AirTran Reports Fourth Quarter and Full Year 2004 Profit

[STL717]

Press Release Issued January 25, 2005 6:00:00 AM ET

AirTran Holdings Reports Fourth Quarter and Full Year 2004 Profit
- Annual Operating Revenues Exceed $1 Billion -

ORLANDO, Fla., Jan. 25 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc.,
(NYSE: AAI), the parent company of AirTran Airways, Inc., today reported net
income for the quarter ended December 31, 2004, of $1.1 million, or $0.01 per
diluted share, versus net income of $21.7 million, or $0.24 per diluted share
in the year-earlier quarter. Net income for the full year 2004 was $12.3
million or $0.14 per diluted share.
AirTran Airways' non-fuel operating cost per available seat mile (CASM)
fell 6.8 percent to 6.00 cents for the fourth quarter of 2004 compared to 6.44
cents for the year-earlier quarter. Year over year non-fuel CASM decreased
2.3 percent to 6.35 cents.
"We are pleased to report net income for the fourth quarter and full year
2004," said Joe Leonard, AirTran Airways chairman and chief executive officer.
"Our non-fuel unit costs of $0.06 represent an all-time record low for our
airline. I am proud of the effort put forth by every member of the AirTran
Airways team to deliver another quarter of profitability," Leonard said.
During the fourth quarter, AirTran Airways boarded a record 3.5 million
passengers and generated a 22.6 percent increase in revenue passenger miles on
a 23.4 percent increase in capacity or available seat miles. Load factor
declined slightly, 0.5 points to 69.3 percent.
"Our Company was beset by four hurricanes heading into the quarter which
hurt our bookings in October," commented Robert L. Fornaro, AirTran Airways
president and chief operating officer. "However, November and December were
strong enough to offset the earlier weakness allowing us to end the quarter
with healthy load factors. I'm grateful for the hard work and effort of each
and every AirTran Airways Crew Member."
Commenting on the fourth quarter, Stan Gadek, AirTran Airways senior vice
president and chief financial officer, said, "Fourth quarter 2004 and 2003 net
income contain net credit and tax adjustments of $0.8 million and $5.7
million, respectively. Excluding these adjustments net income for the two
periods would be $0.3 million and $16.0 million." He added, "We are beginning
to see the long-term beneficial effects on costs and productivity from our new
Boeing 737-700s and expect the favorable trend to continue."

Recapping the year of 2004, AirTran Airways:
* Added the Boeing 737-700 series aircraft to its fleet
* Took delivery of six Boeing 717 aircraft and eight Boeing 737 aircraft
* Enhanced service to Fort Lauderdale/Hollywood, Dallas/Fort Worth, Los
Angeles, Boston, Akron-Canton, Pittsburgh, Newport News/Williamsburg,
Tampa, LaGuardia, Las Vegas and Baltimore/Washington
* Opened a new aircraft hangar at Hartsfield-Jackson Atlanta
International Airport
* Opened a new Metro Atlanta call center in Carrollton, Ga.
* Named Best Low-Fare airline by Entrepreneur Magazine for 2004
* Opened a new pilot training center in Atlanta
* Became the first airline to install XM Satellite Radio on a commercial
aircraft
* Signed professional football player Michael Vick as an endorser for the
airline
* Secured financing for all 2005 aircraft deliveries
* Ended the year with $342.3 million of cash and investments

Highlights for the quarter include:
* Initiated new service to Sarasota/Bradenton International Airport
* Enhanced service to Newport News/Williamsburg, Tampa and Chicago Midway
* Took delivery of two Boeing 717 aircraft and three Boeing 737 aircraft
bringing our fleet to 87 aircraft
* Reached milestone of hiring of our 1,000th pilot
* Ratified contract with the Transport Workers Union and the
International Brotherhood of Teamsters -- covering dispatchers,
mechanics and related personnel
* Named G. Peter D'Aloia, Senior Vice President and Chief Financial
Officer of American Standard Companies Inc., to the Board of Directors

AirTran Holdings, Inc., will conduct a conference call to discuss
quarterly results today at 10:00 a.m. Eastern. A live broadcast of the
conference call will be available via the internet at http://www.airtran.com.
AirTran Airways, one of America's largest low-fare airlines with 6,000
friendly, professional Crew Members, operates over 500 daily flights to more
than 40 destinations. The airline's hub is at Hartsfield-Jackson Atlanta
International Airport, where it is the second largest carrier. AirTran Airways
recently added the fuel-efficient Boeing 737-700 aircraft to create America's
youngest all-Boeing fleet. The airline is also the first carrier to install XM
Satellite Radio on a commercial aircraft. For reservations or more
information, visit http://www.airtran.com (America Online Keyword: AirTran).

Editor's note: Statements regarding the Company's operational and
financial success, business model, expectation about future success, improved
operational performance and our ability to maintain or improve our low costs
are forward-looking statements and are not historical facts. Instead, they are
estimates or projections involving numerous risks or uncertainties, including
but not limited to, consumer demand and acceptance of services offered by the
Company, the Company's ability to maintain current cost levels, fare levels
and actions by competitors, regulatory matters and general economic
conditions. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is
contained from time to time in the Company's SEC filings, including but not
limited to the Company's annual report on Form 10-K for the year ended
December 31, 2003. The Company disclaims any obligation or duty to update or
correct any of its forward-looking statements.

 

[STL717]

The press release

http://www.prnewswire.com/cgi-bin/micro_stories.pl?ACCT=932993&TICK=AAI&STORY=/www/story/01-25-2005/0002901536&EDATE=Jan+25,+2005

 

[Steeler Fan]

Great news. Thanks for the info STL.

One thing that I've heard from others here is that if you look around, things are getting better here all the time. Hopefully, we can keep it going.

 

[wood pecker]

Any luck or information concerning the online application? None of my friends nor I can get back into the system without getting the CDO error message.


Thanks again

 

[BID]

How much, if any, is fuel fuel hedged at AirTran?

 

[TZFO]

Did that 4Q profit of 1.1mil include the 3.5miil we gave you?

 

[mad691]

Actually it was a wash due to to all the lawyer fees, and processing fee's. pretty much breakeven with the break up fee of 3.5 million.

 

[habubuaza]

Congratulations to you guys at Airtran. I flew Delta yesterday (company travel department takes care of that) and I will say that their service has really taken a nose dive. Still a decent airline but not like before. Anyway I believe that Delta's new fare structure has one goal and one goal only. To put Airtran out of business. So I think there is going to be a major turf battle coming up at ATL. Good luck.
You guys are going to need it. Once again congratulations on your financial performance.

 

[Flying Freddie]

I have a few friends at AirTran. They say the company is asking for give backs on the next contract "because everyone else is". Any comments? No flame just curious.

Nice going on keeping it in the black!

 

[FLB717]

Lets see, DAL lost over 2 BILLION, (yes I know it was in the 3-4 hundred million in real losses, but the mark down in assets hurts the ability to take loans on those remaining assets). It's growing capacity in markets they have more than 80% share of, and the lower fare rates affect 10% of the available seats in the system. So while they are trying hard, the changes will hurt them more than us in the big picture. If anything it push's DAL closer to CH11, unless that is the goal. That will put presure on us as well as USAir. But every bit of growth we do away fom ATL (most is) limits our risk from DAL.

Yeah they (AAI) want a 12% reduction in costs. Everyone ( MGT of all airlines)wants to have a race to the bottom, a game we are NOT interested in playing just for the heck of it. We are in Section 6 now, would you reason they would ask for any thing less. Bob and Joe have yet to take cuts so I guess they don't walk the talk.

 

[atldc9]

They are asking, but I don't think we will be giving. The ATA money was actually more of a benefit, something around $800,000 after all the fees were washed. Looking at it that way, we actually had an operating loss of about $500,000.

Fuel hedging benefits were around $38 million net benefit from hedging for the full year. Another $5.8 million saved from the fuel savings program.

Hedges going forward are pretty slim, 40% @ $0.95 for the 1st quarter, 24% the second, and 14 for the 3rd and 4th.

A pretty good quarter relative to the industry. Relative to any other business, pretty rotten.

 

[FL717]

Always one in the crowd...

Did that 4Q profit of 1.1mil include the 3.5miil we gave you?

Actually I think Southwest "gave" it to us, because I don't believe "you" have any money.

 

[TZFO]

Oh. My fault. I did not know SWA would pay the break-up fee. That's a good deal for us then. More money for corporate retention bonuses. Did SWA also pay the UAL-USair break up fee a few years ago?

 

[DonVerita]

I was at the last union meeting. It is common knowledge that management wants 12% in cost reductions through whatever avenue gets them there...not necessarily from pilot wages. Our negotiating team made it very clear to all in attendance that we WILL NOT participate in the race to the bottom that so many other airlines have been dragged into. Nor will we give concessions. It was pointed out that further efficiencies could be had (aka 12%) by cleaning up certain aspects of the current operation.

I am very happy to see that by management reporting $1 Billion in annual revenue, there can be no doubt that we are now officially a MAJOR airline. While that has no effect on the price of rice down in the bayou, it does foster a broader more global way of thinking and of inclusion.

 

[75M]

Originally posted by TZFO

Did SWA also pay the UAL-USair break up fee a few years ago?

Dude, what's your problem?

 

[TAZ MAN]

I am very happy to see that by management reporting $1 Billion in annual revenue, there can be no doubt that we are now officially a MAJOR airline. While that has no effect on the price of rice down in the bayou, it does foster a broader more global way of thinking and of inclusion.

I think I just threw up a little in my mouth.

 

[DonVerita]

I think I just threw up a little in my mouth.

Isn't your C-152 due for an oil change or something. Go back to playing Microsoft Simulator.

 

[TAZ MAN]

Isn't your C-152 due for an oil change or something. Go back to playing Microsoft Simulator.

Hit a sore spot huh. Hope it didn't hurt too bad. My apologies.

 

[STL717]

I was at the last union meeting. It is common knowledge that management wants 12% in cost reductions through whatever avenue gets them there...not necessarily from pilot wages. Our negotiating team made it very clear to all in attendance that we WILL NOT participate in the race to the bottom that so many other airlines have been dragged into. Nor will we give concessions. It was pointed out that further efficiencies could be had (aka 12%) by cleaning up certain aspects of the current operation.

Preferential Bidding will increase productivity greatly!!!! I've seen it happen.

 

[iflyfred]

I am very happy to see that by management reporting $1 Billion in annual revenue, there can be no doubt that we are now officially a MAJOR airline. While that has no effect on the price of rice down in the bayou, it does foster a broader more global way of thinking and of inclusion.

I think I just threw up a little in my mouth.

 

[Steeler Fan]

Originally posted by TZFO



Dude, what's your problem?

Calm down. I've heard that too much stress will cause your hairline to receed!

 

[lowecur]

Goldman Sachs Analyst Glenn Engel's report

Unless AirTran can work a travel bank deal with DFW, they will face pressure on where to put the 737's. Nice Quarter though. Also, creatively moving maintenance overhauls into the 1st Q of 05 was a big help in showing a profit this Q.

Airtran reported 4Q profits of $300k ($0.00 per share) vs. $0.18, beating our estimate of a loss of -$0.13 and consensus expectations of a loss of - $0.08. Healthy November and
December offset weakness in October (affected by hurricane season) as revenues beat our
estimate by $10mn while costs came in $8mn better than expected. We are raising our
2005 and 2006 ests. from -$0.20 and $0.05 to -$0.05 and $0.20, respectively. Continue to
rate AAI shares underperform (Coverage view: Neutral).
YIELDS STABILIZE IN COMPETITIVE MARKETS: Despite Oct. bookings being
hampered by hurricane season ($3mn-$5mn), strength December and November holiday
months led to better than expected revenue performance in 4Q. Yields declined 5% (vs.
our expectation of down 8%). Unit revenues also exceeded expectations, down only 5%
(vs. our est of down 8%) and improving sequentially from down 6% in 3Q04. Results are
particularly impressive (industry unit revs. down 5%) given AAI's disproportionate
exposure to Florida markets where capacity is up double digits yoy. Unit costs, ex- fuel,
fell 7% in the qtr (vs. our est of down 2%) owing to lower maintenance expense (timing of
overhauls partially responsible).
EXPANSION PLANS UNCLEAR AT THIS POINT: Having lost bid for ATA assets in Chicago to
LUV, AAI will go back to the drawing board, evaluating its plans for expansion. Preliminary prospects include DFW, Philadelphia, Pittsburgh & increased frequency out of Atlanta. We believe that any redeployment of assets from lower yielding East Coast markets would be a positive for
AAI.
FALLING UNIT COSTS OFFSET BY LOWER RASM: With integration of bigger aircraft (737-700s) to its fleet, AAI will enter longer haul markets, raising average stagelength (which was up 5.4% in 4Q04) further in 2005. While unit costs will benefit from this, increased stagelength will negatively weigh on yields. We estimate yields and unit revenues will fall another 5% as a result in 2005. On the cost side, we see CASM falling 3%. AAI is about 23% hedged at $0.98 per gallon for
2005.
CONTINUE TO RATE UNDERPERFORM: With US Airways liquidation looking less likely and
capacity continuing to build at double digit rates in Florida markets (up 13% in Q1 and accelerating to 15% in Q2), which accounts for 45% of AAI revenues, we believe unit revenue declines will continue in 2005. DAL and UAIR capacity adds in AAI mkts do not begin until February. With $340mn in cash, liquidity and staying power is not a problem but consensus estimates will have to
come down in 2005 as decline in unit cost will not be enough to offset unit revenue declines from competitive pricing and increased stagelengths on 737 routes. Labor savings in excess of $1bn at UAIRQ and DAL also narrow cost advantage gap.

 

[UrinalSplashbak]

Our negotiating team made it very clear to all in attendance that we WILL NOT participate in the race to the bottom that so many other airlines have been dragged into.

This might be the most ironic statement in the history of the written word!

I don't know how to tell you this, but not only are you already participating in the race, you helped pull the trigger on the starter's pistol and are currently in the pack of leaders!

 

[DougCorp-9]

How exactly are we pulling the trigger? This is our second contract. It is not like we have been at this for 50 plus years like the Legacy cariers.

 

[Ty Webb]

I don't know how to tell you this, but not only are you already participating in the race, you helped pull the trigger on the starter's pistol and are currently in the pack of leaders!

Spoken like a True Idiot.

Funny, it looks like our pay and work rules are actually better than what pilots are approving for similar equipment at other many carriers. Our twelfth year 737 pay is better than many "Legacy" carriers are paying their senior guys on wide-bodies.

If you need someone to blame, keep looking, jackass, 'cause it isn't us. Not even close.

 

[skykid]

Our negotiating team made it very clear to all in attendance that we WILL NOT participate in the race to the bottom that so many other airlines have been dragged into.

?????

 

[Steeler Fan]

This might be the most ironic statement in the history of the written word!

I don't know how to tell you this, but not only are you already participating in the race, you helped pull the trigger on the starter's pistol and are currently in the pack of leaders!

As opposed to ALPA wanting each MECs negotiating committee to "raise the bar". Yeah, that worked great...oh wait, my friends at DL, NWA, US Airways, UAL, and AA (I know, not ALPA) all were furloughed.

Great looking contract though. Now what do we have? I just saw one of my old DC-9 Capts who is VERY senior and still in the left seat at USAir. We were talking about the future of his company, and then he told me that our Captains at AirTran are making more than he is.

I want AirTran to do well, but I don't see the predominant attitude here as blindly taking paycuts for the company. I also don't see the majority opinion being "let's get the biggest contract we can get and scr@w the company". Obviously, those of us who are here have to think long term. I don't see us leading a race to the bottom. Our union does know that the potential is there for exactly what you say, and I think they're sight picture is pretty accurate.

Time will tell.

UrinalSplashbak--That's pretty funny.