ATA Airlines shut down operations and stranded thousands of travelers Thursday after the cancellation of a critical agreement with FedEx Corp. for most of the airline’s charter business left it unable to offset exorbitant fuel prices.

Once the nation’s 10th-largest air carrier, ATA entered bankruptcy for the second time in a little more than three years. The company had more than 2,200 employees, and virtually all were told their jobs were gone.

Many passengers learned of the collapse at ticket counters. About 10,000 passengers flew ATA each day.

ATA was the second carrier to declare bankruptcy in the past two weeks. Aloha Airlines filed for Chapter 11 last month.

“We are seeing some of the very marginal carriers shut down … and will probably see more,” said Ray Neidl, an analyst at Calyon Securities in New York.

The defunct airline’s Web site tells people who bought tickets with plastic to contact their credit card companies for refund information. The will be no refunds for passengers who used cash or a check.

Southwest Airlines is trying to help. The carrier said Thursday that it immediately began rebooking passengers. Those who had travel plans in the next 14 days will be priorities.

Northwest Airlines said Thursday that it is offering ATA customers and employees a standby or confirmed option for travel to or from Hawaii and to or from Cancun, Mexico. The offers are valid until May 3.

The standby option allows ATA’s passengers and employees to fly standby on Northwest for a $100 fee per segment. The confirmed option will allow ATA passengers and employees booked for an ATA flight to be confirmed on a Northwest flight for a fee of $200 per flight segment, each way.

SOURCE : BY TOM MURPHY • ASSOCIATED PRESS