AirTran Holdings, Inc., Reports Net Income of $10.4 Million in Third Quarter

ORLANDO, Fla., Oct. 21 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported net income of $10.4 million or $0.08 per diluted share for the third quarter of 2009. These results represent a $105.0 million improvement over the third quarter of 2008.

The operating income for the third quarter of 2009 was $37.0 million and is the second highest third quarter operating income in Company history.

The Company has been profitable in each quarter of 2009, and has posted year-to-date records in operating income of $150.9 million, net income of $117.6 million, and load factor of 80.4 percent.

Included in net income for the third quarter were $6.3 million of unrealized losses on the Company's future fuel hedge portfolio and a $6.4 million gain primarily related to the Company's retention of deposits from a terminated aircraft sales contract. Excluding these items, the economic net income for the third quarter of 2009 was $10.6 million or $0.08 per diluted share.

"Our 8,500 dedicated Crew Members are committed to running the finest airline in the U.S., and their outstanding efforts have resulted in AirTran being profitable every quarter this year," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "Through their hard work and dedication and the loyalty of our customers, we have been very successful despite these difficult economic times."

During the third quarter, AirTran Airways continued to expand its network by adding point-to-point service from Atlanta, Baltimore, Milwaukee, and Orlando. The industry's low-cost leader introduced a significantly expanded Caribbean schedule with new service to Montego Bay, Jamaica, Nassau, Bahamas, and Aruba, as well as new service to Key West, Fla.

"The year-over-year improvement in our financial performance is directly related to maintaining our industry-leading low cost structure while providing 'best-in-class' service and outstanding value to our business and leisure passengers," said Arne Haak, senior vice president of finance, treasurer and chief financial officer for AirTran Airways. "AirTran Airways was among the first airlines to react to the changing economic environment in 2008, and our operating performance this year reflects those actions."

Other highlights of AirTran Airways' accomplishments in the third quarter and to date include:

  • AirTran Airways is the first and only major airline to equip every flight on all aircraft with high-speed Gogo Inflight Internet

  • Expanded Caribbean and Florida service and announced the following new destinations: Montego Bay, Jamaica; Nassau, Bahamas; Aruba and Key West, Fla.

  • Bolstered liquidity by extending and enhancing a $175 million credit facility and completing over $165 million in equity and debt financing

  • Announced multi-year marketing partnerships with the Atlanta Falcons (and launched special livery aircraft, Falcons One) and the Orlando Magic

AirTran Holdings, Inc. will conduct a conference call to discuss the quarter's results today at 9:30 a.m. EDT. A live broadcast of the conference call will be available via the Internet in the investor relations section at http://www.airtran.com.

AirTran Airways, a subsidiary of AirTran Holdings, Inc. (NYSE: AAI) and a Fortune 1000 company, has been ranked the number one low cost carrier in the Airline Quality Rating study for the past two years. AirTran is the only major airline with Gogo Inflight Internet on every flight and offers coast-to-coast service on North America's newest all-Boeing fleet. Its low-cost, high-quality product also includes assigned seating, Business Class and complimentary XM Satellite Radio on every flight. To book a flight, visit http://www.airtran.com.

Editor's note: Statements regarding the Company's operational and financial success, business model, expectation about future success, improved operational performance and our ability to maintain or improve our low costs are forward-looking statements and are not historical facts. Instead, they are estimates or projections involving numerous risks or uncertainties, including but not limited to, consumer demand and acceptance of services offered by the Company, the Company's ability to maintain current cost levels, fare levels and actions by competitors, regulatory matters and general economic conditions. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2008. The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.

    Media Contacts: AirTran Airways:
                    Christopher White (Media)
                    678-254-7442

                    Jason Bewley (Investor Relations)
                    407-318-5188



                              AirTran Holdings, Inc.
                       Consolidated Statements of Operations
           (In thousands, except per share data and statistical summary)
                                    (Unaudited)



                                    Three Months Ended
                                       September 30,
                                 -----------------------          Percent
                                 2009               2008           Change
                                 ----               ----          -------
     Operating Revenues:
        Passenger            $529,435           $635,316           (16.7)
        Other                  67,967             37,976            79.0
                               ------             ------
            Total operating
             revenues         597,402            673,292           (11.3)
     Operating Expenses:
        Aircraft fuel         190,235            363,882           (47.7)
        Salaries, wages and
         benefits             122,895            120,170             2.3
        Aircraft rent          60,632             60,542             0.1
        Maintenance,
         materials and
         repairs               49,973             40,022            24.9
        Distribution           25,306             26,857            (5.8)
        Landing fees and
         other rents           37,573             36,196             3.8
        Aircraft insurance
         and security
         services               5,440              5,470            (0.5)
        Marketing and
         advertising            9,349              9,948            (6.0)
        Depreciation           13,899             15,445           (10.0)
        Gain on asset
         dispositions          (6,379)            (9,254)          (31.1)
        Other operating        51,446             51,427             0.0
                               ------             ------
            Total operating
             expenses         560,369            720,705           (22.2)
                              -------            -------
     Operating Income
      (Loss)                   37,033            (47,413)              -
     Other (Income)
      Expense:
        Interest income        (3,835)              (908)              -
        Interest expense       20,089             22,592           (11.1)
        Capitalized interest     (179)            (1,202)          (85.1)
        Other                      18                  -               -
        Net losses
         on derivative
         financial
         instruments           10,281             41,520           (75.2)
                               ------             ------
     Other (income)
      expense, net             26,374             62,002           (57.5)
                               ------             ------
     Income (Loss) Before
      Income Taxes             10,659           (109,415)              -
     Income tax expense
      (benefit)                   233            (14,862)              -
                                  ---            -------
     Net Income (Loss)        $10,426           $(94,553)              -
                              =======           ========
     Income (Loss) per
      Common Share
        Basic                   $0.09             $(0.81)              -
        Diluted                 $0.08             $(0.81)              -
     Weighted-average
      Shares Outstanding
        Basic                 120,482            117,177             2.8
        Diluted               140,625            117,177            20.0
     Operating margin             6.2 percent       (7.0) percent   13.2 pts.
     Net margin                   1.7 percent      (14.0) percent   15.7 pts.
     Net margin, adjusted*        1.8 percent       (7.2) percent    9.0 pts.

     Third Quarter
      Statistical
      Summary:
        Revenue passengers   6,533,184         6,612,928            (1.2)
        Revenue passenger
         miles (000s)        5,172,347         5,260,949            (1.7)
        Available seat miles
         (000s)              6,170,977         6,221,858            (0.8)
        Passenger load
         factor                   83.8 percent      84.6 percent    (0.8) pts.
        Departures              65,559            66,337            (1.2)
        Average stage length
         (miles)                   749               745             0.5
        Average fare            $81.04            $96.07           (15.6)
        Average yield per
         RPM                     10.24 cents       12.08 cents     (15.2)
        Passenger revenue
         per ASM                  8.58 cents       10.21 cents     (16.0)
        Total revenue per ASM     9.68 cents       10.82 cents     (10.5)
        Operating cost per
         ASM                      9.08 cents       11.58 cents     (21.6)
        Operating cost per
         ASM, adjusted*           9.18 cents       11.73 cents     (21.7)
        Non-fuel operating
         cost per ASM             6.00 cents        5.73 cents       4.7
        Non-fuel operating
         cost per ASM,
         adjusted*                6.10 cents        5.88 cents       3.7
        Average cost of
         aircraft fuel per
         gallon                  $1.98             $3.82           (48.2)
        Average economic
         cost of aircraft
         fuel per gallon         $2.02             $3.67           (45.0)
        Gallons of fuel
         burned (000s)          96,098            95,303             0.8
        Operating aircraft
         in fleet at end of
         period                    136               139            (2.2)
        Average daily
         aircraft
         utilization (hours)      11.4              11.2             1.8
        Full-time equivalent
         employees at end of
         period                  7,717             7,372             4.7


      *  Statistical calculations for 2009 and 2008, on an adjusted basis,
         exclude gains and losses as detailed in the attached Reconciliation
         of GAAP Financial Information to Non-GAAP Financial Information.  Our
         third quarter 2008 financial data has been restated to reflect the
         required retrospective application of our adoption of Accounting
         Standards Codification (ASC) 470-20, "Debt with Conversion and
         Other Options - Cash Conversion."  The restatement resulted in a $1.3
         million increase and $12.5 million decrease to operating loss and
         net loss, respectively, for the three months ended
         September 30, 2008.



                            AirTran Holdings, Inc.
                     Consolidated Statements of Operations
            (In thousands, except per share data and statistical summary)
                                (Unaudited)


                                      Nine Months Ended
                                        September 30,
                                   ------------------------       Percent
                                   2009               2008         Change
                                   ----               ----         ------
     Operating Revenues:
        Passenger            $1,552,507         $1,860,379          (16.5)
        Other                   190,503            102,684           85.5
                                -------            -------
            Total operating
             revenues         1,743,010          1,963,063          (11.2)
     Operating Expenses:
        Aircraft fuel           483,008          1,000,451          (51.7)
        Salaries, wages and
         benefits               363,627            362,469            0.3
        Aircraft rent           181,621            182,234           (0.3)
        Maintenance,
         materials and
         repairs                145,884            124,795           16.9
        Distribution             70,540             77,081           (8.5)
        Landing fees and
         other rents            108,722            104,990            3.6
        Aircraft insurance
         and security
         services                15,756             16,310           (3.4)
        Marketing and
         advertising             30,947             31,114           (0.5)
        Depreciation             42,120             43,558           (3.3)
        Gain on asset
         dispositions            (3,073)           (15,797)         (80.5)
        Impairment of
         goodwill                     -              8,350              -
        Other operating         152,952            156,748           (2.4)
                                -------            -------
            Total operating
             expenses         1,592,104          2,092,303          (23.9)
                              ---------          ---------
     Operating Income
      (Loss)                    150,906           (129,240)             -
     Other (Income)
      Expense:
        Interest income          (5,212)            (5,372)          (3.0)
        Interest expense         61,068             63,335           (3.6)
        Capitalized interest     (1,244)            (7,028)         (82.3)
        Other                    (4,278)                 -              -
        Net (gains) losses
         on derivative
         financial
         instruments            (17,944)             3,150              -
                                -------              -----
     Other (income)
      expense, net               32,390             54,085          (40.1)
                                 ------             ------
     Income (Loss) Before
      Income Taxes              118,516           (183,325)             -
     Income tax expense
      (benefit)                     945            (38,585)             -
                                    ---            -------
     Net Income (Loss)         $117,571          $(144,740)             -
                               ========          =========
     Income (Loss) per
      Common Share
        Basic                     $0.98             $(1.36)             -
        Diluted                   $0.86             $(1.36)             -
     Weighted-average
      Shares Outstanding
        Basic                   120,158            106,170           13.2
        Diluted                 139,617            106,170           31.5
     Operating margin               8.7 percent       (6.6) percent  15.3 pts.
     Net margin                     6.7 percent       (7.4) percent  14.1 pts.
     Net margin, adjusted*          4.8 percent       (6.4) percent  11.2 pts.

     Nine Month
      Statistical
      Summary:
        Revenue passengers   18,086,257         18,864,674           (4.1)
        Revenue passenger
         miles (000s)        14,076,956         14,737,024           (4.5)
        Available seat miles
         (000s)              17,498,261         18,450,013           (5.2)
        Passenger load
         factor                    80.4 percent       79.9 percent    0.5 pts.
        Departures              188,576            198,978           (5.2)
        Average stage length
         (miles)                    740                737            0.4
        Average fare             $85.84             $98.62          (13.0)
        Average yield per
         RPM                      11.03 cents        12.62 cents    (12.6)
        Passenger revenue
         per ASM                   8.87 cents        10.08 cents    (12.0)
        Total revenue per
         ASM                       9.96 cents        10.64 cents     (6.4)
        Operating cost per
         ASM                       9.10 cents        11.34 cents    (19.8)
        Operating cost per
         ASM, adjusted*            9.12 cents        11.38 cents    (19.9)
        Non-fuel operating
         cost per ASM              6.34 cents         5.92 cents      7.1
        Non-fuel operating
         cost per ASM,
         adjusted*                 6.36 cents         5.96 cents      6.7
        Average cost of
         aircraft fuel per
         gallon                   $1.77              $3.53          (49.9)
        Average economic
         cost of aircraft
         fuel per gallon          $1.81              $3.45          (47.5)
        Gallons of fuel
         burned (000s)          272,264            283,169           (3.9)
        Operating aircraft
         in fleet at end of
         period                     136                139           (2.2)
        Average daily
         aircraft
         utilization (hours)       11.0               11.3           (2.7)
        Full-time equivalent
         employees at end of
         period                   7,717              7,372            4.7



     * Statistical calculations for 2009 and 2008, on an adjusted basis,
       exclude gains and losses as detailed in the attached Reconciliation of
       GAAP Financial Information to Non-GAAP Financial Information.  Our 2008
       financial data has been restated to reflect the required retrospective
       application of our adoption of Accounting Standards Codification (ASC)
       470-20, "Debt with Conversion and Other Options - Cash Conversion."
       The restatement resulted in a $2.4 million increase and $10.7 million
       decrease to operating loss and net loss, respectively, for the nine
       months ended September 30, 2008.



Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

Three and Nine Months Ended September 30, 2009 and 2008

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to certain non-GAAP financial measures including net margin. Our disclosures may also exclude special or non-recurring items that we believe should be taken into consideration to more accurately measure and monitor our operating performance. Our disclosure of non-fuel operating cost per available seat mile (non-fuel CASM) is consistent with financial measures reported by other airlines and analysts. We believe that non-fuel CASM and non-fuel CASM adjusted provide a useful understanding of our operations. Both the cost and availability of fuel are subject to many economic and political factors and are therefore beyond our control. Our press release also contains information regarding the components of GAAP fuel expense and net gains and losses on derivative financial instruments. These amounts have been included as supplemental information.

We disclose both the average fuel cost per gallon and the average economic fuel cost per gallon. Average fuel cost per gallon is based on fuel expense as measured by GAAP and includes realized gains and losses on fuel related derivatives instruments which are accounted for as hedges. Average economic fuel cost per gallon includes realized gains and losses on all fuel related derivative instruments, including those which were not accounted for as hedges, but does not include unrealized gains and losses recognized under GAAP.

We consider our fuel derivative contracts an important tool in managing costs related to jet fuel purchases. We believe it is important to assess our financial performances by including the effect of the net cash settlements and excluding the mark-to-market adjustments for our unrealized gains and losses recorded in the income statement for contracts settling in future periods.

We believe that these measures represent important internal measures of performance. Accordingly, where these non-GAAP measures are provided, it is done so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in assessing our underlying performance on a year-over-year and a quarter-over-quarter basis. However, because these measures are not determined in accordance with accounting principles generally accepted in the United States, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result the aforementioned measures as presented may not be directly comparable to similarly titled measures presented by other companies. The non-GAAP measures are presented as supplemental information and not as alternatives to any GAAP measurements.




    Dollars in thousands,
     unless otherwise
     noted                       Three months ended       Nine months ended
                                    September 30,            September 30,
                                 -----------------        ------------------
                                 2009         2008        2009          2008
                                 ----         ----        ----          ----
    The following table
     calculates net
     margin, adjusted:
      Net income
       (loss)                 $10,426     $(94,553)   $117,571     $(144,740)
        (Gain) loss on debt
         extinguishment,
         net of taxes             251            -      (3,333)            -
        Unrealized
         (gains) losses
         on derivative
         financial
         Instruments,
         net of taxes           6,260       55,547     (27,663)       26,541
        Gain on
         asset
         dispositions,
         net of taxes          (6,379)      (9,254)     (3,073)      (15,797)
        Impairment
         of goodwill                -            -           -         8,350
                                  ---          ---         ---         -----
        Net income
        (loss), adjusted      $10,558     $(48,260)    $83,502     $(125,646)
                              =======     ========     =======     =========
        Total operating
         revenues            $597,402     $673,292   $1,743,010   $1,963,063
                             --------     --------    ---------   ----------
          Net margin,
           adjusted               1.8%       (7.2)%         4.8%        (6.4)%
                                  ===        ====           ===         ====
    The following table
     calculates
     operating cost
     per ASM, adjusted:
      Total operating
       expenses              $560,369     $720,705   $1,592,104   $2,092,303
        Gain on asset
         dispositions           6,379        9,254        3,073       15,797
        Impairment of
         goodwill                   -            -            -       (8,350)
                                  ---          ---          ---       ------
        Operating
         expenses,
         adjusted            $566,748     $729,959   $1,595,177   $2,099,750
                             ========     ========   ==========   ==========
        ASMs (000)          6,170,977    6,221,858   17,498,261   18,450,013
                            ---------    ---------   ----------   ----------
          Operating
           cost per ASM
           (cents),
           adjusted              9.18        11.73         9.12        11.38
                                 ====        =====         ====        =====
    The following table
     calculates non-fuel
     operating cost
     per ASM and non-fuel
     operating cost
     per ASM, adjusted:
      Total operating
       expenses              $560,369     $720,705   $1,592,104   $2,092,303
        Aircraft fuel        (190,235)    (363,882)    (483,008)  (1,000,451)
                             --------     --------     --------   ----------
      Operating
       expenses,
       adjusted              $370,134     $356,823   $1,109,096   $1,091,852
                             ========     ========   ==========   ==========
      ASMs (000)            6,170,977    6,221,858   17,498,261   18,450,013
                            ---------    ---------   ----------   ----------
          Non-fuel
           operating cost
           per ASM (cents)       6.00         5.73         6.34         5.92
                                 ====         ====         ====         ====

      Total operating
       expenses              $560,369     $720,705   $1,592,104   $2,092,303
        Aircraft fuel        (190,235)    (363,882)    (483,008)  (1,000,451)
        Gain on asset
         dispositions           6,379        9,254        3,073       15,797
        Impairment
         of goodwill                -            -            -       (8,350)
                                  ---          ---          ---       ------
      Non-fuel operating
       cost, adjusted        $376,513     $366,077   $1,112,169   $1,099,299
                             ========     ========   ==========   ==========
      ASMs (000)            6,170,977    6,221,858   17,498,261   18,450,013
                            ---------    ---------   ----------   ----------
          Non-fuel
           operating
           cost per ASM
           (cents),
           adjusted              6.10         5.88         6.36         5.96
                                 ====         ====         ====         ====
    The following table
     calculates average
     economic cost of
     aircraft fuel per
     gallon:
      Aircraft fuel
       expense per
       GAAP                  $190,235     $363,882     $483,008   $1,000,451
      Realized (gains)
       losses on derivatives
       that do not qualify
       for hedge accounting,
       recorded in net (gains)
       losses on derivative
       financial instruments    4,021      (14,027)       9,719      (23,391)
                                -----      -------        -----       ------
      Economic fuel
       expense               $194,256     $349,855     $492,727     $977,060
                             ========     ========     ========     ========
      Gallons of fuel
       burned (000s)           96,098       95,303      272,264      283,169
                               ------       ------      -------      -------
          Economic cost
           of aircraft
           fuel per gallon      $2.02        $3.67        $1.81        $3.45
                                =====        =====        =====        =====
    The following
     table calculates
     diluted earnings
     per share, adjusted
     for the three months
     ended September 30,
     2009 and 2008:
      Net income              $10,426      (94,553)
        Gain on debt
         extinguishment,
         net of taxes             251           --
        Unrealized losses
         on derivative
         financial
         instruments,
         net of taxes           6,260       55,547
        Gain on asset
         dispositions,
         net of taxes          (6,379)      (9,254)
                               ------       ------
          Net income,
           adjusted           $10,558      (48,260)
        Plus income
         effect of
         assumed
         conversion-interest
         on convertible debt      956           --
                                  ---          ---
      Income after
       assumed conversion,
       diluted                $11,514      (48,260)
      Adjusted weighted-
       average shares
       outstanding,
       diluted                140,625      117,177
      Diluted earnings
       per share (dollars),
       adjusted                 $0.08       $(0.41)
                                =====       ======



                 COMPANY ESTIMATES/FORWARD LOOKING STATEMENTS

    The following table contains our year-over-year capacity projection for
    the remainder of 2009:


                   Period                   Forecasted ASMs
                  -------                   ---------------
                  Q4 2009                 Up approximately 7%



    The following table contains our year-over-year projections for Q4 2009
    total unit revenues, non-fuel operating unit costs, and average cost per
    gallon of fuel, all in:


                                             Q4 Projection
                                         ---------------------
    Total unit revenue                   per ASM Down 7% to 8%
    Non-fuel unit operating cost per
     ASM in Q4                                Up 1% to 2%
    Average cost per gallon of fuel,
     all-in                                  $2.08 to $2.12



    As of September 30, 2009, we had aggregate unrestricted cash, cash
    equivalents, and short-term investments of $408.2 million, and we also had
    $55.2 million of restricted cash.  During October 2009, we completed a
    public offering of $115.0 million in 5.25% convertible senior notes due in
    2016 and a public offering of 11.3 million shares of our common stock at a
    price of $5.08 per share.  The net proceeds from the two offerings
    aggregated approximately $166.3 million.


SOURCE AirTran Airways

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