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AirTran Holdings, Inc., Reports Second Quarter Results

- Record Revenues of $693 Million -

- Record 6.5 Million Customers Served -

- Fuel Costs Up More Than $166 Million from 2007 -

ORLANDO, Fla., July 29 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported a net loss of $13.5 million or $0.12 per diluted share for the second quarter. During the same quarter in 2007, AirTran reported net income of $42.1 million or $0.42 per diluted share. As with many other airlines, this quarter's loss is primarily attributable to the effects of record high fuel costs. Our loss also includes an impairment charge related to goodwill of $8.4 million.

AirTran ended June with its highest quarterly unrestricted cash and investment balance in the history of the Company of $445.9 million. The Company also successfully negotiated an extension of its primary credit card processing agreement through December 31, 2009. In addition, the Company has received a commitment for a letter of credit facility of up to $150 million available to satisfy potential holdback requirements with credit card processors.

Revenues for the second quarter grew 13.0 percent to $693.4 million, an all-time quarterly record. Second quarter traffic rose by 13.3 percent on a 12.3 percent increase in capacity, resulting in a record second quarter load factor of 79.4 percent, a 0.6 point increase over 2007. Unit revenues in the second quarter were up 0.1 percent to 10.20 cents per ASM.

Our fuel hedging program has helped mitigate the rising costs of fuel but has not prevented the adverse impact of higher fuel prices. The average price per gallon of fuel increased 70.5 percent to $3.75 in the second quarter compared to $2.20 in the second quarter of 2007. Total fuel expense was $368 million, up $167 million from the prior year. During the second quarter, AirTran recorded $51.0 million in net gains related to its fuel hedging program. AirTran realized $16.8 million of gains during the quarter of which $7.4 million reduced fuel expense and $9.4 million were recorded as non- operating gains. Additionally, AirTran recorded unrealized gains of $34.2 million which were recorded as non-operating gains. At quarter end, the estimated net asset fair value of AirTran's fuel related derivative financial instruments was $79.7 million.

Going forward, the Company has fuel hedge positions to cover approximately 70 percent of its fuel needs for the remainder of the year, which will reduce the price paid for crude oil by approximately $12 to $15 per barrel at current fuel price levels.

"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. "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 outlined a five-point plan to achieve this back in April. 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. In addition, AirTran Airways Crew Members have demonstrated an admirable commitment this quarter to serving a record number of customers and maintaining a high operational standard as shown by our high on-time and customer service scores." AirTran was recently awarded the #1 ranking in the Airline Quality Rating for 2008, and AirTran ranked #1 in May for on-time performance among major carriers in the DOT Air Travel Consumer Report.

After completing a comprehensive review of the fleet and capacity in the current economic environment, AirTran has taken steps to reduce growth. In May, AirTran Airways announced that it would defer the delivery of 18 Boeing 737-700 aircraft originally scheduled for delivery between 2009 through 2011 to 2013 through 2014. A second agreement was recently reached with Boeing to defer four additional deliveries of 737-700 aircraft from 2009 to 2015. AirTran is now planning for capacity to be down seven to eight percent during the last four months of 2008. In addition, the Company is currently targeting a four to eight percent capacity reduction in 2009.

"We have taken significant actions to address the challenges of high fuel and a slowing economy," said Arne Haak, senior vice president of finance, treasurer and CFO for AirTran Airways. "During the quarter we further reduced our industry leading non-fuel CASM by 3.2 percent to 5.73 cents per seat mile. We are focused on cash preservation and liquidity and have made significant progress in strengthening our cash position. We continue to work towards additional actions on each front."

Recent highlights of AirTran Airways' accomplishments in the second quarter and to date include:

-- Raised capital of $147 million (net of fees) on a concurrent offering of common equity and convertible notes

-- Received a commitment for a letter of credit facility of up to $150 million

-- Renegotiated an agreement with our primary credit card processor that includes an extension of the term through December 31, 2009

-- Deferred 22 Boeing 737-700 aircraft deliveries from 2009-2011 to 2013- 2015

-- Sold two Boeing 737-700 aircraft in April and completed agreements to sell four additional Boeing 737-700 aircraft and an agreement in principle for a fifth Boeing 737-700 aircraft during the remainder of 2008

-- Reduced non-fuel CASM for the quarter by 3.2 percent due to strong operating performance and improved efficiency

-- Full-time equivalents (FTE) per aircraft improved 2.5 percent to 58.4

-- Commenced service to Burlington, VT on May 21 and San Antonio, TX on June 11

-- Ranked #1 in on-time performance among major carriers in May at 84.6 percent

AirTran Holdings, Inc., will conduct a conference call to discuss the quarter's results today at 10:00 a.m. EDT. A live broadcast of the conference call will be available via the Internet in the investor relations section at http://www.airtran.com .

AirTran Airways, a subsidiary of AirTran Holdings, Inc., a Fortune 1000 company, ranked number one in the 2008 Airline Quality Rating study. The airline offers more than 700 affordable, daily flights to 57 U.S. destinations, employs 8,900 friendly Crew Members and operates America's youngest all-Boeing fleet. AirTran Airways also provides XM Satellite Radio and Business Class seating on every flight. For more information and free online booking, visit http://www.airtran.com .

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, 2007. The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.

    * Attached: Consolidated Statements of Operations*

     Media Contacts:  AirTran Airways
                      Tad Hutcheson
                      Judy Graham-Weaver
                      Cynthia Tinsley-Douglas
                      Quinnie Jenkins
                      678.254.7442

                      Jason Bewley (Financial)
                      407.318.5188



                              AirTran Holdings, Inc.
                      Consolidated Statements of Operations
          (In thousands, except per share data and statistical summary)
                                   (Unaudited)

                                     Three Months Ended
                                          June 30,                 Percent
                                    2008            2007            Change
                                 --------        --------          -------

    Operating Revenues:
     Passenger                   $658,634        $585,875           12.4
     Cargo                            -             1,159             -
     Other                         34,746          26,492           31.2
                                 --------        --------
      Total operating revenues    693,380         613,526           13.0

    Operating Expenses:
     Salaries, wages and
      benefits                    123,392         110,972           11.2
     Aircraft fuel                368,127         201,588           82.6
     Aircraft rent                 60,789          60,667            0.2
     Distribution                  27,685          23,874           16.0
     Maintenance, materials and
      repairs                      43,441          38,190           13.7
     Landing fees and other rents  33,681          30,268           11.3
     Aircraft insurance and
      security services             5,547           5,895           (5.9)
     Marketing and advertising      9,698          10,151           (4.5)
     Depreciation                  14,649          11,547           26.9
     Gain on sale of aircraft      (7,292)         (6,234)          17.0
     Impairment of goodwill         8,350             -               -
     Other operating               50,837          48,746            4.3
                                  -------         -------
      Total operating expenses    738,904         535,664           37.9
                                  -------         -------
    Operating Income (Loss)       (45,524)         77,862             -

    Other (Income) Expense:
     Interest income               (2,682)         (5,521)         (51.4)
     Interest expense              18,478          18,321            0.9
     Capitalized interest          (1,528)         (2,361)         (35.3)
     Net (gains) losses on
      derivative financial
      instruments                 (43,560)            156             -
                                  -------         -------
    Other (income) expense, net   (29,292)         10,595             -
                                  -------         -------
    Income (Loss) Before Income
     Taxes                        (16,232)         67,267             -

    Income Tax Expense (Benefit)   (2,694)         25,208             -
                                  --------         -------

    Net Income (Loss)            $(13,538)        $42,059             -
                                 ========         =======

    Income (Loss) per Common
     Share
     Basic                         $(0.12)          $0.46             -
     Diluted                       $(0.12)          $0.42             -

    Weighted-average Shares
     Outstanding
     Basic                        109,097          91,524           19.2
     Diluted                      109,097         104,366            4.5

     EBITDA                       $12,685         $89,253          (85.8)
     EBITDA adjusted*            $(20,454)        $83,175            -
     Operating margin                (6.6) percent   12.7 percent  (19.3) pts.
     Operating margin adjusted*      (6.4) percent   11.7 percent  (18.1) pts.
     Net margin                      (2.0) percent    6.9 percent   (8.9) pts.
     Net margin adjusted*            (4.5) percent    6.2 percent  (10.7) pts.

    Second Quarter Statistical
     Summary:
     Revenue passengers         6,533,427       6,323,023            3.3
     Revenue passenger miles
      (000s)                    5,128,676       4,527,372           13.3
     Available seat miles
      (000s)                    6,457,117       5,747,975           12.3
     Departures                    69,071          66,836            3.3
     Block hours                  147,243         134,316            9.6
     Passenger load factor           79.4 percent    78.8 percent    0.6 pts.
     Break-even load factor          81.4 percent    69.7 percent   11.7 pts.
     Average fare                 $100.81          $92.66            8.8
     Average yield per RPM          12.84 cents     12.94 cents     (0.8)
     Passenger revenue per ASM      10.20 cents     10.19 cents      0.1
     Operating cost per ASM         11.44 cents      9.32 cents     22.7
     Operating cost per ASM
      adjusted*                     11.43 cents      9.43 cents     21.2
     Non-fuel operating cost per
      ASM                            5.74 cents      5.81 cents     (1.2)
     Non-fuel operating cost per
      ASM adjusted*                  5.73 cents      5.92 cents     (3.2)
     Average cost of aircraft
      fuel per gallon               $3.75           $2.20           70.5
     Average economic cost of
      aircraft fuel per gallon      $3.65           $2.20           65.9
     Gallons of fuel burned    98,261,250      91,433,439            7.5
     Weighted-average number
      of aircraft                     141             133            6.0

    * Statistical calculations for 2008 exclude the gain related to the sale
of two Boeing 737 aircraft of $7.3 million, a goodwill impairment charge of
$8.4 million and unrealized gains on derivatives of $34.2 million and the
related tax effect, where applicable. Statistical calculations for 2007
exclude the gain related to the sale of two Boeing 737 aircraft of $6.2
million and unrealized losses on derivatives of $0.2 million and the related
tax effect.



                                       Six Months Ended
                                           June 30,               Percent
                                      2008          2007           Change
                                  ---------    ----------         --------

    Operating Revenues:
     Passenger                   $1,225,063    $1,064,429           15.1
     Cargo                             -            2,058             -
     Other                           64,708        51,105           26.6
                                  ---------     ---------
      Total operating revenues    1,289,771     1,117,592           15.4

    Operating Expenses:
     Salaries, wages and benefits   242,299       218,689           10.8
     Aircraft fuel                  636,569       367,668           73.1
     Aircraft rent                  121,588       121,560            0.0
     Distribution                    50,224        42,803           17.3
     Maintenance, materials and
      repairs                        84,773        71,724           18.2
     Landing fees and other rents    68,794        59,180           16.2
     Aircraft insurance and
      security services              10,840        11,631           (6.8)
     Marketing and advertising       21,166        21,280           (0.5)
     Depreciation                    27,890        21,788           28.0
     Gain on sale of aircraft        (7,292)       (6,234)          17.0
     Impairment of goodwill           8,350            -              -
     Other operating                105,321        96,702            8.9
                                   --------      --------
      Total operating expenses    1,370,522     1,026,791           33.5
                                  ---------     ---------
    Operating Income (Loss)         (80,751)       90,801             -

    Other (Income) Expense:
     Interest income                 (4,464)      (10,498)         (57.5)
     Interest expense                37,182        34,983            6.3
     Capitalized interest            (4,112)       (4,845)         (15.1)
     Net (gains) losses on
      derivative financial
      instruments                   (38,370)          156             -
                                    --------       ------
    Other (income) expense, net      (9,764)       19,796             -
                                    --------       ------
    Income (Loss) Before Income
     Taxes                          (70,987)       71,005             -

    Income Tax Expense (Benefit)    (22,636)       26,788             -
                                   --------       -------

    Net Income (Loss)              $(48,351)      $44,217             -
                                   ========       =======

    Income (Loss) per Common
     Share
     Basic                           $(0.48)        $0.48             -
     Diluted                         $(0.48)        $0.45             -

    Weighted-average Shares
     Outstanding
     Basic                          100,605        91,431           10.0
     Diluted                        100,605       104,244           (3.5)

     EBITDA                        $(14,491)     $112,433             -
     EBITDA adjusted*              $(42,440)     $106,355             -
     Operating margin                  (6.3)percent   8.1 percent  (14.4)pts.
     Operating margin adjusted*        (6.2)percent   7.6 percent  (13.8)pts.
     Net margin                        (3.7)percent   4.0 percent   (7.7)pts.
     Net margin adjusted*              (4.9)percent   3.6 percent   (8.5)pts.

    Six Month Statistical
     Summary:
     Revenue passengers          12,251,746    11,403,131            7.4
     Revenue passenger miles
      (000s)                      9,476,075     8,175,491           15.9
     Available seat miles
      (000s)                     12,228,154    10,955,107           11.6
     Departures                     132,641       128,438            3.3
     Block hours                    282,059       258,568            9.1
     Passenger load factor             77.5 percent  74.6 percent    2.9 pts.
     Break-even load factor            82.0 percent  69.6 percent   12.4 pts.
     Average fare                    $99.99        $93.35            7.1
     Average yield per RPM            12.93 cents   13.02 cents     (0.7)
     Passenger revenue per ASM        10.02 cents    9.72 cents      3.1
     Operating cost per ASM           11.21 cents    9.37 cents     19.6
     Operating cost per ASM
      adjusted*                       11.20 cents    9.43 cents     18.8
     Non-fuel operating cost per
      ASM                              6.00 cents    6.02 cents     (0.3)
     Non-fuel operating cost per
      ASM adjusted*                    5.99 cents    6.07 cents     (1.3)
     Average cost of aircraft
      fuel per gallon                 $3.39         $2.11           60.7
     Average economic cost of
      aircraft fuel per gallon        $3.34         $2.11           58.3
     Gallons of fuel burned     187,866,351   174,114,058            7.9
     Weighted-average number of
      aircraft                          140           131            6.9

*Statistical calculations for 2008 exclude the gain related to the sale of two B737 aircraft of $7.3 million, a goodwill impairment charge of $8.4 million and unrealized gains on derivatives of $29.0 million and the related tax effect, where applicable. Statistical calculations for 2007 exclude the gain related to the sale of two B737 aircraft of $6.2 million and unrealized losses on derivatives of $0.2 million and the related tax effect.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

           Three Months and Six Months Ended June 30, 2008 and 2007

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to certain non-GAAP financial measures including EBITDA. Earnings before income taxes, interest, depreciation and amortization ("EBITDA") is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. We are also presenting EBITDA because it is used by some industry analysts and investors as a way to assess a company's ability to incur and service debt, make capital expenditures and meet working capital requirements. Our disclosure of non-fuel operating cost per available seat mile (non-fuel CASM) is consistent with financial measures reported by other airlines and analysts. We believe that non-fuel CASM provides a better understanding of our operations. Both the cost and availability of fuel are subject to many economic and political factors and are therefore beyond our control.

We disclose both the average fuel cost per gallon and the average economic fuel cost per gallon. Average fuel cost per gallon is based on fuel expense as measured by GAAP and includes realized gains and losses on fuel related derivative instruments which are accounted for as hedges. Average economic fuel cost per gallon also includes realized gains and losses on fuel related derivative instruments which were not accounted for as hedges.

We believe that these measures represent important internal measures of performance. Accordingly, where these non-GAAP measures are provided, it is done so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in assessing our underlying performance on a year-over-year and a quarter-over-quarter basis. However, because these measures are not determined in accordance with accounting principles generally accepted in the United States, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result the aforementioned measures as presented may not be directly comparable to similarly titled measures presented by other companies. The non-GAAP measures are presented as supplemental information and not as alternatives to any GAAP measurements.


    Amounts in '000's

                                  Three months ended       Six months ended
                                       June 30,                 June 30,
                                   2008          2007       2008        2007
                               ----------------------   ----------------------

    The following table reconciles
     net (gains) losses on
     derivative financial
     instruments per GAAP to net
     (gains) losses on derivative
     financial instruments
     adjusted
       Net (gains) losses on
        derivative financial
        instruments              $(43,560)       $156    $(38,370)       $156
       Less:
       Realized gains on
        derivatives that do
        not qualify for hedge
        accounting, previously
        recorded in net  (gains)
        losses on derivative
        financial instruments      (9,363)         -       (9,363)        -
                                 ---------------------   ---------------------
       Net (gains) losses on
        derivative financial
        instruments adjusted     $(34,197)      $156     $(29,007)       $156
                                ======================   =====================



    The following table reconciles
     net income (loss) to EBITDA
     and EBITDA adjusted:
       Net income (loss)         $(13,538)   $42,059     $(48,351)    $44,217
       Add back:
         Income tax expense
          (benefit)                (2,694)    25,208      (22,636)     26,788
         Interest expense, net     14,268     10,439       28,606      19,640
         Depreciation              14,649     11,547       27,890      21,788
                                 ---------------------   ---------------------
         EBITDA                   $12,685    $89,253     $(14,491)   $112,433
      Less:
         Gain on aircraft sale     (7,292)    (6,234)      (7,292)     (6,234)
         Impairment of goodwill     8,350        -          8,350         -
         Net (gains) losses on
          derivative financial
          instruments adjusted    (34,197)       156      (29,007)        156
                                 ---------------------   ---------------------
         EBITDA adjusted         $(20,454)   $83,175     $(42,440)   $106,355
                                 =====================   =====================



    The following table calculates
     operating income (loss) adjusted
     and operating margin adjusted:
      Operating income (loss)    $(45,524)   $77,862     $(80,751)    $90,801
      Less:
         Gain on aircraft sale     (7,292)    (6,234)      (7,292)     (6,234)
         Impairment of goodwill     8,350        -          8,350         -
                                 ---------------------   ---------------------
         Operating income (loss)
          adjusted               $(44,466)   $71,628     $(79,693)    $84,567
                                 =====================   =====================
         Total operating
          revenues                693,380    613,526    1,289,771   1,117,592
            Operating margin,
             adjusted                -6.4%      11.7%        -6.2%        7.6%
                                 =====================   =====================



    The following table calculates
     net income (loss) adjusted
     and net margin adjusted:
      Net income (loss)          $(13,538)   $42,059     $(48,351)    $44,217
      Less:
         Gain on aircraft sale,
          after tax                (4,558)    (3,896)      (4,558)     (3,896)
         Impairment of goodwill     8,350        -          8,350         -

         Net (gains) losses on
          derivative financial
          instruments adjusted,
          after tax               (21,373)        99      (18,129)         99
                                 ---------------------   ---------------------
      Net income (loss),
       adjusted                  $(31,119)   $38,262     $(62,688)    $40,420
                                 =====================   =====================
      Total operating revenues    693,380    613,526    1,289,771   1,117,592
            Net margin adjusted      -4.5%       6.2%        -4.9%        3.6%
                                 =====================   =====================



    The following table calculates
     operating cost per ASM
     adjusted:
      Total operating expenses    $738,904   $535,664  $1,370,522  $1,026,791
      Less: gain on sale of
       aircraft                     (7,292)    (6,234)     (7,292)     (6,234)
      Less: impairment of goodwill   8,350        -         8,350         -
                                  --------------------   ---------------------
      Operating cost              $737,846   $541,898  $1,369,464   1,033,025
                                  ====================   =====================
      ASMs (000)                 6,457,117  5,747,975  12,228,154  10,955,107
            Operating cost per
             ASM (cents) adjusted    11.43      9.43        11.20        9.43
                                  ====================   =====================



    The following table shows the
     calculation of non-fuel
     operating cost per ASM and
     non-fuel operating cost
     per ASM adjusted:
      Total operating expenses    $738,904   $535,664  $1,370,522  $1,026,791
      Less: aircraft fuel          368,127    201,588     636,569     367,668
                                  --------------------   ---------------------
      Non-fuel operating cost     $370,777   $334,076    $733,953    $659,123
                                  ====================   =====================
      ASMs (000)                 6,457,117  5,747,975  12,228,154  10,955,107
            Non-fuel operating
             cost per ASM (cents)     5.74       5.81        6.00        6.02
                                  ====================   =====================

      Total operating expenses    $738,904   $535,664  $1,370,522  $1,026,791
      Less: aircraft fuel          368,127    201,588     636,569     367,668
      Less: gain on sale of
       aircraft                     (7,292)    (6,234)     (7,292)     (6,234)
      Less: impairment of goodwill   8,350        -         8,350         -
                                  --------------------   ---------------------
      Non-fuel operating cost     $369,719   $340,310    $732,895    $665,357
                                  ====================   =====================
      ASMs (000)                 6,457,117  5,747,975  12,228,154  10,955,107
            Non-fuel operating
             cost per ASM (cents)
             adjusted                 5.73       5.92        5.99        6.07
                                  ====================   =====================



    The following table shows the
     calculation of average
     economic cost of aircraft
     fuel per gallon:
       Aircraft fuel- including
        taxes and into-plane
        costs and excluding
        gains (losses) on fuel
        derivative financial
        instruments               $375,563               $648,057
       Realized (gains) losses
        on derivatives that
        qualify for hedge
        accounting                  (7,436)               (11,488)
                                 ----------              ---------
       Aircraft fuel per GAAP     $368,127   $201,588    $636,569    $367,668
                                 ==========              =========
       Realized gains on
        derivatives that do
        not qualify for hedge
        accounting, previously
        recorded in unrealized
        gains (losses) on
        derivatives                $(9,363)                (9,363)
                                 ----------              ---------
       Economic fuel expense      $358,764               $627,206
                                 ==========              =========
       Gallons of fuel burned   98,261,250 91,433,439 187,866,351 174,114,058
            Economic fuel
             expense per gallon       3.65       2.20        3.34        2.11
                                  ====================   =====================

SOURCE AirTran Holdings, Inc.

CONTACT: Tad Hutcheson, Judy Graham-Weaver, Cynthia Tinsley-Douglas, Quinnie Jenkins, +1-678-254-7442, all of AirTran Airways; or Jason Bewley (Financial), +1-407-318-5188

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