Aitran stock offer.

[gearup5]

From the Atlanta Business Journal:AirTran Holdings Inc., parent of AirTran Airways, has announced that is offering more than 22.3 million shares of common stock at $3.20 per share, pursuant to an underwriting agreement with Morgan Stanley and Credit Suisse.
At the same time, the Orlando-based company (NYSE: AAI) announced pricing for its previously announced offering of $65 million of 5.5 percent convertible senior notes due in 2015.
The notes will be convertible into AirTran common stock at the conversion rate of 260.417 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of about $3.84 per share.
The closing of the notes and common stock offerings is expected to happen April 30.
The proceeds from the sales will be used to buy government securities and general corporate purposes, including working capital, capital expenditures and retirement of debt.

 

[Speedtape]

This is not a good sign! First, the notion to raise cash, and second to make an offer when most institutional investors will not touch airline stocks unless they get steep discounts on the offering because any investement is highly speculative and high risk!

However, the idea of raising cash for any airline at this time should be the number 1 priority! It just may not be possible, given the current conditions!

 

[meanstreak]

Can somebody explain to me why we are doing this?

Do we need money in the bank to stay out of Bankruptcy?

 

[Eagle757shark]

Can somebody explain to me why we are doing this?

Do we need money in the bank to stay out of Bankruptcy?

AirTran needs CASH in the bank to keep from happening to it what occured at Frontier. Once you dip below a certain cash position, the credit card companies will hold the money paid until the date of travel. This would put a strain on our operation and could force Ch. 11. Fuel is continueing to rise. Raising fares will help but it will take time to see the payoff of raising fares. Many folks have already purchased their tickets for the busy summer season. However, fuel has not been purchased for the summer season outside of the hedges. AirTran is attempting to raise cash to stay ahead. The hurricane season is approaching and that is definitely going to be the wild card for all East coast airlines this summer. One major storm in the gulf may put several carriers into bankruptcy. This is real and unfortunately there is no end in site. The best thing is to pray for a strong dollar and oil retreats back down below $100 dollars a barrel. It would also be nice to get a cash infusion from a code partner or merger.

 

[roughneck]

Liquidity is absolutely a huge concern for everyone. Diluting the stock isn't the most desireable thing, but it beats running out of money. It will make AT a huge target for a buyout, but it beats BK.

Probably a good idea for AirTran considering todays environment. You don't have to beat anyone today, you just have to outlast them.

 

[Speedtape]

Liquidity is absolutely a huge concern for everyone. Diluting the stock isn't the most desireable thing, but it beats running out of money. It will make AT a huge target for a buyout, but it beats BK.

Probably a good idea for AirTran considering todays environment. You don't have to beat anyone today, you just have to outlast them.

Your last statment is the strategy! Cash is King!

 

[twepilot]

other businesses that may have been interested are now waiting for us to declare BK. Then they'll swoop in and pick us to pieces.

RV

 

[Eagle757shark]

For AirTran to put its future in the hopes someone will buy them could be fatal. All of the domestic carriers are having issues with high oil prices. AirTran is attempting to do what they can given the high energy prices. Is is to late, time will only tell. The dollar gained strength today on the Euro. Hopefully the dollar will not get any weaker and the price of oil will start to come down a bit.

In the short term I would love to see AirTran make a deal with a international carrier for a code-share type of arrangement. If it means offering a seat on the board of directors for a investment in AirTran and cash infusion (similar to Jetblue and Luftansa), I'm all for it. Europeans can come over here and spend a lot of money given how weak the dollar is. I would like to see AirTran feed them through their domestic network.

Everyone thought JetBlue was silly to enter into a code-share agreement with Luftansa. But the $300 million dollar plus cash infusion now looks like a blessing. JetBlue has approx 1 billion dollars in the bank. Cash is king during these times. An airline their size with a billion dollars in the bank is not bad.

 

[meanstreak]

Didn't Independence Air do something similar right before they went Bankrupt.

 

[~~~^~~~]

This almost happened to Delta during the dark days preceeding bankruptcy. Delta maintained their account standing with American Express by selling ASA and using the money to cover.

 

[acbarney]

Liquidity is absolutely a huge concern for everyone. Diluting the stock isn't the most desireable thing, but it beats running out of money. It will make AT a huge target for a buyout, but it beats BK.

Probably a good idea for AirTran considering todays environment. You don't have to beat anyone today, you just have to outlast them.

Back in 2004 when I briefly worked for ATA, George Mikelsons told this story at a company roadshow

"There is an old joke about two boys who come upon a bear while walking in the forest. "Let's get out of here." said the first boy. "Wait a minute, while I put on my sneakers." said the second. Boy #1 responded, "You're not going to out-run that bear just because you have sneakers on." Boy #2: "I don't have to out-run the bear. I just have to out-run you"

I guess the bear finally caught ATA.

He who has the most cash wins.

 

[airline#5]

This is ATA all over again...just not as fun!?!

 

[bravodude]

LEAR 70 you here? how about pcl 128? Wow no comment from you guys!

 

[Jonny Sacko]

Don't worry about them, worry about that Ray Neigl or whatever his name is. He'll come out with another doozy to try and put the stock away after getting it de-listed, and the next day saying "oh gosh fellas, I guess they're not that bad off". That's what I'm waiting for. After that, he'll move on to another carrier and play the same game to make money for himself, ruining company after company!

 

[Lear70]

LEAR 70 you here? how about pcl 128? Wow no comment from you guys!

Up in Ohio having a mini-vacation with the wife (long weekend, no kids) while going to a buddy's wedding this afternoon. Flying/driving during the day yesterday then out partying last night on the river (wife is still sleeping in so I have a minute).

I've already commented about this in the thread about the airTran 1st quarter loss and 10k.

I'm certain we're simply bolstering our cash position to keep from going anywhere near a level the credit card companies can start screwing with us.

Next quarter they'll probably account for the sale of those 737 delivery slots along with higher load factors for Spring Break and early summer travel which will offset the increase in fuel prices we've been seeing every few weeks and we'll post much lower of a loss, probably pretty close to break-even.

The situation is bad for a LOT of carriers, but the sky isn't falling yet. If this keeps up for another year and they don't start raising prices to compensate for the fuel, then we're going to be having a different discussion...