Part 2
Road to recovery
Key to the recovery plan was forging a tighter relationship with Boeing Co., which helped finance the airline's purchase of 717s in exchange for an equity stake in the company. The last of AirTran's older DC-9s will be phased out next year, leaving it with nothing but 717s.
When the transition is complete, AirTran says, it will have the industry's youngest fleet.
"It was a very important piece of changing the image of the airline," said Fornaro, who lives in McLean, Va., and commutes by plane to company headquarters in Orlando every week. "It clearly disassociates ourselves with ValuJet."
Rick Pedra, AirTran's Baltimore maintenance manager, talks about the Boeing plane as if it were a high-performance minivan.
He points out the plane's two Rolls-Royce engines, Goodyear tires, roomy bathrooms and spacious overhead storage bins.
"The new aircraft has really made a difference on the product," he said, taking a walk around an 8-month-old 717 parked at BWI last week.
When he gets to the forward cargo hold, Pedra casually notes the up-to-date fire suppression system, a requirement on airliners as a result of the ValuJet disaster.
"A lot of mistakes that we learned from that [accident] were basically passed on to all the major airlines," said Pedra, who worked for ValuJet before it became AirTran.
Analysts agree the 117-seat plane deserves substantial credit for the company's turnaround. The 717 uses 24 percent less fuel and, by virtue of being new, saves the company on maintenance costs.
By flying one type of airplane, the company will save money on employee training and will eliminate the expense of stockpiling parts for several aircraft types. It's a formula Southwest has used for years.
"They reclaimed their reputation for maintenance and safety" under Leonard, said Ray Neidl, an airline analyst with Blaylock & Partners LLP. AirTran is one of three airlines whose stock Neidl rates a "buy."
AirTran squeezes the most out of its new planes by avoiding the work rules that have hamstrung major carriers such as bankrupt US Airways and financially troubled United Airlines. Pilots at the carrier average 65 to 70 hours in the air a month, compared with an estimated 50 hours a month at major network airlines, Neidl wrote in a research report on AirTran.
Pay is generally lower than at major airlines, but some employees consider lower pay preferable to lower job security.
"For me, it reflects on a healthy company," said Smith, who joined AirTran as a pilot after his former employer, Sun Country Airlines, fell on hard times. "How many airlines have I been through? Do I want to see another one go away?"
New employees are required to undergo cross-training to increase efficiency. For example, those who work below the wing are expected to head upstairs and help check in passengers if ticket agents get swamped.
Similarly, supervisors and ticket agents are expected to help load luggage if the need arises. Even the airline's unionized machinists have been known to load bags in a pinch.
"They've done it on many, many occasions," said Michael Kopay, AirTran's BWI station manager.
Leonard came to the carrier with a reputation as a heavy when it came to dealing with unions at now-defunct Eastern Airlines. But that image seems to have been extinguished over the past few years. He and other senior management meet with employees throughout the airline's system quarterly to discuss everything from finances to employee complaints.
When the terrorist attacks last year sent the industry into a tailspin, the airline's unions readily negotiated temporary pay cuts to help see the airline through the crisis. Within a week of the attacks, the in-house pilots union accepted short-term salary reductions and changes in minimum flying guarantees that reduced pilot-related costs by 22 percent.
Teamsters Local 528, which represents the airline's mechanics, inspectors, ground-support mechanics and stores clerks, accepted a shortened workweek and other concessions that shaved costs by 21 percent. The reductions were reversed within a few months.
"That was done like that," Pedra said, snapping his fingers. "The employees actually went to the president and said, 'Hey, we'll do this,' and it helped out the airline immensely and we didn't lay off one mechanic."
The airline's quick recovery has allowed it to begin service in eight more cities in the past year, including Baltimore, which the carrier began serving in December, right after Arlington, Va.-based US Airways closed its BWI-based MetroJet service as part of a cost-cutting move.
Revenue guarantees have been key to expansion in cities that lack low-fare service. In exchange for AirTran's commitment to begin service to Wichita, Kan., in May, city officials agreed to defray start-up costs by covering the airline's losses for up to $3 million a year for two years, said AirTran spokesman Tad Hutcheson.
With the economy struggling, the carrier tapped those funds this year. The limit was reached by September.
"We knew we would lose money going in," Hutcheson said. Cities still win, he said, because AirTran forces other carriers to lower their fares by as much as 50 percent to compete.
Partnerships
The company has negotiated such public-private partnerships in nine cities. Maryland has paid $100,000 in the past year to help promote AirTran's flights, but transportation officials did not provide a revenue guarantee. Hutcheson said no guarantee was necessary in Baltimore because the carrier was able to immediately pick up established low-fare routes vacated when US Airways killed BWI's MetroJet service.
"It was a mature enough market," Hutcheson said. "It wasn't as risky."
Analysts say such arrangements, which have been questioned by some taxpayers, are a critical part of the airline's aggressive growth strategy.
In an interview after AirTran's third-quarter earnings report, Leonard talked about increasing the frequency of flights to cities on the East Coast and expanding the airline's Atlanta hub. Preparations are being made to begin flying coast-to-coast by extending the 717's range with added fuel tanks or buying a new, longer-range plane.
"They will forever have to live in the shadow of ValuJet to some extent, although there is nothing about the company now that I can see that is ValuJet," said Klaskin. "There's no ValuJet legacy there."