AirTran Net Income of $134.7 Million for 2009

[maxblast72]

Max, attributing half of the wages to the pilots was a little generous, I would say more like 1/4 to 1/3. And with an ave. pay raise of 20% between Ca and Fo's, I come out with around 30 mil. The point I was trying to make is that low pilot wages was not the reason AAI made a profit last year.

Airtran's total labor costs are a little under under $500 million per year and the pilots get a little over $200 million, so you can figure between 40-45% of Airtran's total labor costs are due to the pilots.

BTW, looking at the projections (if they are correct) for Q1, we should make an operating profit around $ 46 mil.

I am not sure where you get that operating profit of $46 million.

Using the Q1 2010 projections from last weeks 8-K:

Capacity = Up 7-8%
TRASM = Up 2.5-3.5%
Nonfuel CASM = Up 2.5-3%
All in fuel cost = $2.25-2.30 gal

I calculated a breakeven at the operating level which results in a net loss of around $20 million (the average estimate of 10 Wall St analysts for us is a loss of 8 cents per share according to Yahoo Finance).

According to the projections, our revenue will be up $60 million year over year due to 7-8% capacity increase and 2.5-3.5% TRASM increase. But our fuel cost are going up $70 million (due to capacity growth and price increase from $1.62 last year to $2.25-2.30 this year). Also, our nonfuel costs are going up $37 million (due to 2.5-3% nonfuel CASM increase and capacity growth). The $107 million in increased costs overrides our $60 million revenue increase and takes us from an operating profit of $47 million in Q1 2009 to a breakeven Q1 2010.

 

[Wesb737fo]

Airtran's total labor costs are a little under under $500 million per year and the pilots get a little over $200 million, so you can figure between 40-45% of Airtran's total labor costs are due to the pilots.

I am not sure where you get that operating profit of $46 million.

Using the Q1 2010 projections from last weeks 8-K:

Capacity = Up 7-8%
TRASM = Up 2.5-3.5%
Nonfuel CASM = Up 2.5-3%
All in fuel cost = $2.25-2.30 gal

I calculated a breakeven at the operating level which results in a net loss of around $20 million (the average estimate of 10 Wall St analysts for us is a loss of 8 cents per share according to Yahoo Finance).

According to the projections, our revenue will be up $60 million year over year due to 7-8% capacity increase and 2.5-3.5% TRASM increase. But our fuel cost are going up $70 million (due to capacity growth and price increase from $1.62 last year to $2.25-2.30 this year). Also, our nonfuel costs are going up $37 million (due to 2.5-3% nonfuel CASM increase and capacity growth). The $107 million in increased costs overrides our $60 million revenue increase and takes us from an operating profit of $47 million in Q1 2009 to a breakeven Q1 2010.

You're right, I did the gas wrong. Well, I'm winging here in the MKE hotel using the the AirTran filing. I show the ave. gas price at 1.87 for 2009, where did you see $1.62? At 2.27 projected, that is around a 20% increase over 1.87. I erred when converting that into fuel casm. I figured fuel casm 3.06 cents and I should have around 3.5. Once again, my point is that non-fuel casm doesn't go up that much for an industry standard contract.

Regardless, it's been the same contract for 9 years, pay us the frikin' money and RAISE THE TICKET PRICES a couple of bucks. I'm tired of paying for AAI's fuel.

 

[maxblast72]

You're right, I did the gas wrong. Well, I'm winging here in the MKE hotel using the the AirTran filing. I show the ave. gas price at 1.87 for 2009, where did you see $1.62? At 2.27 projected, that is around a 20% increase over 1.87. I erred when converting that into fuel casm. I figured fuel casm 3.06 cents and I should have around 3.5.

$1.62/gallon was our economic all-in fuel cost for Q1 2009 per gallon. $1.87 was the price for the entire year. When figuring fuel costs for Q1 2010, take the gallons burned for Q1 2009 times 1.075 (7.5% increase in capacity increases gallons burned by roughly the same percent) and then multiply by the estimated Q1 2010 all-in fuel price. As you can see, we go from roughly $135 million fuel bill in Q1 2009 to a fuel bill of roughly $205 million in Q1 2010.

In this economy, Airtran can be really profitable when Jet A is in the $1.60-$1.80 range. In the $2.30 range, we drop down to breakeven. Look for a double dip recession to benefit to help Airtran as fuel prices drop again. Oil down 10-15% in the last month as Wall St. retreats from its highs. If we don't get the double dip, we should be OK with TRASM increases (due to limited capacity additions industrywide) overcoming the fuel prices in the $2.30 range.

Regardless, it's been the same contract for 9 years, pay us the frikin' money and RAISE THE TICKET PRICES a couple of bucks. I'm tired of paying for AAI's fuel.

That is why we are trying to develope markets where we are the largest player (ie more than 75% of the marketshare). Alot of our newest Florida nonstops are markets where we are the only player nonstop giving us good pricing power.

 

[pipejockey]

but if you think that profits are strictly driven by pilot pay, you need to look at some 10K filings and learn how to read them.

I wholeheartedly agree! I was merely trying to make clear how horribly underpaid you AirTran Pilots are, especially the 737 pilots. I am quite certain that many of you would be shocked at just how little fares would need to increase to get back 2001 pay rates, adjusted for inflation of course.

On a side note. Management makes it abundantly clear why they believe pilots should not be paid what they were in the 1970's, and even worse, they don't even think we deserve the pay we had in 2001. But I have not heard one reasonable justification for the kind of pay and bonuses upper management and the executives get. The average Executive was paid about 40 times that of average labor in the 1970's, now they are paid 400 times that of their average labor! It seems to me that the ratio should have stayed the same throughout. It seems as if the financial blow in corporate america is always landed on the chin of labor and never shared equally by management.

 

[rajflyboy]

As bad a connection as Delta is in ATL I can fully understand why Air Tranny is doing well.

For the past 8 months or so I have mostly airlined to and from work on either Delta or Air Tran. Delta is averaging 3 out of every 4 times either late out of ATL or I misconnect because my first flight into ATL is delayed.

So far I have not had this problem on Air Tran. They have been on time with no misconnects.

 

[Wesb737fo]

I wholeheartedly agree! I was merely trying to make clear how horribly underpaid you AirTran Pilots are, especially the 737 pilots. I am quite certain that many of you would be shocked at just how little fares would need to increase to get back 2001 pay rates, adjusted for inflation of course.

On a side note. Management makes it abundantly clear why they believe pilots should not be paid what they were in the 1970's, and even worse, they don't even think we deserve the pay we had in 2001. But I have not heard one reasonable justification for the kind of pay and bonuses upper management and the executives get. The average Executive was paid about 40 times that of average labor in the 1970's, now they are paid 400 times that of their average labor! It seems to me that the ratio should have stayed the same throughout. It seems as if the financial blow in corporate america is always landed on the chin of labor and never shared equally by management.

True, since I have began looking " under the hood " recently, I can definitely say that AAI and RAH people are underpaid for what we do. However, I think most airline pilots with the exception of a well known few are vastly underpaid.

I would encourage anyone who has an airline job to look closely at the sec filings for his or her company and KNOW what he/she is really worth, DEMAND it, and ACCEPT nothing less. (Sorry to steal KDA from some former colleagues)

 

[Dooker]

Sounds like now is the time to get on at AirTran. Increasing capacity, new contract just around the corner, very few grayhairs on the payroll.

What's not to like?

 

[Secret Squirrel]

Those are the reasons I got on here. Has not worked out like I thought. I would be careful If lots of upgrades and a good contract right around the corner are your prerequisites.

 

[maxblast72]

With very few retirements over the next 10 years and over 700 First Officers at Airtran, it will take 130-140 aircraft deliveries (we have 5 bidding captains per airplane) to get new hires into the left seat. It will take a long time for new hires to get to the left seat (of course same could be said about any other airline - Southwest has almost 3,000 First Officers although they have more old guys than us).

 

[Colonel Savage]

AAI would have to average 12% per annum growth over 6 years, or 6% growth over 12 years to double in size, and provide a new hire at year one of the cycle an upgrade.

Feel free to interpolate between the numbers to estimate for the duration of your choice, but they are not linear, as compounding is involved.

 

[maxblast72]

AAI would have to average 12% per annum growth over 6 years, or 6% growth over 12 years to double in size, and provide a new hire at year one of the cycle an upgrade.

Ah, the old rule of 72 for investment doubling timeline (can be substituted for upgrade projections obviously).

 

[Colonel Savage]

Yes, can be used as a rule of thumb for many things.

 

[maxblast72]

Except using the published aircraft delivery schedule through 2016, the average growth is probably going to be closer to 6% cause a timeline of 12 years to double in size. The bottom 400 FOs at Airtran (currently) need to plan on still being in the right seat at the end of 2016 (after our remaining 55 737s deliveries) and vote on the next TA based on those projections. That means some guys hired in 2006 at Airtran will still be in the right seat (10th year FOs).

 

[Colonel Savage]

Regardless of what happens to the economy/industry, IMO AAI will outperform virtually every other major airline in the US in terms of growth, including SWA, so long as you protect your scope.

 

[relief tube]

Nice work fellas.

I haven't jumped on you guys in a while. How are things coming with contract and pay increases?

uhhhh....not good- thus the large profit management made.