AirTran Future brighter after painful struggles

Eagle757shark

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AirTran future brighter after painful struggles

Mon Nov 24, 2008 2:17pm EST
By Kyle Peterson - Analysis
CHICAGO (Reuters) - AirTran Airways, once seen as a likely casualty of the stunning oil price spike that claimed several smaller rivals this year, seems to have found its way out of the woods and may be positioned for profits in 2009.
By some estimates, the low-cost airline, a unit of AirTran Holdings (AAI.N: Quote, Profile, Research, Stock Buzz), had a brush with oblivion in the first half of this year as oil and jet fuel raced to record highs and pummeled the airline industry.
But a series of liquidity-boosting steps and a few lucky breaks have brightened the future of the Orlando, Florida-based airline which has an Atlanta hub.
"The fuel price spike had put extreme pressure on AirTran's cash flow and liquidity by midsummer, and unrestricted cash balances had dropped to very uncomfortable levels," said Bill Warlick, senior director at Fitch Ratings.
"But the rapid decline in jet fuel costs and the big cuts in domestic capacity have improved the carrier's cash flow prospects considerably," he said.
AirTran, of course, was not alone is its predicament. The entire industry was clobbered in the first half of the year by fuel prices that rallied with oil to a record high in July.
Other airlines of comparable or smaller size had begun to feel the strain. A handful of small carriers went out of business, and Frontier Airlines (FRNTQ.PK: Quote, Profile, Research, Stock Buzz) filed for bankruptcy.
AirTran, meanwhile, was broadly viewed as having a dangerously low liquidity position -- $356 million as of December 30, while fuel prices continued to drain the cash.
Furthermore, it faced a growing threat from its Atlanta rival Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz), which announced a merger with Northwest Airlines in April. With that merger complete, AirTran now competes at its only hub with the world's largest airline.
Because of AirTran's enviable East Coast presence, its nimble point-to-point route structure and falling stock prices, some experts saw the company as a promising takeover target.
"I think the theory was it would have been a reasonably priced transaction for an extraordinary airline," said Stuart Klaskin at KKC Aviation Consulting.
"They were determined not to get themselves caught in a bit of a death spiral," Klaskin said.
SEEING SIGNS OF LIFE
Airline shares tumbled across the board as the industry piled up quarterly losses. Between January 1 and July 14, AirTran stock fell more than 80 percent before stabilizing at a little more than $1 as share.
That compares with a 60 percent decline in the Amex airline index .XAL during the same period. AirTran shares have since rebounded to near $2.85.
A rapid decline in fuel prices took the pressure off airlines in the third quarter, but losses mounted as carriers had purchased fuel when prices were still near the highs. AirTran posted a third-quarter loss, reversing a year-ago profit.
All the while, chaos in the U.S. economy threatened to erode travel demand. Against this dreary backdrop, AirTran hustled to regain its footing.
"We had a tough year, but we managed through it," said Steven Rossum, AirTran's executive vice president of corporate development.
"We've worked hard at managing our liquidity, and it requires a lot of our management time," he said.
The airline has taken giant steps toward improving its liquidity position, which was $402 million at the end of the third quarter, compared with $356 million at the end of the fourth quarter of 2007.
To achieve this feat, AirTran constructed a $215 million financing facility in two stages: a $90 million revolving credit line and $125 million in letters of credit.
AirTran also rescheduled airplane deliveries, sold some aircraft, sold other equipment and leased it back, reworked deals with certain business partners and slashed capacity.
The carrier still has a bond rating of CCC+, which is below junk threshold. But Rossum is optimistic the rating will rise.
"It takes a long time to dig out of the credit rating hole," he said.
(Reporting by Kyle Peterson, editing by Matthew Lewis)
 

relief tube

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yay, the one airline this country needs the least is on track to get back to very smart 20% growth again.
 

Full of LUV

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SWA Baby

Really......I would like to know what airline you think this country needs.
Airtran needs to vacate the ATL to make room for the SWA invasion. No code sharing the east coast and make those fat southerners pay DOUBLE!
 

Wesb737fo

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Airtran needs to vacate the ATL to make room for the SWA invasion. No code sharing the east coast and make those fat southerners pay DOUBLE!
On behalf of the 9000 AirTran employees and their families, we would all like to not only wish you a happy thanksgiving, but one worthy of all the admiration and kindness that your warm words of encouragement have conveyed to us here on flight info.

Wow, such humility. I just bet your fellow employees are very proud to have you working with them. You must be revered as one of the most outstanding individuals to ever be hired at SWA. Bravo Sir.....Bravo....YOU are a cut above the rest.

Merry Christmas

Wes
 

Full of LUV

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Wes, don't worry.....

On behalf of the 9000 AirTran employees and their families, we would all like to not only wish you a happy thanksgiving, but one worthy of all the admiration and kindness that your warm words of encouragement have conveyed to us here on flight info.

Wow, such humility. I just bet your fellow employees are very proud to have you working with them. You must be revered as one of the most outstanding individuals to ever be hired at SWA. Bravo Sir.....Bravo....YOU are a cut above the rest.

Merry Christmas

Wes
Wes,
Don't worry, in the spirit of Christmas, SWA will grant preferential interviews to any displaced 737 pilots that have a type rating and aren't completely jaded by the industry.
 

funnyman12

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Being that Airtran average on way fare in the 3rd quarter was a wopping $96 (lower than any other airline by a rediculous amount), a Southwest presence in ATL would probably bring ticket prices up. Best team in management!!! Airtran Wooohooo!!
 

Wesb737fo

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Wes,
Don't worry, in the spirit of Christmas, SWA will grant preferential interviews to any displaced 737 pilots that have a type rating and aren't completely jaded by the industry.

Wow....you are so generous! That's outstanding. We should erect a statue of yourself so that everyone can admire you. Of course we could just move the one that you apparently have in your home.

OK jokes over....hmmm ...B-1900....CRJ.....You must either know me and are attempting to yank my chain or you are just something else.

Either way, I'm sure I can speak for everyone here at AirTran in wishing you a Happy Thanksgiving.

On the other hand, the Fat Southerners wanted me to let you know that you can choke on t*rd as far as they were concerned.
 

Full of LUV

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Chill.....

Wow....you are so generous! That's outstanding. We should erect a statue of yourself so that everyone can admire you. Of course we could just move the one that you apparently have in your home.

OK jokes over....hmmm ...B-1900....CRJ.....You must either know me and are attempting to yank my chain or you are just something else.

Either way, I'm sure I can speak for everyone here at AirTran in wishing you a Happy Thanksgiving.

On the other hand, the Fat Southerners wanted me to let you know that you can choke on t*rd as far as they were concerned.
Chill~~ The article was good news, Airtran isn't going anywhere. I didn't wish their demise, you just asked who should service the south and I think SWA should. Have a great turkey day, and it's time everyone is thankful for the job, family, and life they lead in America.
 

Wesb737fo

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Chill~~ The article was good news, Airtran isn't going anywhere. I didn't wish their demise, you just asked who should service the south and I think SWA should. .....
No I didn't ask that. I am chilled btw.
My first reply was for relief tube who apparently feels that AAI should go away, then you started in with the Fat Southerner deal.
Then I was sure you were a former B1900 First Officer that I flew with many moons ago. Former Air Force wizzo? Is that you Jerry "RTF-TBO"?
 

Full of LUV

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Sorry, not me...Wings of Gold, not lead!

No I didn't ask that. I am chilled btw.
My first reply was for relief tube who apparently feels that AAI should go away, then you started in with the Fat Southerner deal.
Then I was sure you were a former B1900 First Officer that I flew with many moons ago. Former Air Force wizzo? Is that you Jerry "RTF-TBO"?
Sorry, not me...Wings of Gold, not lead! Have a great holiday!
 

Kharma Police

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Airtran needs to vacate the ATL to make room for the SWA invasion. No code sharing the east coast and make those fat southerners pay DOUBLE!
Why don't you change your screen name to "Full of Sh#$". As they say in Mexico (which you will never fly to thanks to your code share), Adios, cabron
 
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Fubijaakr

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Enough
Air Tran's future is bright. As a buyout/merger candidate.
 

Full of LUV

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Man o' Man

Why don't you change your screen name to "Full of Sh#$". As they say in Mexico (which you will never fly to thanks to your code share), Adios, cabron
What the heh? A good article about Airtran is published and someone else says they should perish and a couple of Airtran pilots go off the deep end..... What would have happened if it were negative news? Your right, SWA cant fly across the borders because apparently fat people have the right to a free seat in Canada, hasn't made it to the Mexican courts yet. SWA charges double for wide loads. Have a great turkey day!
 
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