AirTran 1st Quarter results

[beech1900kid]

NEW YORK, April 22 (Reuters) - AirTran Holdings (AAI.N: Quote, Profile, Research), parent of low-cost carrier AirTran Airways, posted a quarterly net loss on Tuesday as it grappled with soaring fuel prices.
The company said it lost 34.8 million, or 38 cents per share in the first quarter, compared with a profit of $2.2 million, or 2 cents per share a year earlier.
Analysts, on average, had been expecting it to post a loss of 30 cents a share, according to Reuters Estimates.
The loss in the period was due to the effect of record high fuel prices, the company said in a statement. It recorded fuel costs of $268 million in the quarter, up $102 million from the year-earlier period.
Revenue rose 18.3 percent to $596.4 million in the quarter. (Reporting by Aarthi Sivaraman, editing by Will Waterman)

 

[Thunderchief]

Plus no growth for 2008 and 2009.... The days of 3 yr upgrade are over!

 

[Eagle757shark]

AirTran Announces Intention to Offer $65 Million of Convertible Senior Notes and to Offer 14,250,000 Shares of Common Stock
Tuesday April 22, 5:05 am ET
ORLANDO, Fla., April 22 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc. (NYSE: AAI - News), today announced that it intends to offer, subject to market and other conditions, $65 million of Convertible Senior Notes due 2015 (the "Notes"). AirTran intends to grant the underwriters of the Notes offering a 30-day option to purchase an additional $9,750,000 aggregate principal amount of the Notes, solely to cover over allotments, if any.
The Notes will be convertible into AirTran common stock, at the option of the holders of the Notes. The interest rate, conversion rate, conversion price and other terms of the Notes will be determined at the time of pricing of the offering. The Notes will be general senior unsecured obligations of AirTran.
Concurrently with the offering of the Notes, AirTran intends to offer, subject to market and other conditions 14,250,000 shares of its common stock. The underwriters have the option to purchase up to an additional 2,137,500 shares of common stock from AirTran solely to cover over allotments, if any.
Morgan Stanley & Co. Incorporated ("Morgan Stanley") will act as bookrunner for each of the offerings and Credit Suisse Securities (USA) LLC ("Credit Suisse") will act as co-lead manager for each of the offerings.
AirTran intends to place a portion of the net proceeds of the Notes offering in an escrow account to acquire government securities in an amount equal to the first six scheduled semi-annual interest payments due on the Notes, AirTran intends to use the remaining net proceeds from the Notes offering and the net proceeds of the common stock offering for general corporate purposes, which may include additions to working capital, capital expenditures, the retirement of debt, other investments in strategic alliances, code-share agreements, or other business arrangements and, although we are not presently in any negotiations, acquisitions of other airlines or their assets. Pending the application of the net proceeds, AirTran intends to invest the net proceeds in investment grade, interest bearing securities.
AirTran has filed a registration statement with the SEC for the offerings of the Notes and the common stock to which this communication relates. Before investing, please read the prospectus and prospectus supplements for the Notes and the common stock offerings in the registration statement and other documents filed with the SEC for more complete information about AirTran and these offerings. These documents are available for free and may be obtained by visiting the SEC website at http://www.sec.gov. Alternatively, copies of the prospectus and the prospectus supplements for the Notes and the common stock offerings are available by contacting Morgan Stanley at 180 Varick Street, 2nd Floor, New York, New York 10014, Attention: Prospectus Department or by email at [email protected], and Credit Suisse at One Madison Avenue, New York, New York 10010 or by calling toll free 800-221-1037.
This news release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sales of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities law of any such state or jurisdiction.

 

[Eagle757shark]

AirTran loses $35 million, will make big growth cuts

posted by Jason Garcia on Apr 22, 2008 7:26:30 AM
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AirTran Holdings Inc. swung to a big loss in the first quarter of 2008 and will reduce a once-rapid growth rate to "no more than flat" for the next two years, as it and other airlines continue to buckle under the record price of fuel.
Orlando-based AirTran, parent of AirTran Airways, said it lost $34.8 million, or 38 cents a share, during the three months ending March 31. That's well off the $2.2 million, or 2 cents a share, profit it made during the same quarter a year ago.

The company said passenger bookings continue be strong and that first quarter revenue grew 18.3 percent to almost $600 million, a company record. But that wasn't nearly enough to offset fuel prices. AirTran said its average price for a gallon of fuel spiked from $2.01 to $3.00, a nearly 50 percent increase. The airline's total fuel bill more than doubled for the quarter, from $102 million to $268 million.
The stratospheric fuel prices forced AirTran to take what it called a "comprehensive review of its future fleet and capacity plans." With that, the airline said it will reduce to its growth plan for the final four months of 2008 from a planned 10 percent to zero. It will also eliminate a planned 10 percent capacity growth rate in 2009.
"Despite record revenues, record high fuel costs remain a tremendous challenge for all airlines," Bob Fornaro, AirTran Airways' president and chief executive officer, said in a written statement.

 

[lowecur]

AirTran Announces Intention to Offer $65 Million of Convertible Senior Notes and to Offer 14,250,000 Shares of Common Stock

Better late than never. It will be interesting to see how this goes in this environment. My guess is it may be adjusted downwards, but FL will pretty much take anything in this day and age.

The usually profitable summer months will prove to be a loser this year because of the continued spike in fuel prices. Since many of the tickets have been sold, airlines can only hope to mitigate the damage with high LF's and add-on's. I see Jetblue just jumped on the extra bag band wagon. Travelers will be in for a shock in ticket prices, as many airlines will have to pass along their cost's beginning after the summer travel season. Welcome to the age of elitest air travel. Let the increases begin.

imp: ​

 

[Andy]

Welcome to the age of elitest air travel.

You mean that air travel may cost more than traveling by rail or bus? Heaven forbid.

 

[Eagle757shark]

As of 0845 on the 22nd of April, fuel is at $117.38 a barrel. It is going to be a difficult year. The one thing that bothers me is the high load factors and the low airfares. With these high load factors, airlines aren't charging enough for their tickets. The airline executives have to figure out how much they can raise fares and still keep people flying. The days of $39 dollar fare sales is irresponsible given the cost of fuel. It is time these executives earn their bonuses!

 

[Lear70]

This was the information I was hearing the day of the big sell-off a week and a half ago.

Still haven't found out which institution dumped nearly 11 Million shares at one time, but the whole thing just stinks of insider trading.

What gets me is:

AirTran Holdings Inc... will reduce a once-rapid growth rate to "no more than flat" for the next two years, as it and other airlines continue to buckle under the record price of fuel.

The stratospheric fuel prices forced AirTran to take what it called a "comprehensive review of its future fleet and capacity plans." With that, the airline said it will reduce to its growth plan for the final four months of 2008 from a planned 10 percent to zero. It will also eliminate a planned 10 percent capacity growth rate in 2009.

Upgrades just DIED except for attrition (very little).

Say hello to 7-10 year F/O's, which is why I was so dead-set against the F/O rates in the T.A.'s. Upgrade in 3 years? Yeah, thanks, AP. uke:

Orlando-based AirTran, parent of AirTran Airways, said it lost $34.8 million, or 38 cents a share, during the three months ending March 31. That's well off the $2.2 million, or 2 cents a share, profit it made during the same quarter a year ago.

Which begs the question: Is that including the sale of the 737 deliveries or not? (edit: I can't find the one-time profits in the 10k, so I don't think they're taking the credit for them in this quarter - negotiations start again soon, nice to start them on a good solid quarter of loss that those sales might have offset? or maybe I'm seeing black helicopters again).

The company said passenger bookings continue be strong and that first quarter revenue grew 18.3 percent to almost $600 million, a company record. But that wasn't nearly enough to offset fuel prices. AirTran said its average price for a gallon of fuel spiked from $2.01 to $3.00, a nearly 50 percent increase. The airline's total fuel bill more than doubled for the quarter, from $102 million to $268 million.

Hmmm... RECORD high ticket sales, yet prices still too low to cover costs.

Lowecur, don't be ridiculous... "Elitist" air travel? Please...

From the 10k statement: 5,718,319 passengers flew during the 1st quarter. A $10 increase in fares would have increased revenue by $57.2 Million dollars.

A net profit of $22.4 Million instead of a loss.

I hardly think $10 bucks places airTran ticket prices in an "elitist" travel category (pax will spend that getting a Mocha at Seattle's Best waiting for their connection). Your mileage may vary.

Sounds like it's time to start inching some tickets up $5 to $10 at a time. Slow increases and I'd bet the pax would still sign up.

Americans are just as addicted to travel now as they are to Plasma TV's, DVD's, laptop computers, and Starbucks every morning. Higher ticket prices are the ONLY way to offset high fuel prices, and they're not going to drive off customers over $10 or $20 bucks. That's the cost of a couple Latte's...

"Despite record revenues, record high fuel costs remain a tremendous challenge for all airlines," Bob Fornaro, AirTran Airways' president and chief executive officer, said in a written statement.

Pilots don't chip in for fuel, Bob. Find a way to INCREASE REVENUE.

 

[Eagle757shark]

Folks this is why there is no such thing as a low cost carrier anymore! People get caught up in a catch phrase. With fuel at such high levels, you have to raise your ticket prices to pay for the cost of doing business. As it was pointed out above, bookings are strong. That doesn't mean a DAMN thing if you are not covering your cost. The oil companies have figured it out. Raise the cost of gas enough, hold it and get people used to paying for it and then raise the price again. The airlines will not do this! They will continue to sell seats for $39 dollars and condition the public with this mind set. People will always travel, it is the nature of the society we live in. People are still filling up their gas tanks and driving, and people that need to fly will continue to fly when they need too. I know I can't drive from Atlanta to Orlando for $39 dollars, so why the hell are you charging airlines seats for that amount??????

 

[Lear70]

Other items of interest from the 10k

ORLANDO, Fla., April 22 /PRNewswire-FirstCall/ -- AirTran Holdings,
AirTran revenues remain very strong, despite generally negative
economic news in the U.S. First quarter traffic rose by 19.2 percent on a
10.8 percent increase in capacity, resulting in a record first quarter load
factor of 75.3 percent, a 5.2 point increase over 2007.

75.3% Load Factor?

I thought it was in the 80's... so we're traveling 25% empty?

During the first quarter, AirTran realized $4.1 million of hedging gains which reduced fuel expense.

The quarter also includes non-operating expense of
$5.2 million pertaining to unrealized net losses on certain fuel related derivative financial instruments.

So our hedging department made $4.1 Million on hedging then lost $5.2 Million on the same hedging with bad hedge placement?

Great.

At quarter end, the estimated net asset
fair value of AirTran's fuel related derivative financial instruments was $17.3 million, including unrecognized gains of $13 million. Going forward
the Company has increased its fuel hedge positions to cover approximately 50 percent of its fuel needs for the remainder of the year.

So we're 50% hedged... but... a $17.3 Million hedge isn't going to help much when fuel will be $300 Million more than last year for the remaining 3 quarters.

Ouch.

"Despite record revenues, record high fuel costs remain a tremendous challenge for all airlines," said Bob Fornaro, AirTran Airways' president and chief executive officer. "We remain committed to serving our customers, reducing costs and profitably managing our company going forward.

Ummm... how about "responsible ticket pricing", Bob? This is supposed to be an investor release, the investor knows there's nothing more to cut, and you're saying this is your only strategy?

Not very reassuring to the investors. Stock prices are going to hurt today.

We are proud that AirTran Airways Crew Members have maintained our focus on a high operational and service standard while achieving the number one ranking in the 2008 Airline Quality Rating report. By focusing on what we do and doing
it better than anyone else, AirTran Airways will continue to be well positioned for the future."

What? :erm:

"Advanced bookings for the summer look very strong, however, we are nonetheless concerned with the continued rise in fuel prices, particularly towards the end of this year," said Kevin Healy, senior vice president of marketing and planning. "Given the current environment we will execute on a plan that will result in the suspension of our growth plans beginning in September 2008 and continuing at least through 2009.

We will remain focused on positioning ourselves to be successful in a high fuel environment by
reducing costs and improving efficiencies. At the same time we will continue our focus on increasing unit revenues, introducing more ancillary revenue programs, such as the optional advance seat assignment fees, and maximizing the revenue production associated with our A+ Rewards frequent flier program."

There you go, Kevin. Good for you for coming out and saying it:

Increase unit revenues, i.e., raise ticket prices. Bravo!

 

[tailhookah]

AirTran Holdings, Inc. (NYSE: AAI - News), today announced that it intends to offer, subject to market and other conditions, $65 million of Convertible Senior Notes due 2015 (the "Notes"). AirTran intends to grant the underwriters of the Notes offering a 30-day option to purchase an additional $9,750,000 aggregate principal amount of the Notes, solely to cover over allotments, if any.

Sorry to say but this is a desperate measure to try to quickly raise cash to continue to operate... translation? Airtran is on the ropes and needs either 1) CASH or 2) an immediate merger partner.

I predict, within the next 4 weeks, the next 2 airlines to file for BK protection are Airtran and Spirit... in no particular order.

Tailhookah

ps- not reveling in this guys... it's a rough time for all of us and a merger or BK is just around the corner for all of our companies at the current pace.

 

[Eagle757shark]

It is time for AirTran to find a international code-share partner. With the weak dollar, it is time to tap into some of that international travel. AirTran's growth plan for the second half of 2008 and all of 2009 has been cut to zero. If fuel continues to rise and you are not agressively raising ticket prices to cover that cost, then what will change? Another way of tapping into higher yield and revenue has to be achieved. Important note, AirTran has the lowest non-fuel cost in the industry. Southwest has one of the best fuel hedging programs in place. This has allowed Southwest to remain profitable as they have maintained their domestic route structure. Jetblue has tapped into the international market through a code share with Luftansia and has steadily grown into the carribean markets. Jetblue recorded a $8 million dollar loss in the first quarter and has approx $1 billion dollars in cash. AirTran has spent the last 7 years building a small domestic network. Maybe it is time to look for a couple of European and Latin America companies to link up with as another way to raise revenue and yield. Well I guess a merger is always possible as well.

 

[Lear70]

Sorry to say but this is a desperate measure to try to quickly raise cash to continue to operate... translation? Airtran is on the ropes and needs either 1) CASH or 2) an immediate merger partner.

I predict, within the next 4 weeks, the next 2 airlines to file for BK protection are Airtran and Spirit... in no particular order.

Tailhookah

ps- not reveling in this guys... it's a rough time for all of us and a merger or BK is just around the corner for all of our companies at the current pace.

Don't think so...

The 10k doesn't reveal anywhere NEAR such a dire cash position.

They're doing this preemptively for the losses that will be incurred in the 2nd and 3rd quarter due to selling tickets at $90 a brl. oil prices when oil will likely go even higher.

I'd bet if they can't get revenue up to cover costs by the end of the year then yes, look for a Ch. 11 filing then. But not quite yet...

Spirit I have no clue about...

 

[SFR]

AirTran is toast! If you work there, start looking for another job. Sorry, but this is true.

Life of LCCs are going to be terminating slowly here.

 

[Max Powers]

AirTran is toast! If you work there, start looking for another job. Sorry, but this is true.

Life of LCCs are going to be terminating slowly here.

And let me guess you work for a legacy????

The tranny has about as much cash on hand as most of the legacy when compared in a ratio to expected future losses.