Tranny Loses 13 Million

[Colonel Savage]

Tuesday, July 29, 2008 - 8:04 AM EDT


AirTran loss at $13.5 million in second quarter


Atlanta Business Chronicle



Record high fuel costs and an impairment charge kept AirTran Holdings Inc. in the red in the second quarter.
The Orlando, Fla.-based airline had a net loss of $13.5 million and a loss of 12 cents a share, compared with net income of $42.1 million and earnings of 42 cents a share in the second quarter of 2007. Revenue for the second quarter was up 13 percent to $693.4 million.
The average price per gallon of fuel rose 70.5 percent to $3.75 in the second quarter, compared with $2.20 in the second quarter of 2007. Total fuel expense was $368 million, up $167 million from the prior year.
AirTran (NYSE: AAI), which hubs at Hartsfield-Jackson Atlanta International Airport, said its fuel hedging program has helped mitigate rising fuel costs but has not prevented the adverse impact of higher fuel prices. During the second quarter, AirTran logged $51 million in net gains related to its fuel hedging program.
The results for the second quarter of 2008 also include an $8.4 million goodwill impairment charge.
"As in recent quarters, AirTran Airways posted record revenues, but the steep increase of fuel costs is still an enormous challenge for the entire airline industry and revenue gains are not keeping pace with the all-time high fuel costs," said Bob Fornaro, AirTran Airways chairman, president and CEO, in a press release. "To combat the difficult fuel environment and carry us through future challenges, we are focused on creating a sustainable and profitable position for our airline... We are maintaining our focus on the quality of our operation while reducing costs, deferring aircraft deliveries, cutting capacity, and improving efficiencies as well as raising capital.”
AirTran’s cost cuts include the recent announcement the airline will slash employee pay by 5 to 15 percent starting in August. Senior corporate officers will have their pay cut by 15 percent, while mid-level employees will see their pay reduced between 5 and 11 percent.

 

[~~~^~~~]

Tuesday, July 29, 2008 - 8:04 AM EDT


AirTran loss at $13.5 million in second quarter
The results for the second quarter of 2008 also include an $8.4 million goodwill impairment charge.

So they lost about $5 million? Not bad, really.

Looks like they are seeking justification for pay cuts, rather than citing any real need. Might as well get pay cuts while the mood is all doom and gloom, 'eh?

 

[Max Powers]

So they lost about $5 million? Not bad, really.

Looks like they are seeking justification for pay cuts, rather than citing any real need. Might as well get pay cuts while the mood is all doom and gloom, 'eh?

Keep in mind this is the quarter we are supposed to do the best and make a profit to make up for the usual losses in the next 2 to 3 quarters.

 

[ACL65PILOT]

True, but it is a lot less than it could have been.

 

[Ty Webb]

Uh, yeah . . . I'll be getting my pay "slashed" . . . .

Don't know any pilots willing to vote for that one, but I do appreciate management offering us such a handy means of showing how much goodwill they have destroyed over the past three years.

 

[airlinepilot]

5 mil doesn't even justify a pay cut....small beans.

 

[lowecur]

Fornaro will have to hope oil heads lower and stays there for a few years. If it doesn't, then he will have no choice but to cut his fleet way down. The tough part of waiting to make the move is trying to sell the 737's as the 717 is not saleable. Waiting till the middle of next year will find even fewer buyers in the world market than today, and those willing will be in the catbird seat.

Personally, I think it's a foregone conclusion. Even with oil at $80 bbl, very few will have the $$$ to go anywhere next year or 2010. The legacy's will somehow hang on (they always do), as the low cost carriers struggle to hang in there. Even the mighty WN will find the going tough if oil is at $80 bbl for a few years, and the economy in a tailspin.

The poor folks over a FRNT could be a real crystal ball for the rest of of the low cost carriers. Last minute infusions by invest people are really a last resort idea. It's much easier to take the hit a year or two in advance in small increaments, rather than taking one big hard hit. It will be interesting to see what kind of a final paycut will be mandated to survive, and whether the union will endorse it.
imp:

 

[Citrus531]

I heard today that if the AT pilots, FA's, Mx guys and dispatchers do vote down the pay cuts officially, the rest of us non-union folks won't get the 5%-15% pay cuts afterall. They'll just start parking airplanes/selling planes and letting people go right now as opposed to later.

Because in the "special a-line" newsletter sent out to us by Bob a month ago when the cuts were announced said they'd look at the numbers 5-6 months from now and see how these paycuts have "helped" before making another decision on the matter(i.e. more pay cuts or job elimination)I know they have to get the savings somewhere.....gotta love the airline mgmt. ....I'm thinking the fall could be rough!

 

[Eagle757shark]

I heard today that if the AT pilots, FA's, Mx guys and dispatchers do vote down the pay cuts officially, the rest of us non-union folks won't get the 5%-15% pay cuts afterall. They'll just start parking airplanes/selling planes and letting people go right now as opposed to later.

Because in the "special a-line" newsletter sent out to us by Bob a month ago when the cuts were announced said they'd look at the numbers 5-6 months from now and see how these paycuts have "helped" before making another decision on the matter(i.e. more pay cuts or job elimination)I know they have to get the savings somewhere.....gotta love the airline mgmt. ....I'm thinking the fall could be rough!

SORRY, but history shows you CANNOT SHRINK to Profitability! Today they indicated they would begin shrinking the Atlanta hub. They also said that the Teamsters voted down pay cuts and they would come asking again. They said if they didn't get the cuts they would shrink further and lay off more folks! Well, that will not work! Now here comes the SCARE everyone into concessions tactic! I tell you Delta and Southwest DARE AirTran to start shrinking in Atlanta. Any attempt to shrink in Atlanta could invite the same expansion for Southwest in Atlanta that they have taken on in Denver! Once Southwest smells blood, they are like a pack of wolves. If Southwest is given an opportunity to move into Atlanta, well we all know what may happen. It is time those Master degrees and bonus' start being earned!

Waiting for another airline to fail is not a business plan. Asking the employees to pay for fuel is not a business plan. Every revenue raising option has not been sought at AirTran and it must! They did mention moving into Cancun and other carribean cities.

 

[Eagle757shark]

By KELLY YAMANOUCHI
The Atlanta Journal-Constitution
Published on: 07/29/08
AirTran Airways plans to shrink its Atlanta hub as high oil costs put pressure on the airline, the company's executives said Tuesday.
[ Post your comments below. ]
High oil prices mean it makes less sense to fly "lower-yielding leisure customers," AirTran's Chief Financial Officer Arne Haak said during an investor conference call. "This will result in our Atlanta hub getting smaller."
The Orlando-based airline has rapidly grown its Atlanta hub in recent years, bringing in more price competition against market leader Delta Air Lines.
"We created the market in Atlanta for low fares, for close-in regional business fares," AirTran Chief Executive Bob Fornaro said during the conference call. "Quite frankly, those average prices need to come up." When prices go up, the market will contract, and Fornaro said the number of flights AirTran has this summer is "too much."
Aside from cutting back in Atlanta, the airline also expects to close more operations in other cities it serves.
Fornaro also said that mechanics represented by the Teamsters have voted against a proposed pay cut. AirTran announced earlier this month that it plans to cut employee pay by 5 percent to 15 percent.
"Over time we will go back again to the Teamsters," Fornaro said. Haak said if the airline is not successful in cutting pay, it will need to reduce its fleet further, "and that will result in more terminations."
AirTran reported Tuesday that it lost $13.5 million in the second quarter and will cut flight capacity by 7 percent to 8 percent in the last four months of this year and by 4 percent to 8 percent in 2009 — steeper cuts than previously planned. Fornaro hopes to increase that capacity cut to as much as 10 percent, depending on how many planes the airline can sell off. The company also is deferring deliveries of four more aircraft from Boeing — for a total of 22 deferrals.
Though the airline is cutting back its operations, Fornaro said the airline may consider adding international routes such as to Cancun or to places in the Caribbean.

 

[Citrus531]

SORRY, but history shows you CANNOT SHRINK to Profitability! Today they indicated they would begin shrinking the Atlanta hub. They also said that the IAM voted down pay cuts and they would come asking again. They said if they didn't get the cuts they would shrink further and lay off more folks! Well, that will not work! Now here comes the SCARE everyone into concessions tactic! I tell you Delta and Southwest DARE AirTran to start shrinking in Atlanta. Any attempt to shrink in Atlanta could invite the same expansion for Southwest in Atlanta that they have taken on in Denver! Once Southwest smells blood, they are like a pack of wolves. If Southwest is given an opportunity to move into Atlanta, well we all know what may happen. It is time those Master degrees and bonus' start being earned!

Waiting for another airline to fail is not a business plan. Asking the employees to pay for fuel is not a business plan. Every revenue raising option has not been sought at AirTran and it must! They did mention moving into Cancun and other carribean cities.

Yeah i just found the quote/article in the AJC...

"Over time we will go back again to the Teamsters," Fornaro said. Haak said if the airline is not successful in cutting pay, it will need to reduce its fleet further, "and that will result in more terminations."

"We created the market in Atlanta for low fares," AirTran Chief Executive Bob Fornaro said during the conference call. "Quite frankly, those average prices need to come up." When prices go up, the market will contract, and Fornaro said the number of flights AirTran has this summer is "too much."

It's amazing to look at the #'s from a year ago...what a diff..

 

[Eagle757shark]

When they start cutting flights in Atlanta, what do you think Delta will do? It is time this management start thinking outside the box. Every major airline in the US, including Southwest, has joined a code share alliance with a international carrier except AirTran. With a weak US dollar and people from overseas looking to come to the US to spend money, why isn't AirTran looking abroad? Is it time to start charging for that first bag? Is it time to raise fares an additional $24 dollars to break even? Is it time to find a international code share partner to feed your hub? The old 1980s and 1990s tactic of coming to the employees to raise revenue is a old tactic that just doesn't work anymore. With the internet employees are much more savvy to what's happening around them and just won't stand for giving up pay.

 

[Eagle757shark]

AirTran expects to end the year with 139 aircraft, compared to a previous projection of 147 aircraft.
Haak said the capacity reductions will result in the airline's Atlanta hub "getting smaller."
Earlier this month, AirTran said it wanted to cut its overall employee pay by about 10 percent to help offset soaring fuel prices
Fornaro said Tuesday that the airline's mechanics recently voted down the pay cuts related to them. The union representing the airline's pilots has not put it to a vote, he said. About 50 percent of AirTran employees are represented by unions.
Fornaro told The Associated Press that the dissent among some employees regarding pay cuts does not put the company in a jam at this time. He did note, however, that pay cuts are part of the airline's plan to cut costs.
"Quite frankly, if we are going to ask vendors and partners for concessions, we feel it is important for people at AirTran to (give) some as well," Fornaro said.
AirTran said it has fuel hedge positions to cover roughly 70 percent of its fuel needs for the remainder of the year.

 

[Max Powers]

BOYS AND GIRLS THERE IS A LOT OF POSTURING GOING ON OVER THERE IN ORLANDO. at least thats my two cents worth.

 

[lowecur]

SORRY, but history shows you CANNOT SHRINK to Profitability!

That statement has credibility in a market where you are the only one trying to shrink to profitability. In today's market....everyone is trying to shrink to profitability....because they have no choice. Protecting the hub at all cost is dumb in the new airline paradigm. Hubs will continue to be protected to the point that the routes and gates are mandatory to the hub survival, but if the cost outweighs the benefit....it's goodbye. All boats are sinking and the ballast is being jettisoned to float another day.

imp:​