Determining Company Debt, Income, and Firm Value
This YBTM example contains simplifying notions and asset value notes.
Because of these simplifications, the data should only be considered as representative. And, although we can calculate a value for the stock of this company, the actual events show that value can disappear in a moment.
The model building effort:
Using the data and forms found in the template and print case file:
• Estimate the market value for ATA's stock value using market prices.
• Estimate the market value for ATA's debt using the market yield rates as given. • Determine the firms estimate of the WACC on an after tax basis using the market weights with and without recovery of assets included.
• Calculate the static value of ATA’s shares using the NOI method.
This company filed for bankruptcy protection on April 2, 2008. Data for the model came from the period before the bankruptcy filing. This was the second time that ATA filed for bankruptcy protection. ATA did not emerge from this bankruptcy filing. Look this company up in Wikipedia for a review of its history. http://en.wikipedia.org/wiki/ATA_Airlines Key facts you will find in Wikipedia
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ATA Airlines, Inc. was a low-cost scheduled service and charter airline based in Indianapolis, Indiana. ATA operated scheduled passenger flights throughout the US mainland and Hawaii, as well as military and commercial charter flights around the world.
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ATA was North America's largest charter airline, and until its shutdown transported more troops for the United States Military than any other commercial airline.
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On April 2, 2008, ATA filed for Chapter 11 bankruptcy protection. ATA then announced it was ceasing all services, effective 4:00 AM EDT, Thursday April
3, 2008, citing the unexpected loss of a major contract for its military charter business, as a subcontractor of FedEx Express, along with recent increases in jet fuel prices. Red-eye flights in the air at the time of the announcement proceeded to their destinations. Flight 4586 from Honolulu to Phoenix was the last ATA flight, departing almost 2 hours late at 12:10am (HST) arriving April
3, 2008 at 8:48am (MST).
Amtran Short Company Value YBTM.doc
11/14/2010
ATA YBTM
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Finance 461
Southwest Airlines owns and retains all ownership of the operating certificate and all assets held by ATA Airlines including trademarks, logos, etc. These were purchased for $7.5 million by Southwest
