DALLAS – Southwest Airlines Co., turning up the heat in a bidding showdown, offered $117 million in cash and loans for six gates at Chicago’s Midway Airport now held by bankrupt ATA Airlines Inc.

Under the proposal, Southwest and ATA, both rivals at Midway, would sell seats on each other’s planes. The bid is composed of $40 million in cash and $77 million in loans and assumed debt.

The deal would bring Southwest and ATA up to $50 million in additional revenue while giving the Dallas discounter room to grow in its top passenger market.

“I do feel like it’s an innovative move for us,” said Gary Kelly, Southwest’s chief executive, noting that Southwest has never tried this approach with another airline. “We’re making money and we’re in a position to be aggressive and grow.”

With the move, Southwest seeks to upset the bid of another discount carrier, AirTran Airways.

Last month, the unit of AirTran Holdings Inc. of Orlando, Fla., offered about $100 million for all ATA gates and other landing rights. The two carriers would also cooperate and exchange passengers.

The AirTran bid includes $90 million in cash for all 14 ATA gates.

AirTran executives went on the offensive Friday, calling Southwest’s bid “a clever trick” designed to end competition at Chicago’s No. 2 airport, where Southwest is already the top airline.

“We’re offering more cash and a better opportunity for growth,” said Kevin Healy, AirTran’s vice president of planning and sales. “If you want to get conspiratorial and devious about it, this is Southwest’s plan to make sure there is no viable competitor at Midway.”

An auction process starts next week, and a federal bankruptcy court judge is expected to declare a winner by Friday.

Indianapolis-based ATA must come up with millions for aircraft leasing companies to keep its fleet. Spokeswoman Erica Keane said ATA isn’t favoring either bid, and only wants the best outcome for staying alive.

If Southwest wins, it could potentially sell seats on ATA’s planes from Dallas/Fort Worth International Airport. Kelly said no decisions had been made on the nine routes on which the two carriers would sell each other’s seats.

Last month, Southwest decided not to fly from D/FW where Delta Air Lines Inc. is shutting down its hub. Instead, Southwest is fighting a federal law that restricts long-haul flights from Dallas Love Field, its home airport.

A deal with ATA could give Southwest back-door access to a small slice of D/FW’s traffic. ATA serves Midway and Indianapolis from D/FW.

But Friday’s bid is about Chicago, Southwest’s top priority for expansion.

If it wins, Southwest would end up with 25 of Midway’s 43 gates and seats on flights for ATA’s remaining service, a position that will attract some regulatory scrutiny.

U.S. Department of Justice spokeswoman Gina Talamona confirmed Friday that antitrust investigators are “aware of the situation and are looking into it.”

Kelly said his staff carefully reviewed its proposed bid with officials from the Justice Department and from the U.S. Department of Transportation, which has authority to review competition issues.

“No one had any objections to what we’re proposing,” he said.

The key player in the battle is the city of Chicago, which owns the Midway gates and must consent to the transfer for either bidder.

Southwest doesn’t want to own ATA, he said. It just wants more gates to increase its schedule at Midway schedule from its current 170 daily flights to as many as 250. That would make Chicago the biggest city in Southwest’s system.

If ATA survives, Southwest would entertain converting its investment into stock to take advantage of its growth.

“We know it’s a high-risk plan in a high-risk industry,” Kelly said. “But if we don’t get paid back on the loans, we still think it’ll be a very good addition for us.”

Southwest has $1.9 billion in cash and a separate $575 million credit line, and the purchase wouldn’t change its standing as the strongest balance sheet in the industry, the Standard & Poor’s ratings service said Friday.

AirTran is much smaller than Southwest but has enough cash on hand to pay for its bid, Healy said. With more experience in working with other airlines, AirTran has the edge in keeping ATA solvent, he said.

“We’re not in a position to have to defend our deal,” he said. “They’re the ones who are going to have to convince someone that less cash somehow works better.”

AirTran’s growing D/FW operations will continue to expand regardless of the Midway outcome, Healy said. He wouldn’t speculate on whether those plans would accelerate if AirTran fails to win at Midway.

One analyst suggested that AirTran ought to consider dumping the deal and expanding its network elsewhere.

“Best-case scenario for (AirTran), we believe, would be to simply walk away,” said Jamie Baker of J.P. Morgan Chase in a research note Friday.

But Baker was also skeptical of Southwest’s $50 million revenue estimate from the potential ATA alliance over nine routes.

“We’re hard-pressed to reconcile how Southwest can generate as much as $5.5 million of network benefit with the addition of each ATA spoke.”

Southwest shares lost a penny Friday to $15.71. AirTran shares lost 29 cents to $10.70.

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