Flying Freddie
Bitchin' Blue
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- Dec 30, 2002
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Reuters
UPDATE - AirTran quarterly profit falls but beats estimates
Tuesday July 27, 3:24 pm ET
By Jui Chakravorty
(Adds details throughout, analyst quotes, stock activity, COO quotes)
NEW YORK, July 27 (Reuters) - AirTran Holdings Inc. (NYSE:AAI - News), parent of low-cost carrier AirTran Airways, on Tuesday said its quarterly net profit plunged, hurt by high fuel prices and a competitive environment.
Still, Orlando, Florida-based AirTran, which has its main hub in Atlanta, beat Wall Street estimates by a pennand said it expects to remain profitable in the third and fourth quarters.
AirTran reported net income of $16.8 million, or 18 cents a share, down from $57.2 million, or 74 cents a share, a year earlier. AirTran is one of three U.S. airlines to post a profit for at least nine consecutive quarters. JetBlue and Southwest are the others.
Analysts, on average, expected 17 cents a share, according to Reuters Estimates.
AirTran shares were down 5 cents to $11.48 in midafternoon trading.
"AirTran faces a challenging competitive environment, but we believe the long-term fundamental opportunities for the company are intact," Lehman Brothers analyst Gary Chase wrote in a research note. "We find the shares compelling in light of recent price declines."
Neither Lehman nor Chase have a banking relationship with AirTran Airways.
COMPETITION, COSTS CLOUD SKIES
The carrier, which faces stiff competition from Delta Air Lines (NYSE:DAL - News) in Atlanta, AMR Corp.'s (NYSE:AMR - News) American Airlines in Dallas and Southwest Airlines (NYSE:LUV - News) in Philadelphia, is now facing pressure from Independence Air in Washington, D.C.
Low-fare Independence Air, with its hub at Washington's Dulles Airport, was launched earlier this year by Atlantic Coast Airlines Holdings (NasdaqNM:ACAI - News).
"They (Independence Air) have been very aggressive with the startup, offering extremely low fares," AirTran's Chief Operating Officer Bob Fornaro said in an interview on Tuesday. "The fares are below the prevailing fares in the marketplace."
Fornaro said Independence was putting pricing pressure on east coast routes, as well as non-stop flights between Atlanta and Washington D.C.
Operating revenue rose to $275 million from $233.9 million a year earlier. Fornaro said the airline would be profitable in the third and fourth quarters but cautioned the third-quarter would be "very challenging" because of excess capacity and limited demand.
"The capacity is not sustainable," Fornaro said about the industry in general. "High fuel prices will exacerbate losses. Most businesses will have to restructure eventually."
CUT COSTS, CAPACITY
AirTran, which has partnerships with Air Wisconsin and Ryan International to operate flights on certain routes, plans to end those relationships in July and November respectively and begin flying its own planes.
The airline said it expects its load factor, or percentage of seats filled, to fall in the third quarter, with a particularly steep drop in August.
"The main problem is capacity," said Fornaro. "The reason fare hikes don't stick is excess capacity." AirTran plans to cut capacity by dropping service to Greensboro, North Carolina and Tallahassee, Florida.
AirTran, with the youngest all-Boeing fleet in the United States, has ordered 100 Boeing (NYSE:BA - News) 737s. It took delivery of two of the planes, designed for longer flights, in the second quarter. Lehman analyst Chase said these planes are 10 to 15 percent more fuel-efficient than 717s, which constitute the bulk of the airline's fleet.
UPDATE - AirTran quarterly profit falls but beats estimates
Tuesday July 27, 3:24 pm ET
By Jui Chakravorty
(Adds details throughout, analyst quotes, stock activity, COO quotes)
NEW YORK, July 27 (Reuters) - AirTran Holdings Inc. (NYSE:AAI - News), parent of low-cost carrier AirTran Airways, on Tuesday said its quarterly net profit plunged, hurt by high fuel prices and a competitive environment.
Still, Orlando, Florida-based AirTran, which has its main hub in Atlanta, beat Wall Street estimates by a pennand said it expects to remain profitable in the third and fourth quarters.
AirTran reported net income of $16.8 million, or 18 cents a share, down from $57.2 million, or 74 cents a share, a year earlier. AirTran is one of three U.S. airlines to post a profit for at least nine consecutive quarters. JetBlue and Southwest are the others.
Analysts, on average, expected 17 cents a share, according to Reuters Estimates.
AirTran shares were down 5 cents to $11.48 in midafternoon trading.
"AirTran faces a challenging competitive environment, but we believe the long-term fundamental opportunities for the company are intact," Lehman Brothers analyst Gary Chase wrote in a research note. "We find the shares compelling in light of recent price declines."
Neither Lehman nor Chase have a banking relationship with AirTran Airways.
COMPETITION, COSTS CLOUD SKIES
The carrier, which faces stiff competition from Delta Air Lines (NYSE:DAL - News) in Atlanta, AMR Corp.'s (NYSE:AMR - News) American Airlines in Dallas and Southwest Airlines (NYSE:LUV - News) in Philadelphia, is now facing pressure from Independence Air in Washington, D.C.
Low-fare Independence Air, with its hub at Washington's Dulles Airport, was launched earlier this year by Atlantic Coast Airlines Holdings (NasdaqNM:ACAI - News).
"They (Independence Air) have been very aggressive with the startup, offering extremely low fares," AirTran's Chief Operating Officer Bob Fornaro said in an interview on Tuesday. "The fares are below the prevailing fares in the marketplace."
Fornaro said Independence was putting pricing pressure on east coast routes, as well as non-stop flights between Atlanta and Washington D.C.
Operating revenue rose to $275 million from $233.9 million a year earlier. Fornaro said the airline would be profitable in the third and fourth quarters but cautioned the third-quarter would be "very challenging" because of excess capacity and limited demand.
"The capacity is not sustainable," Fornaro said about the industry in general. "High fuel prices will exacerbate losses. Most businesses will have to restructure eventually."
CUT COSTS, CAPACITY
AirTran, which has partnerships with Air Wisconsin and Ryan International to operate flights on certain routes, plans to end those relationships in July and November respectively and begin flying its own planes.
The airline said it expects its load factor, or percentage of seats filled, to fall in the third quarter, with a particularly steep drop in August.
"The main problem is capacity," said Fornaro. "The reason fare hikes don't stick is excess capacity." AirTran plans to cut capacity by dropping service to Greensboro, North Carolina and Tallahassee, Florida.
AirTran, with the youngest all-Boeing fleet in the United States, has ordered 100 Boeing (NYSE:BA - News) 737s. It took delivery of two of the planes, designed for longer flights, in the second quarter. Lehman analyst Chase said these planes are 10 to 15 percent more fuel-efficient than 717s, which constitute the bulk of the airline's fleet.
