Newjetjockey
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AirTran mulls protest against United
By Caroline Daniel in Chicago
Published: April 28 2004 0:31 | Last Updated: April 28 2004 0:31
AirTran Holdings, the parent company of low-cost carrier AirTran Airways, is considering whether to lobby against the application by United Airlines for a federal loan guarantee, adding to pressure in Washington as the federal board reviews United's new business plan.
Bob Fornaro, president and chief operating officer, in an interview with the Financial Times, said the Air Transportation Stabilisation Board, which oversees the guarantee process, and the Federeral Reserve, were soliciting opinions from airlines about a United guarantee.
"We are thinking about it right now. They have been spending a lot of money doing Ted, [United's low-cost carrier] that has no competitive value to it, and why should they be using taxpayers' money to fund it? These guys are also getting a lot of help with pensions, and need to stop blaming their problems on 9/11."
United's initial application for a federal loan guarantee was turned down amid concerns about its forecasts and intense lobbying from mainline and low cost airlines. "We argued against it last time, and the legacy carriers lobbied as well, but this time around fewer legacy carriers are with us. Now it is just a handful of low-cost carriers. We are trying to figure out if the loan is inevitable or not," said Mr Fornaro.
AirTran competes directly with Delta and US Airways, and on Tuesday reported a doubling of net income to $4.1m, on revenues up 16 per cent at $241m.
Mr Fornaro said that transcontinental routes in the US, were the "biggest problem for the legacy carriers. It is the most competitive market place in 20 years. There was a thought that from a brand perspective customers wanted to choose traditional carriers [for these longer routes], but now the quality of LCCs is equal to or better than them."
Last year AirTran, which currently operates Boeing 717s, underscored its ambitious growth plans of expanding by about 20 per cent a year with an order for 100 more Boeing aircraft. It will take the first new 737 in June.
"Low-cost carriers tend to buy at the bottom of the market, while traditional carriers buy at the top of the cycle, so we had a competitive advantage in buying aircraft,? he said. Although AirTran is a significant Boeing customer, and Boeing this week said a number of low cost carriers were looking at its 7E7, its new mid-sized aircraft, Mr Fornaro did not expect to be an early customer.
"Our prospects are best in mid-haul routes and our competitive advantage on longer haul routes is less. We are a couple of years away from looking at a new aircraft, but I'm glad that Boeing is getting the aircraft launched."
Mr Fornaro said AirTran did not intend to add more new cities this year, but conceded there were growing competitive pressures as other airlines add more capacity. Southwest, for example, has rapidly expanded its plans for Philadelphia, an airport that AirTran has also been targeting
By Caroline Daniel in Chicago
Published: April 28 2004 0:31 | Last Updated: April 28 2004 0:31
AirTran Holdings, the parent company of low-cost carrier AirTran Airways, is considering whether to lobby against the application by United Airlines for a federal loan guarantee, adding to pressure in Washington as the federal board reviews United's new business plan.
Bob Fornaro, president and chief operating officer, in an interview with the Financial Times, said the Air Transportation Stabilisation Board, which oversees the guarantee process, and the Federeral Reserve, were soliciting opinions from airlines about a United guarantee.
"We are thinking about it right now. They have been spending a lot of money doing Ted, [United's low-cost carrier] that has no competitive value to it, and why should they be using taxpayers' money to fund it? These guys are also getting a lot of help with pensions, and need to stop blaming their problems on 9/11."
United's initial application for a federal loan guarantee was turned down amid concerns about its forecasts and intense lobbying from mainline and low cost airlines. "We argued against it last time, and the legacy carriers lobbied as well, but this time around fewer legacy carriers are with us. Now it is just a handful of low-cost carriers. We are trying to figure out if the loan is inevitable or not," said Mr Fornaro.
AirTran competes directly with Delta and US Airways, and on Tuesday reported a doubling of net income to $4.1m, on revenues up 16 per cent at $241m.
Mr Fornaro said that transcontinental routes in the US, were the "biggest problem for the legacy carriers. It is the most competitive market place in 20 years. There was a thought that from a brand perspective customers wanted to choose traditional carriers [for these longer routes], but now the quality of LCCs is equal to or better than them."
Last year AirTran, which currently operates Boeing 717s, underscored its ambitious growth plans of expanding by about 20 per cent a year with an order for 100 more Boeing aircraft. It will take the first new 737 in June.
"Low-cost carriers tend to buy at the bottom of the market, while traditional carriers buy at the top of the cycle, so we had a competitive advantage in buying aircraft,? he said. Although AirTran is a significant Boeing customer, and Boeing this week said a number of low cost carriers were looking at its 7E7, its new mid-sized aircraft, Mr Fornaro did not expect to be an early customer.
"Our prospects are best in mid-haul routes and our competitive advantage on longer haul routes is less. We are a couple of years away from looking at a new aircraft, but I'm glad that Boeing is getting the aircraft launched."
Mr Fornaro said AirTran did not intend to add more new cities this year, but conceded there were growing competitive pressures as other airlines add more capacity. Southwest, for example, has rapidly expanded its plans for Philadelphia, an airport that AirTran has also been targeting