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AirTran Holdings, Inc., Reports Fourth Quarter and Year End Results

  • Fourth Quarter Recovery with Operating Income of $54.9 Million -
  • Record Revenues of $589.4 Million -
  • 2008 Net Loss of $273.8 Million -

ORLANDO, Fla., Jan. 28 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported a net loss of $273.8 million for the full year 2008, or $2.51 per diluted share, which included non-operating losses of $150.8 million related to changes in fair value on the Company's out-of-the-money fuel hedge contracts. During the fourth quarter, AirTran unwound approximately 78 percent of its 2009 fuel hedge contracts in order to mitigate the potential for additional losses on further oil price declines. For the fourth quarter, AirTran reported a net loss of $118.4 million, or $1.00 per diluted share, which also included non-operating losses of $147.7 million related to fuel hedge contracts. AirTran ended the fourth quarter with $340.5 million in unrestricted cash and investments, its highest year-end balance since 2005.

The fourth quarter results demonstrated the benefits of AirTran Airways' plan for adapting to the year's high-cost energy environment, the unrest in the capital markets, and an uncertain economy. In the second quarter 2008, the Company initiated steps to position the airline to react to these challenges by enhancing the airline's liquidity and reducing capacity and capital expenditures aggressively through the disposition of aircraft and the deferral of Boeing 737 deliveries while sustaining a low-cost structure. These actions combined with the recent decline in fuel prices resulted in a record fourth quarter operating income of $54.9 million on record fourth quarter revenues of $589.4 million.

"2008 was an especially tough and challenging year," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "We thank our dedicated, hard-working Crew Members and our loyal customers for helping us overcome the many obstacles we faced in 2008. Our Crew Members continue to strive to provide exceptional customer service, and a high-quality product while offering value to the traveling public. Despite the industry challenge shifting from high oil costs to concerns regarding consumer demand, our 2008 initiatives have us well positioned to return to profitability in 2009."

Revenues for the fourth quarter grew 1.0 percent to $589.4 million. Despite a 6.5 percent decrease in capacity, fourth quarter traffic fell just 2.2 percent, resulting in a record fourth quarter load factor of 78.7 percent, a 3.4 point increase over 2007. Passenger unit revenues in the fourth quarter were up 6.8 percent to 10.32 cents per available seat mile (ASM). Total unit revenues were up 7.9 percent to 11.00 cents per ASM, the highest fourth quarter level achieved in the Company's history.

For the full year, capacity increased by 4.9 percent and traffic rose 9.6 percent, which resulted in a load factor of 79.6 percent. Total annual revenues grew by 10.5 percent to $2.6 billion. Passenger unit revenues increased 4.6 percent to 10.14 cents per available seat mile (ASM). Total unit revenues were up 5.3 percent to 10.72 cents per ASM, the highest annual level AirTran has ever achieved.

Commenting on the fourth quarter performance, AirTran Airways' senior vice president and chief financial officer Arne Haak said, "2008 presented multiple financial challenges. With a resiliency and a 'can-do-attitude' that defines AirTran, we reacted promptly and decisively to address these challenges. We are committed to being disciplined managers, maintaining our low cost advantage, and we believe that AirTran is now better positioned for the uncertainty that lies ahead in 2009."

Highlights of AirTran Airways' 2008 accomplishments include:

  • Raised over $375 million in financing/credit transactions resulting in the Company's highest year-ending balance of unrestricted cash and investments since 2005
  • Completed the sale or rescheduling of 46 aircraft, which resulted in repayment of over $220 million in debt obligations in 2008 and the reduction of over $950 million in capital expenditures for 2009-2010
  • Recorded highest fourth quarter operating income in history of $54.9 million
  • Initiated new service to Columbus, Ohio, and Harrisburg Pa., in November 2008
  • Announced new service to Branson, Mo., and Cancun, Mexico beginning in 2009
  • Strengthened our partnerships with The Coca Cola Company, The Hertz Corporation, Barclays, and eBay/PayPal

AirTran Holdings, Inc., will conduct a conference call to discuss the quarter's results today at 9:30 a.m. EST. 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. (NYSE: AAI), a Fortune 1000 company, is ranked number one in the 2008 Airline Quality Rating study. The airline offers coast-to-coast flights, North America's newest all-Boeing fleet, friendly service and Business Class and complimentary XM Satellite Radio on every flight. To book a flight, 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 Contact:       Tad Hutcheson
                         678.254.7442

    Investor Relations:  Jason Bewley
                         407.318.5188



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


                                  Three Months Ended
                                      December 31,                Percent
                                2008                2007          Change
                                ----                ----          ------

    Operating Revenues:
      Passenger             $553,230            $553,923            (0.1)
      Cargo                        -                 300               -
      Other                   36,185              29,613            22.2
                              ------              ------
        Total operating
         revenues            589,415             583,836             1.0

    Operating Expenses:
      Salaries, wages and
       benefits              112,420             114,396            (1.7)
      Aircraft fuel          194,487             221,105           (12.0)
      Aircraft rent           60,387              60,622            (0.4)
      Distribution            23,319              22,638             3.0
      Maintenance,
       materials and
       repairs                38,555              39,532            (2.5)
      Landing fees and
       other rents            32,748              32,238             1.6
      Aircraft insurance and
       security services       5,246               5,902           (11.1)
      Marketing and
       advertising             9,361               8,897             5.2
      Depreciation            15,394              13,613            13.1
      Gain on sale of
       assets                 (5,503)                  -               -
      Other operating         48,147              50,000            (3.7)
                              ------              ------
        Total operating
         expenses            534,561             568,943            (6.0)
                             -------             -------
    Operating Income          54,854              14,893               -

    Other (Income)
     Expense:
      Interest income          1,693              (4,386)              -
      Interest expense        20,190              20,448            (1.3)
      Capitalized
       interest                 (492)             (2,134)          (76.9)
      Net losses on
       derivative
       financial
       instruments           147,686               1,695               -
                             -------               -----
    Other (income)
     expense, net            169,077              15,623               -
                             -------              ------
    Loss Before Income
     Taxes                  (114,223)               (730)              -

    Income Tax Expense         4,168               1,441               -
                           ---------             -------
    Net Loss               $(118,391)            $(2,171)              -
                           =========             =======

    Loss per Common Share
      Basic                   $(1.00)             $(0.02)              -
      Diluted                 $(1.00)             $(0.02)              -

    Weighted-average
     Shares Outstanding
      Basic                  118,034              91,786            28.6
      Diluted                118,034              91,786            28.6

      EBITDA                $(77,438)            $26,811               -
      EBITDA adjusted*      $(84,951)            $28,506               -
      Operating margin           9.3  percent        2.6  percent    6.7  pts.
      Operating margin
       adjusted*                 8.4  percent        2.6  percent    5.8  pts.
      Net margin               (20.1) percent       (0.4) percent  (19.7) pts.
      Net margin
       adjusted*               (21.4) percent       (0.2) percent  (21.2) pts.

    Fourth Quarter
     Statistical Summary:
      Revenue passengers   5,754,446           5,934,141            (3.0)
      Revenue passenger
       miles (000s)        4,218,819           4,313,551            (2.2)
      Available seat
       miles (000s)        5,359,177           5,732,017            (6.5)
      Departures              61,142              65,515            (6.7)
      Block hours            126,159             134,119            (5.9)
      Passenger load
       factor                   78.7  percent       75.3  percent    3.4  pts.
      Break-even load
       factor                   95.0  percent       75.4  percent   19.6  pts.
      Average fare            $96.14              $93.35             3.0
      Average yield per
       RPM                     13.11  cents        12.84  cents      2.1
      Passenger revenue
       per ASM                 10.32  cents         9.66  cents      6.8
      Total revenue per
       ASM                     11.00  cents        10.19  cents      7.9
      Operating cost
       per ASM                  9.97  cents         9.93  cents      0.4
      Operating cost
       per ASM adjusted*       10.08  cents         9.93  cents      1.5
      Non-fuel operating
       cost per ASM             6.35  cents         6.07  cents      4.6
      Non-fuel operating
       cost per ASM adjusted*   6.45  cents         6.07  cents      6.3
      Average cost of
       aircraft
       fuel per gallon         $2.32               $2.45            (5.3)
      Average economic
       cost of aircraft
       fuel per gallon         $4.10               $2.45            67.3
      Gallons of fuel
       burned             83,999,581          90,307,722            (7.0)
      Weighted-average
       number of
       aircraft                  137                 137               -

    * Statistical calculations for 2008 and 2007 on an adjusted basis exclude
      gains and losses as detailed in the attached Reconciliation of GAAP
      Financial Information to Non-GAAP Financial Information.



                                  Twelve Months Ended
                                      December 31,                Percent
                                2008                2007          Change
                                ----                ----          ------

    Operating Revenues:
      Passenger           $2,413,609          $2,198,910             9.8
      Cargo                        -               3,433               -
      Other                  138,869             107,640            29.0
                             -------             -------
        Total operating
         revenues          2,552,478           2,309,983            10.5

    Operating Expenses:
      Salaries, wages
       and benefits          474,889             451,818             5.1
      Aircraft fuel        1,194,938             803,640            48.7
      Aircraft rent          242,464             242,764            (0.1)
      Distribution           100,400              88,461            13.5
      Maintenance,
       materials and
       repairs               163,350             151,265             8.0
      Landing fees and
       other rents           137,738             122,800            12.2
      Aircraft insurance and
       security services      21,556              23,761            (9.3)
      Marketing and
       advertising            40,475              40,415             0.1
      Depreciation            58,618              48,485            20.9
      Gain on sale of
       assets                (23,185)             (6,234)              -
      Impairment of
       goodwill                8,350                   -               -
      Other operating        204,895             198,648             3.1
                             -------             -------
        Total operating
         expenses          2,624,488           2,165,823            21.2
                           ---------           ---------
    Operating Income
     (Loss)                  (72,010)            144,160               -

    Other (Income)
     Expense:
      Interest income         (3,679)            (20,401)          (82.0)
      Interest expense        78,080              75,530             3.4
      Capitalized
       interest               (5,355)             (9,226)          (42.0)
      Midwest exchange
       offer expenses              -              10,650               -
      Net losses on
       derivative
       financial
       instruments           150,836                 255               -
                             -------                 ---
    Other (income)
     expense, net            219,882              56,808               -
                             -------              ------
    Income (Loss)
     Before Income
     Taxes                  (291,892)             87,352               -

    Income Tax Expense
     (Benefit)               (18,063)             34,669               -
                           ---------             -------
    Net Income (Loss)      $(273,829)            $52,683               -
                           =========             =======

    Income (Loss) per
     Common Share
      Basic                   $(2.51)              $0.58               -
      Diluted                 $(2.51)              $0.56               -

    Weighted-average
     Shares Outstanding
      Basic                  109,153              91,574            19.2
      Diluted                109,153             104,319             4.6

      EBITDA               $(164,228)           $181,740               -
      EBITDA adjusted*     $(154,532)           $186,411               -
      Operating margin          (2.8) percent        6.2  percent   (9.0) pts.
      Operating margin
       adjusted*                (3.4) percent        6.0  percent   (9.4) pts.
      Net margin               (10.7) percent        2.3  percent  (13.0) pts.
      Net margin
       adjusted*               (10.3) percent        2.4  percent  (12.8) pts.

    Twelve Month
     Statistical
     Summary:
      Revenue passengers  24,619,120          23,780,058             3.5
      Revenue passenger
       miles (000s)       18,955,843          17,297,724             9.6
      Available seat
       miles (000s)       23,809,190          22,692,355             4.9
      Departures             260,120             261,505            (0.5)
      Block hours            549,226             531,559             3.3
      Passenger load
       factor                   79.6  percent       76.2  percent    3.4  pts.
      Break-even load
       factor                   89.3  percent       73.2  percent   16.1  pts.
      Average fare            $98.04              $92.47             6.0
      Average yield per
       RPM                     12.73  cents        12.71  cents      0.2
      Passenger revenue
       per ASM                 10.14  cents         9.69  cents      4.6
      Total revenue per
       ASM                     10.72  cents        10.18  cents      5.3
      Operating cost
       per ASM                 11.02  cents         9.54  cents     15.5
      Operating cost
       per ASM
       adjusted*               11.09  cents         9.57  cents     15.9
      Non-fuel operating
       cost per ASM             6.00  cents         6.00  cents        -
      Non-fuel operating
       cost per ASM
       adjusted*                6.07  cents         6.03  cents      0.7
      Average cost of
       aircraft
       fuel per gallon         $3.25               $2.23            45.7
      Average economic
       cost of aircraft
       fuel per gallon         $3.60               $2.23            61.4
      Gallons of fuel
       burned            367,168,620         359,759,033             2.1
      Weighted-average
       number of
       aircraft                  139                 134             3.7

    * Statistical calculations for 2008 and 2007 on an adjusted basis exclude
      gains and losses as detailed in the attached Reconciliation of GAAP
      Financial Information to Non-GAAP Financial Information.



           Reconciliation of GAAP Financial Information to Non-GAAP
                             Financial Information

        Three Months and Twelve Months Ended December 31, 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, EBITDA adjusted, operating margin adjusted, and net margin adjusted. 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 disclosures may also exclude special or non-recurring items that we believe should be taken into consideration to more accurately measure and monitor our operating performance. 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 and non-fuel CASM adjusted provide 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. Our press release also contains information regarding the components of GAAP fuel expense and net gains and loss on derivative financial instruments. These amounts have been included as supplemental information.

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 includes realized gains and losses on all fuel related derivative instruments, including those which were not accounted for as hedges.

We consider our fuel derivative contracts an important tool in managing costs related to jet fuel purchases. We believe it is important to assess our financial performances by including the effect of the quarterly net cash settlements and excluding the mark-to-market adjustments for our unrealized gains and losses recorded in the income statement for contracts settling in future periods.

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.




    Dollars in thousands, unless otherwise noted

                                Three months ended      Twelve months ended
                                   December 31,             December 31,
                                   ------------             ------------
                                 2008        2007         2008         2007
                                 ----        ----         ----         ----

    The following table
     reconciles net income
     (loss) to
     EBITDA and EBITDA
     adjusted:
        Net income (loss)     $(118,391)    $(2,171)   $(273,829)     $52,683
        Add back:
          Income tax
           expense (benefit)
                                  4,168       1,441      (18,063)      34,669
          Interest, net          21,391      13,928       69,046       45,903
          Depreciation           15,394      13,613       58,618       48,485
                                 ------      ------       ------       ------
          EBITDA               $(77,438)    $26,811    $(164,228)    $181,740
        Less:
          Gain on sale of
           assets                 5,503           -       23,185        6,234
          Impairment of
           goodwill                   -           -       (8,350)           -
          Midwest exchange
           offer expenses             -           -            -      (10,650)
          Unrealized gains
           (losses) on
           derivative
           financial
           instruments            2,010      (1,695)     (24,531)        (255)
                                  -----      ------      -------         ----
          EBITDA adjusted      $(84,951)    $28,506    $(154,532)    $186,411
                               ========     =======    =========     ========


    The following table
     calculates operating
     margin adjusted:
        Operating income
         (loss)                 $54,854     $14,893     $(72,010)    $144,160
        Less:
          Gain on sale of
           assets                 5,503           -       23,185        6,234
          Impairment of
           goodwill                   -           -       (8,350)           -
                                -------     -------      -------      -------
        Operating income
         (loss) adjusted        $49,351     $14,893     $(86,845)    $137,926
                                =======     =======     ========     ========
        Total operating
         revenues              $589,415    $583,836   $2,552,478   $2,309,983
                               --------    --------   ----------   ----------
         Operating
          margin,
           adjusted                8.4%        2.6%        -3.4%         6.0%
                                    ===         ===         ====          ===


    The following table
     calculates net margin
     adjusted:
        Net income (loss)     $(118,391)    $(2,171)   $(273,829)     $52,683
        Less:
          Gain on sale of
           assets, after tax
                                  5,503           -       23,185        3,896
          Impairment of
           goodwill                   -           -       (8,350)           -
          Midwest exchange
           offer expenses             -           -            -       (6,656)
          Unrealized gains
           (losses) on
           derivative
           financial
           instruments ,
           after tax              2,010      (1,059)     (24,531)        (159)
                                  -----      ------      -------         ----
        Net income (loss),
         adjusted             $(125,904)    $(1,112)   $(264,133)     $55,602
                              =========     =======    =========      =======
        Total operating
         revenues              $589,415    $583,836   $2,552,478   $2,309,983
                               --------    --------   ----------   ----------
       Net margin, adjusted       -21.4%       -0.2%       -10.3%         2.4%
                                  =====        ====        =====          ===

    The following table
     calculates operating
     cost per ASM adjusted:
          Total operating
           expenses            $534,561    $568,943   $2,624,488   $2,165,823
          Add: gain on sale
           of assets              5,503           -       23,185        6,234
          Less: impairment
           of goodwill                -           -       (8,350)           -
                                -------     -------      -------      -------
          Operating costs,
           adjusted            $540,064    $568,943   $2,639,323    2,172,057
                               ========    ========   ==========    =========
          ASMs (000)          5,359,177   5,732,017   23,809,190   22,692,355
                              ---------   ---------   ----------   ----------
          Operating cost
           per ASM (cents)
           adjusted               10.08        9.93        11.09         9.57
                                  =====        ====        =====         ====

    The following table
     calculates non-fuel
     operating
     cost per ASM and non-
     fuel operating cost
     per ASM
     adjusted:
        Total operating
         expenses              $534,561    $568,943   $2,624,488   $2,165,823
        Less: aircraft fuel    (194,487)   (221,105)  (1,194,938)    (803,640)
                               --------    --------   ----------     --------
        Operating costs,
         adjusted              $340,074    $347,838   $1,429,550   $1,362,183
                               ========    ========   ==========   ==========
        ASMs (000)            5,359,177   5,732,017   23,809,190   22,692,355
          Non-fuel
           operating cost
           per ASM (cents)         6.35        6.07         6.00         6.00
                                   ====        ====         ====         ====

        Total operating
         expenses              $534,561    $568,943   $2,624,488   $2,165,823
        Less: aircraft fuel    (194,487)   (221,105)  (1,194,938)    (803,640)
        Add: gain on sale
         of aircraft              5,503           -       23,185        6,234
        Less: impairment of
         goodwill                     -           -       (8,350)           -
                                -------     -------      -------      -------
        Non-fuel operating
         cost, adjusted        $345,577    $347,838   $1,444,385   $1,368,417
                               ========    ========   ==========   ==========
        ASMs (000)            5,359,177   5,732,017   23,809,190   22,692,355
          Non-fuel
           operating cost
           per ASM (cents)
           adjusted                6.45        6.07         6.07         6.03
                                   ====        ====         ====         ====

    The following table
     provides detail of
     certain components of
     aircraft fuel expense
     and calculates average
     economic cost of
     aircraft fuel per
     gallon:
        Aircraft fuel
         expense per GAAP       194,487     221,105    1,194,938      803,640

        Add Realized
         (gains) losses on
         derivatives that do
         not
         qualify for hedge
         accounting,
         recorded in net
         (gains)
         losses on
         derivatives             40,327                   16,936
        Add Realized
         (gains) losses on
         derivatives related
         to
         2009 contracts
         terminated,
         recorded in net
         (gains)
         losses on
         derivatives            109,370                  109,370
                                -------                  -------
        Economic fuel
         expense               $344,184               $1,321,244
                               ========  ==========   ==========  ===========
        Gallons of fuel
         burned              83,999,581  90,307,722  367,168,620  359,759,033
                             ----------  ----------  -----------  -----------
        Economic fuel
         expense per
         gallon (dollars)         $4.10       $2.45        $3.60        $2.23
                                  =====       =====        =====        =====


    The following table
     reconciles net income
     (loss) and earnings
     (loss)
     per share to net income
     (loss) adjusted and
     earnings (loss) per
     share adjusted:
        Net income (loss)     $(118,391)               $(273,829)
        Add back:
          Impairment of
           goodwill                   -                    8,350
          Realized and
           unrealized (gains)
           losses on
           derivative
           financial
           instruments
           related to 2009
           contracts            107,360                  133,901
        Less:
          Gain on sale of
           assets, after tax
                                 (5,503)                 (23,185)
                                 ------                  -------
        Net income (loss),
         adjusted              $(16,534)               $(154,763)
                               ========                =========

        Diluted shares
         outstanding            118,034                  109,153
                                -------                  -------
        Earnings (loss) per
         share, adjusted         $(0.14)                  $(1.42)
                                 ======                   ======



SOURCE AirTran Holdings, Inc.

CONTACT: Media: Tad Hutcheson, +1-678-254-7442, Investors: Jason Bewley, +1-407-318-5188

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