FedEx held a long standing Department of Defense military contract in which it would provide military troop and their families air transport. FedEx subcontracted a portion of this contract to ATA Airlines and for over 20 years ATA had been a member of the FedEx team. As a result of the contract agreement in 2000, ATA placed a large order for 39 new Boeing 737-800 aircraft and 12 Boeing 757-300 aircraft and in 2006, ATA purchased nine of Northwest Airlines remaining DC-10-30s. These aircraft were to be used on military troop charters, replacing ATA's aging L1011-500 fleet.

Kenneth Broughton, the attorney representing ATA, indicated in court, that ATA had received a written commitment from FedEx that their military contract with FedEx would continue through the fiscal year ending in 2009.  On April 2, 2008, ATA filed for Chapter 11 bankruptcy protection.

ATA then announced it was ceasing all services effective April 3, 2008, citing the unexpected loss of a major contract from its military charter business as a subcontractor of FedEx Express.  It was the third of four U.S. airlines to announce a complete shut down in the week of March 30, 2008, after Aloha Airlines did so on March 30, Minnesota-based charter Champion Air did so March 31, and Skybus Airlines terminated service on April 5.