George Mickelsons, president of ATA Holdings blamed the move on "excess capacity, extremely high fuel prices... and declining fares," according to a statement.
The airline will continue to operate a full-flight schedule, and honour its customer commitments, tickets and frequent-flier reward programmes while in bankruptcy, the statement added.
Orlando-based AirTran Holdings will assume ATA's flight operations, gate leases and routes at Chicago Midway Airport and arrival and departure slots at New York's LaGuardia Airport and Ronald Reagan Washington National Airport.
The deal is subject to approvals by the bankruptcy court and other entities and is expected to take effect by early 2005, ATA officials said.
ATA's announcement came amid speculation that Delta Air Lines Inc, the nation's third-largest airline, would win $ 1billion in concessions from its pilots and avoid bankruptcy.
The airline is expected to decide on Wednesday whether it should seek bankruptcy protection.
