. Currently, we provide a third party bond which is
unlimited in amount to satisfy our obligations under these
regulations. Under our bonding arrangements, the issuer of the
bond has the right to terminate the bond at any time on 30 days'
notice. We provide a $1.5 million letter of credit to secure our
potential obligations to the issuer of the bond. If the bond
were materially limited or canceled, we, like all other U.S.
charter airlines, would be required to escrow funds to comply
with the Department of Transportation requirements summarized
above. Compliance with these requirements would reduce our
liquidity and require us to fund higher levels of working capital
ranging up to $16.9 million based on 1998's peak pre-paid
bookings.
IF WE BECOME SUBJECT TO LIABILITY CLAIMS THAT ARE NOT ADEQUATELY
COVERED BY INSURANCE, WE MAY HAVE TO BEAR LOSSES WHICH COULD HAVE
A MATERIAL ADVERSE EFFECT ON US.
We may incur losses in the event of an aircraft accident. An
accident could involve not only repair or replacement of a
damaged aircraft and its consequent temporary or permanent loss
from service, but also potential claims of injured passengers and
others. We are required by the Department of Transportation to
carry liability insurance on each of our aircraft. We currently
maintain public liability insurance in the amount of $1.5
billion. Although we believe our insurance coverage is adequate,
we cannot assure you that the amount of insurance coverage will
not be changed or that we will not be forced to bear substantial
losses from accidents. Substantial claims resulting from an
accident could have a material adverse effect on our business,
financial condition and results of operations, and could
seriously inhibit passenger acceptance of the our services. Our
insurance policies also impose geographic restrictions on where
we may provide airline service.
WE HAVE NOT PAID ANY DIVIDEND SINCE BECOMING A PUBLIC COMPANY IN
1993 AND WE DO NOT CURRENTLY ANTICIPATE PAYING CASH DIVIDENDS ON
OUR COMMON STOCK.
We expect to retain any earnings generated from our operations
for use in our business. Any future determination as to the
payment of dividends will be at the discretion of our board of
directors and will depend upon our operating results, financial
condition and capital requirements, general business conditions
and other factors that the board deems relevant. Our ability to
pay dividends is also limited by other factors, including the
ability of our subsidiaries to make dividend and other payments
to us and the terms of our various credit facilities and debt
instruments. As a result, we cannot assure you that we will pay
dividends at any time in the future. Under the covenant that
most restricts our ability to pay dividends, the maximum amount
available for the payment of dividends was $6.6 million as of
June 30, 1999.
A LIMITATION ON OUR USE OF NET OPERATING LOSS CARRYFORWARDS COULD
BE MATERIALLY ADVERSE TO US.
We have approximately $47.3 million of net operating loss
carryforwards and $8.7 million of alternative minimum tax and
other tax credit carryforwards as of December 31, 1998, which may
be available to reduce U.S. federal income taxes payable by us in
the future. However, if we experience an "ownership change"
within the meaning of Section 382 of the Internal Revenue Code of
1986, our use of these net operating loss carryforwards and
investment tax credit carryforwards could be limited.
In general, an ownership change under Section 382 will occur
if, over a three-year period, stockholders who own 5% or more of
the capital stock of the corporation increase their percentage
ownership by more than 50 percentage points in the aggregate.
The effect on us of a limitation on the use of our tax attributes
in the event of an ownership change in the future would depend on
a number of factors, including our profitability and the timing
of the sale of assets. Some of these factors are beyond our
control. This type of a limitation could be materially adverse
to us under certain circumstances. In addition, for financial
reporting purposes, this type of ownership change could require
us to reduce the amount of our deferred tax benefits, resulting
in a charge to our earnings.
ANTI-TAKEOVER PROVISIONS IN OUR ORGANIZATIONAL DOCUMENTS AND
INDIANA LAW COULD DETER TAKEOVER ATTEMPTS THAT STOCKHOLDERS MAY
THINK ARE IN THEIR BESTS INTERESTS.
If, at any time, Mr. Mikelsons and his permitted transferees
under our Restated Articles of Incorporation no longer
beneficially own in the aggregate 50% or more of the combined
voting power of our outstanding stock entitled to vote generally
in the election of directors, provisions of our Articles and
By-Laws will become effective that may discourage attempts to
acquire our company or to remove incumbent management even if
some or a majority of our shareholders deemed the attempt to be
in their best interests.
The provisions of our Articles that would come into effect
include:
<circle>the division of our board of directors into three
classes serving staggered three-year terms;
<circle>the removal of directors only for cause and only by
a majority of the then outstanding shares of voting
stock, voting together as a single class; and
<circle>requiring shareholders representing 80% of the
voting power and a majority of voting stock held by
disinterested stockholders to approve some mergers, sales
of assets, and other transactions involving interested
shareholders and to amend various provisions of the
Articles.
The requirement of a supermajority vote to approve some
corporate transactions and some amendments to the Articles could
enable a minority of our shareholders to exercise veto powers
over these transactions and amendments. So long as Mr. Mikelsons
owns more than 20% of the combined power of the outstanding
voting stock, he will be able to exercise these veto powers.
YEAR 2000 ISSUES MAY ADVERSELY AFFECT OUR BUSINESS.
Until recently, many computer programs were written to store
only two digits of year-related date information to make the
storage and manipulation of data more efficient. Programs which
use two digit date fields, however, may not be able to
distinguish between such years as 1900 and 2000. In some
circumstances, this date limitation could result in system
failures or miscalculations, potentially causing disruptions of
business processes or system operations.
We are currently preparing our software systems and hardware
components for compliance with year 2000 readiness standards. We
are also communicating with third-party vendors and suppliers to
determine their compliance with year 2000 readiness standards,
and ensure that we continue to receive essential goods and
services without interruption. We believe, based upon our
assessment of year 2000 readiness, that we will be prepared to
mitigate all significant risks of business and operational
disruption arising from Year 2000-defective computer components.
Our preparedness depends on the availability of a wide range of
technical skills from both internal and external sources, and
also depends on the availability of purchased software and
hardware components. We cannot be certain that these resources
and components can be acquired in the quantities needed, or by
the times needed, to successfully ensure readiness, and it is
possible that we could suffer serious disruptions to business
processes and operations as a consequence of system failures
attributable to the year 2000 problem. These disruptions could
impair our ability to operate our flight schedule, and could
impose significant economic penalties on us by increasing the
cost of operations through the temporary loss of efficiencies
provided by computer software and hardware.
In addition, we cannot be certain that domestic and foreign
air transportation infrastructure, like airports and air traffic
control systems, will fully comply with year 2000 requirements by
the end of 1999. A significant lack of readiness of the air
transportation infrastructure to meet year 2000 standards could
result in a material adverse effect on our results of operations
and financial condition by imposing serious limitations on our
ability to operate our flight schedule.
ABOUT AMTRAN
GENERAL
Amtran owns American Trans Air, Inc., or ATA, the eleventh
largest passenger airline in the United States (based on 1998
revenues) and is a leading provider of airline services in
selected market segments. Amtran is also the largest commercial
charter airline in the United States and the largest charter
provider of passenger airline services to the U.S. military, in
each case based on 1998 revenues. For the quarter ended June 30,
1999, the revenues of Amtran consisted of 57.6% scheduled
service, 21.1% commercial charter service and 9.7% military
charter service, with the balance derived from related travel
services.
SCHEDULED SERVICE
Amtran provides scheduled service through ATA to selected
destinations primarily from its gateways at Chicago-Midway and
Indianapolis and also provides transpacific services between the
western United States and Hawaii. Amtran focuses on routes where
it believes it can be a leading provider of nonstop service and
targets leisure and value-oriented business travelers.
COMMERCIAL CHARTER SERVICE
Amtran is the largest commercial charter airline in the United
States and provides services throughout the world, primarily to
U.S., South American and European tour operators. Amtran seeks
to maximize the profitability of these operations by leveraging
its leading market position, diverse aircraft fleet and worldwide
operating capability. Amtran believes its commercial charter
services are a predictable source of revenues and operating
profits in part because its commercial charter contracts require
tour operators to assume capacity, yield and fuel price risk, and
also because of Amtran's ability to readily re-deploy assets into
favorable markets. Amtran's commercial charter services are
marketed and distributed through a network of domestic and
international sales offices.
MILITARY/GOVERNMENT CHARTER SERVICE
Amtran has provided passenger airline services to the U.S.
military since 1983 and is currently the largest charter provider
of these services. Amtran believes that because these operations
are generally less seasonal than leisure travel, they have tended
to have a stabilizing impact on Amtran's operating margins. The
U.S. government awards one year contracts for its military
charter business and pre-negotiates contract prices for each type
of aircraft that a carrier makes available. Amtran believes that
its fleet of aircraft is well suited to the needs of the military
for long-range service.
Amtran is an Indiana corporation which was organized in 1989.
Amtran's executive offices are located at 7337 West Washington
Street, Indianapolis, Indiana 46231, and its telephone number is
(317) 247-4000.
USE OF PROCEEDS
All of the shares of the common stock, without par value, of
Amtran (the "Shares") offered hereby are being sold by the
persons identified in the prospectus (the "Selling
Shareholders"). Amtran will not receive any of the proceeds from
the sale of the Shares. Amtran will pay certain expenses
relating to this offering, estimated to be approximately $25,000.
See "Selling Shareholders."
SELLING SHAREHOLDERS
The following table sets forth certain information regarding
ownership of the Amtran common stock by the Selling Shareholders
as of September 1, 1999, including the number of Shares offered
hereby. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Shareholders may
offer all or a portion of the Shares for resale from time to
time. See "Plan of Distribution." All of the Shares were issued
in connection with the acquisition by Amtran of Chicago Express
Airlines, Inc., a Georgia corporation, on May 18, 1999, in a
transaction that was exempt from registration under the
Securities Act of 1933, as amended, in reliance upon the
exemption provided by Section 4(2) thereof. The registration
statement of which this prospectus is a part was filed pursuant
to the definitive agreement relating to such acquisition.
Number of Number of Shares of
Shares of Shares of Common Stock
Common Stock Common Beneficially
Beneficially Stock Owned After
Selling Owned Prior to Offered OFFERING (1)
SHAREHOLDERS OFFERING (1) HEREBY NUMBER PERCENT
Carol J. Brady 63,190 63,190 0 *
Glenn Schaab 15,798 15,798 0 *
* The number of shares indicated does not exceed one percent of
the number of shares of common stock outstanding.
(1) Beneficial ownership is determined in accordance with
the rules of the Commission. In computing the number
of shares beneficially owned by a person and the
percentage ownership of that person, shares of common
stock subject to options held by that person that are
currently exercisable or exercisable within 60 days of
the date of this prospectus are deemed outstanding.
Such shares, however, are not deemed outstanding for
the purposes of computing the percentage ownership of
each other person. Except as indicated in the
footnotes to this table, each Selling Shareholder
named in the table above has sole voting and
investment power with respect to the shares set forth
opposite such Selling Shareholder's name.
PLAN OF DISTRIBUTION
All or part of the Shares may be offered by the Selling
Shareholders from time to time in transactions on the Nasdaq
Stock Market, in privately negotiated transactions, through the
writing of options on the Shares, or a combination of such
methods of sale, at fixed prices that may be changed, at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. For purposes
of this prospectus, the term "Selling Shareholders" includes
donees, transferees, pledgees or other successors in interest of
or to the Selling Shareholders that receive the Shares as a gift,
partnership distribution or other non-sale related transfer. The
Selling Shareholders will act independently of Amtran in making
decisions with respect to the timing, manner and size of each
sale. The methods by which the Shares may be sold or distributed
may include, but are not limited to, the following:
(a) a cross or block trade in which the broker or dealer
engaged by the Selling Shareholders will attempt to
sell the Shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction;
(b) purchases by a broker or dealer as principal and resale
by such broker or dealer for its account;
(c) an exchange distribution in accordance with the rules
of such exchange;
(d) ordinary brokerage transactions and transactions in
which the broker solicits purchasers;
(e) privately negotiated transactions;
(f) short sales or borrowings, returns and reborrowings of
the Shares pursuant to stock loan agreements to settle
short sales;
(g) delivery in connection with the issuance of securities
by issuers, other than Amtran, that are exchangeable
for (whether on an optional or mandatory basis), or
payable in, such shares (whether such securities are
listed on a national securities exchange or otherwise)
or pursuant to which such shares may be distributed;
and
(h) a combination of any such methods of sale or
distribution.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to
participate in such sales. Brokers or dealers may receive
commissions or discounts from the Selling Shareholders or from
the purchasers in amounts to be negotiated immediately prior to
the sale. The Selling Shareholders may also sell the Shares in
accordance with Rule 144 under the Securities Act or pursuant to
other exemptions from registration under the Securities Act.
If the Shares are sold in an underwritten offering, the Shares
may be acquired by the underwriters for their own account and may
be further resold from time to time, in one or more transactions,
including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The
names of the underwriters with respect to any such offering and
the terms of the transactions, including any underwriting
discounts, concessions or commissions and other items
constituting compensation of the underwriters and broker-dealers,
if any, will be set forth in a prospectus supplement relating to
such offering. Any public offering price and any discounts,
concessions or commissions allowed or reallowed or paid to
broker-dealers may be changed from time to time. Unless
otherwise set forth in a prospectus supplement, the obligations
of the underwriters to purchase the Shares will be subject to
certain conditions precedent and the underwriters will be
obligated to purchase all the Shares specified in such prospectus
supplement if any such Shares are purchased. This prospectus
also may be used by brokers who borrow the Shares to settle short
sales of shares of Amtran common stock and who wish to offer and
sell such Shares under circumstances requiring use of the
prospectus or making use of the prospectus desirable.
From time to time, the Selling Shareholders may engage in
short sales, short sales against the box, puts, calls and other
transactions in securities of Amtran, or derivatives thereof, and
may sell and deliver the Shares in connection therewith.
None of the proceeds from the sales of the Shares by the
Selling Shareholders will be received by Amtran. Amtran will
bear certain expenses in connection with the registration of the
Shares being offered by the Selling Shareholders, including all
costs incident to the offering and sale of the Shares to the
public other than any sales, broker's or underwriting commissions
or fees.
The Selling Shareholders, and any broker-dealer who acts in
connection with the sale of Shares hereunder, may be deemed to be
"underwriters" as that term is defined in the Securities Act, and
any commissions received by them and profit on any resale of the
Shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed
upon for Amtran by Baker & Daniels, Indianapolis, Indiana.
EXPERTS
The consolidated financial statements of Amtran as of December
31, 1998 and 1997, and for each of the three years in the period
ended December 31, 1998, appearing in Amtran's annual report on
Form 10-K for the year ended December 31, 1998, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and are incorporated herein by
reference in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
424B.wpd