TRANNY Beats the Street!

[Colonel Savage]

AirTran Holdings, Inc., Reports Record First Quarter Net Income of $28.7 Million

• Wednesday April 22, 2009, 6:50 am EDT

- Record First Quarter Operating Income of $47.7 Million -





- Company Earns Record Operating Income for Second Consecutive Quarter -
ORLANDO, Fla., April 22 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI - News), the parent company of AirTran Airways, Inc., today reported record net income of $28.7 million or $0.21 per diluted share for the first quarter along with record operating income of $47.7 million. The Company also posted revenues of $542.0 million and achieved the highest first quarter load factor in Company history at 76.3 percent.
The combination of lower fuel prices, low costs, and quality service coupled with fleet and route network adjustments has resulted in the Company posting its best first quarter earnings in history. Total fuel costs for the quarter were down 50.5 percent year-over-year on a 7.2 percent reduction in capacity as measured by available seat miles (ASMs).
"Our ability to report a profit today is rooted in the difficult decisions we made last year. AirTran Airways was among the first airlines to react to the changing economic environment and we are among the first to show signs of recovery," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "Our Crew Members deserve much of the credit as they continue to provide a high-quality product to our customers seeking real value and we are pleased to have been recognized, for the second consecutive year, as first in quality among major carriers in 2008."
During the first quarter, AirTran Airways expanded service in several markets that represented opportunities for significant traffic. Flights in Milwaukee have increased more than 50 percent year over year and more than 30 scheduled daily departures are planned for the Summer schedule. Additional flights and new cities were also added to the Orlando route network and AirTran Airways now has more than 60 peak day departures to 36 destinations and is the second largest carrier to America's top vacation destination.
"AirTran Airways' ability to be nimble and responsive to changing market conditions is a tremendous competitive advantage. Increasing flights to and from Milwaukee and Orlando while redesigning our Atlanta hub schedule to make the network more efficient and productive are the latest examples of this capability," said Kevin Healy, senior vice president of marketing and planning for AirTran Airways.
While the Company expanded to new markets and continued to offer high-value, friendly service, AirTran Airways remained sharply focused on remaining the lowest cost producer among major airlines.
"While the weakening economy has begun to pressure prices throughout the airline sector, our industry leading, low-cost structure has allowed us to offset this challenge," said Arne Haak, senior vice president of finance, treasurer and chief financial officer for AirTran Airways. "We are committed to maintaining our low cost advantage and expect to remain profitable every quarter this year despite the current economic environment."
Other highlights of AirTran Airways' accomplishments in the first quarter and to date include:

• Ranked #1 among all low-cost carriers for the second consecutive year in the Airline Quality Rating (www.aqr.aero). This is the fifth consecutive year AirTran ranked third or higher for quality among all U.S. carriers in this prestigious rating.
• Chosen as Travelzoo's Best Provider of Domestic Air Fare Deals in 2009.
• Announced service commencing in five new cities (Atlantic City, N.J., Allentown, Pa., Charleston, W.Va., Asheville, N.C., and Knoxville, Tenn.) and 14 new routes.
• Partnered with the Milwaukee Brewers by establishing the AirTran Airways Landing Zone at Miller Park and by signing Milwaukee Brewers slugger Ryan Braun as the latest celebrity endorser.
• Consolidated support operations including: customer service, inflight, recruiting, marketing and sales in AirTran's new Atlanta Corporate Center.

 

[BLUE BAYOU]

That's great news-- I think that point to point flying is a great sell for the medium markets. It also goes to show that maybe buying Midwest wasn't all that important since they're also doing well in MKE...

 

[CatfishVT9]

That's great news-- I think that point to point flying is a great sell for the medium markets. It also goes to show that maybe buying Midwest wasn't all that important since they're also doing well in MKE...

Bob's new slogan: "If you can't join 'em, beat 'em.

 

[HomerJ]

Nicely done ladies and gentlemen. Not easy to do in this day and age...

 

[Volasl]

There is a special place in hell for a CEO of an airline that makes a profit during this time with employees on the street.

 

[maxblast72]

The key part of the report to focus on was at the bottom. There Fornaro predicted Q2 RASM was only going to be down 2-3%. That is pretty good compared with the trends most other airlines reported. Airtran is not dependent on business or international travelers to have a strong revenue performance.

Fornaro also projected an all-in Q2 fuel price between $1.75 and $1.80. Wouldn't be surprised to see an all-time quarterly net profit record close to $100 million for Q2 if those projections hold up.

 

[maxblast72]

There is a special place in hell for a CEO of an airline that makes a profit during this time with employees on the street.

Thanks for your concern, but when the decision was made to reduce Airtran's total monthly block hours (and furlough), Airtran was burning through alot of cash. As soon as fuel prices went back below $2/gallon and Airtran became profitable again, everyone was offered a recall due to the fact that we were adding thousands of block hours back into the summer 2009 schedule.

What do you want a CEO to do? Keep flying unprofitable flights or to try to reduce the bleeding?

 

[Colonel Savage]

The key part of the report to focus on was at the bottom. There Fornaro predicted Q2 RASM was only going to be down 2-3%. That is pretty good compared with the trends most other airlines reported. Airtran is not dependent on business or international travelers to have a strong revenue performance.

Fornaro also projected an all-in Q2 fuel price between $1.75 and $1.80. Wouldn't be surprised to see an all-time quarterly net profit record close to $100 million for Q2 if those projections hold up.

Fornaro said on CNBC that Q2 earnings would "be the bottom"? Did he mean RASM?

 

[HomerJ]

There is a special place in hell for a CEO of an airline that makes a profit during this time with employees on the street.

There is a worse place in hell for a CEO that runs a company that bleeds red every quarter with employees on the street. Isn't the objective of this industry to actually turn a profit? That's right, I forgot, our free market economy isn't free anymore...

 

[Volasl]

My point is the short term mentality of most managment groups in the airlines. Even though i dont work for Southwest they were losing over a million a day after Sept 11 and still didnt furlough. I wish United or any other group had that mentality.

No corp needs to regularly lose money but i think there needs to be a longer term goal.

Shaping Southwest's Organizational Culture Contd...

Thriving Under Pressure

Post-September11, 2001, when most airlines in the US went in for massive layoffs, Southwest avoided laying off any employee (Refer Exhibit VII.) Even before the September 11 crisis hit, Kelleher had explained his philosophy regarding layoffs in an interview to Fortune magazine. He said, "Nothing kills your company's culture like layoffs. Nobody has ever been furloughed [at Southwest], and that is unprecedented in the airline industry. It's been a huge strength of ours. It's certainly helped us negotiate our union contracts. One of the union leaders….came in to negotiate one time, and he said, "We know we don't need to talk with you about job security." We could have furloughed at various times and been more profitable, but I always thought that was shortsighted.
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You want to show your people that you value them and you're not going to hurt them just to get a little more money in the short term. Not furloughing people breeds loyalty. It breeds a sense of security. It breeds a sense of trust. So in bad times you take care of them, and in good times they're thinking, perhaps, "We've never lost our jobs. That's a pretty good reason to stick around."...

 

[The Prussian]

volasl...excellent post, and food for thought...

...and,...it kinda adds some perspective to WN's Q1 loss...

 

[gt1900]

That is exactly why pilots don't run big company's. Not furloughing can lead to a bankrupt company as well. AAI was bleeding money in 2008 and they had to do something fast. If fuel would have stayed at $140 a barrel there would be no AAI today. Sometimes you have to tighten the buckle to try and make it to the next upturn in an industry. When AAI furloughed many analysts were still calling for $200 a barrel oil. You are forced to make decisions when running a company. Near term and long term decisions. Last summer when AAI furloughed nobody was calling for $40 a barrel oil just 6 months later. At that time there was no end in sight. Just be glad everyone is back and it looks like AAI has made it through. I'm sure those furloughed guys are glad they had a company to come back to. If AAI hadn't made a lot of the decisions they did, we would all be on the street. Remember the $150 million AAI managment raised? He11, if they didn't do that AAI would be done. I think its more short sided to look back now and bash managment for the decisions they made. AAI furloughed pilots, but they got them back just as quick. A company that has long term goals but can also adjust quickly to current market conditions is a company that should stay around for a long time....... BTW.... Wheres my raise? Make sure everyone looks at AAI and SWA proposed pay rates. ALA 5th year FO $102 an hour. AAI 5th year FO $72...... SHOW ME THE MONEY!!!!!!!

 

[Dude]

I think it's great that AirTran made a profit. It would have been nice had we done the same. I hope the trend continues for you.

You have to have a secret decoder ring to figure out our financials, these days.

 

[Linedriver]

My point is the short term mentality of most managment groups in the airlines. Even though i dont work for Southwest they were losing over a million a day after Sept 11 and still didnt furlough. I wish United or any other group had that mentality.

No corp needs to regularly lose money but i think there needs to be a longer term goal.

Shaping Southwest's Organizational Culture Contd...

Thriving Under Pressure

Post-September11, 2001, when most airlines in the US went in for massive layoffs, Southwest avoided laying off any employee (Refer Exhibit VII.) Even before the September 11 crisis hit, Kelleher had explained his philosophy regarding layoffs in an interview to Fortune magazine. He said, "Nothing kills your company's culture like layoffs. Nobody has ever been furloughed [at Southwest], and that is unprecedented in the airline industry. It's been a huge strength of ours. It's certainly helped us negotiate our union contracts. One of the union leaders….came in to negotiate one time, and he said, "We know we don't need to talk with you about job security." We could have furloughed at various times and been more profitable, but I always thought that was shortsighted.
window.google_render_ad();
You want to show your people that you value them and you're not going to hurt them just to get a little more money in the short term. Not furloughing people breeds loyalty. It breeds a sense of security. It breeds a sense of trust. So in bad times you take care of them, and in good times they're thinking, perhaps, "We've never lost our jobs. That's a pretty good reason to stick around."...

SWA has a unique culture in the industry. I have friends there and they enjoy their job and job security. It think it's great what SWA did after 9/11 but the truth about that is a company can only afford to do that for a certain period of time. At some point it they would have to align the labor costs.

Some management is better than others and you have to be well in front of the pack to do what SWA did then. Times are leaner now and hopefully they will be able to make it through this downturn without furloughing. I think they will be fine.

The good thing about furloughs is that it isn't personal. The bad thing about furloughs is that it isn't personal.

Regardless, management has the responsibility of being profitable and labor cost is just another cost like electricity or advertising. If furloughs are curtailed it will be less from a 'goodwill' effort and more from a higher cost to train point of view.

That's the case at any job.

 

[samballs]

Management will be putting letters out by the end of the day saying "it is important that we keep cost in line. I ask all employees to think to themselves if there pay is really that low. If we want to continue these profits I ask all employees to please take pay cuts and I will be the first. Starting today I will work for $1.00 with 35,000,000 in options for the year. Thank you and please fail your medical if your pass 5 yr pay."

sincerely

Sh!tty CEO

 

[a320drivr]

Hey our company hasnt made money in yrs and the ceo gave himself a raise.

 

[bravodude]

now all you need to do is get a new contract with some big pay increases.

 

[runwayjockey]

Did these guys get furloughed or fired I don't remember? Congrats on the profit.

 

[Longhorn]

I'm disappointed. I saw Tranny in the title and thought the thread was about something else....OH Well..congrats on the earnings..

 

[Lear70]

Where the hell have YOU been?

Nice sleeves...