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AirTran Holdings, Inc., Reports Record First Quarter Net Income of $28.7 Million

- Record First Quarter Operating Income of $47.7 Million -

- Company Earns Record Operating Income for Second Consecutive Quarter -

ORLANDO, Fla., April 22 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported record net income of $28.7 million or $0.21 per diluted share for the first quarter along with record operating income of $47.7 million. The Company also posted revenues of $542.0 million and achieved the highest first quarter load factor in Company history at 76.3 percent.

The combination of lower fuel prices, low costs, and quality service coupled with fleet and route network adjustments has resulted in the Company posting its best first quarter earnings in history. Total fuel costs for the quarter were down 50.5 percent year-over-year on a 7.2 percent reduction in capacity as measured by available seat miles (ASMs).

"Our ability to report a profit today is rooted in the difficult decisions we made last year. AirTran Airways was among the first airlines to react to the changing economic environment and we are among the first to show signs of recovery," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "Our Crew Members deserve much of the credit as they continue to provide a high-quality product to our customers seeking real value and we are pleased to have been recognized, for the second consecutive year, as first in quality among major carriers in 2008."

During the first quarter, AirTran Airways expanded service in several markets that represented opportunities for significant traffic. Flights in Milwaukee have increased more than 50 percent year over year and more than 30 scheduled daily departures are planned for the Summer schedule. Additional flights and new cities were also added to the Orlando route network and AirTran Airways now has more than 60 peak day departures to 36 destinations and is the second largest carrier to America's top vacation destination.

"AirTran Airways' ability to be nimble and responsive to changing market conditions is a tremendous competitive advantage. Increasing flights to and from Milwaukee and Orlando while redesigning our Atlanta hub schedule to make the network more efficient and productive are the latest examples of this capability," said Kevin Healy, senior vice president of marketing and planning for AirTran Airways.

While the Company expanded to new markets and continued to offer high-value, friendly service, AirTran Airways remained sharply focused on remaining the lowest cost producer among major airlines.

"While the weakening economy has begun to pressure prices throughout the airline sector, our industry leading, low-cost structure has allowed us to offset this challenge," said Arne Haak, senior vice president of finance, treasurer and chief financial officer for AirTran Airways. "We are committed to maintaining our low cost advantage and expect to remain profitable every quarter this year despite the current economic environment."

Other highlights of AirTran Airways' accomplishments in the first quarter and to date include:

  • Ranked #1 among all low-cost carriers for the second consecutive year in the Airline Quality Rating (www.aqr.aero). This is the fifth consecutive year AirTran ranked third or higher for quality among all U.S. carriers in this prestigious rating.
  • Chosen as Travelzoo's Best Provider of Domestic Air Fare Deals in 2009.
  • Announced service commencing in five new cities (Atlantic City, N.J., Allentown, Pa., Charleston, W.Va., Asheville, N.C., and Knoxville, Tenn.) and 14 new routes.
  • Partnered with the Milwaukee Brewers by establishing the AirTran Airways Landing Zone at Miller Park and by signing Milwaukee Brewers slugger Ryan Braun as the latest celebrity endorser.
  • Consolidated support operations including: customer service, inflight, recruiting, marketing and sales in AirTran's new Atlanta Corporate Center.

AirTran Holdings, Inc. will conduct a conference call to discuss the quarter's results today at 9:30 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. (NYSE: AAI) and a Fortune 1000 company, has been ranked the number one low cost carrier in the Airline Quality Rating study for the past two years. The airline offers coast-to-coast flights on North America's newest all-Boeing fleet, with 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, 2008. The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.

Media Contacts: AirTran Airways:
Christopher White (Media)

Jason Bewley (Investor Relations)

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

                               Three Months Ended
                                    March 31,                    Percent
                               2009                2008           Change
                               ----                ----           ------

    Operating Revenues:
      Passenger            $486,101            $566,429            (14.2)
      Other                  55,854              29,962             86.4
                             ------              ------
        Total operating
         revenues           541,955             596,391             (9.1)

    Operating Expenses:
      Salaries, wages
       and benefits         117,948             118,907             (0.8)
      Aircraft fuel         132,870             268,442            (50.5)
      Aircraft rent          60,431              60,851             (0.7)
      Distribution           20,215              22,539            (10.3)
       materials and
       repairs               46,443              41,332             12.4
      Landing fees and
       other rents           33,784              35,113             (3.8)
       insurance and
       security services      5,072               5,293             (4.2)
      Marketing and
       advertising           11,361              11,468             (0.9)
      Depreciation           14,117              13,348              5.8
      Other operating        52,007              54,484             (4.5)
                             ------              ------
        Total operating
         expenses           494,248             631,777            (21.8)
                            -------             -------
    Operating Income
     (Loss)                  47,707             (35,386)               -

    Other (Income) Expense:
      Interest income          (678)             (1,782)           (62.0)
      Interest expense       21,230              20,452              3.8
       interest                (340)             (3,625)           (90.6)
      Other                    (322)                  -                -
      Net (gains)
       losses on
       instruments             (890)              5,190                -
                               ----               -----
    Other (income)
     expense, net            19,000              20,235             (6.1)
                             ------              ------
    Income (Loss)
     Before Income Taxes     28,707             (55,621)               -

    Income Tax Benefit            -             (20,264)               -

                            -------            --------
    Net Income (Loss)       $28,707            $(35,357)               -
                            =======            ========

    Income (Loss) per
     Common Share
      Basic                   $0.24              $(0.38)               -
      Diluted                 $0.21              $(0.38)               -

    Weighted-average Shares
      Basic                 119,828              92,114             30.1
      Diluted               138,084              92,114             49.9

      Operating margin          8.8  percent       (5.9) percent    14.7  pts.
      Net margin                5.3  percent       (5.9) percent    11.2  pts.
      Net margin,
       adjusted*                4.9  percent       (5.1) percent    10.0  pts.

    First Quarter
     Statistical Summary:
      Revenue passengers  5,344,683           5,718,319             (6.5)
      Revenue passenger
       miles (000s)       4,086,181           4,347,399             (6.0)
      Available seat
       miles (000s)       5,358,382           5,771,038             (7.2)
      Passenger load
       factor                  76.3  percent       75.3  percent     1.0  pts.
      Departures             58,959              63,570             (7.3)
      Average stage
       length (miles)           727                 724              0.4
      Average fare           $90.95              $99.06             (8.2)
      Average yield per RPM   11.90  cents        13.03  cents      (8.7)
      Passenger revenue
       per ASM                 9.07  cents         9.82  cents      (7.6)
      Total revenue per ASM   10.11  cents        10.33  cents      (2.1)
      Operating cost per ASM   9.22  cents        10.95  cents     (15.8)
      Operating cost per ASM,
       adjusted*               9.21  cents        10.95  cents     (15.9)
      Non-fuel operating cost
       per ASM                 6.74  cents         6.30  cents       7.0
      Non-fuel operating cost
       per ASM, adjusted*      6.73  cents         6.30  cents       6.8
      Average cost of
       aircraft fuel per
       gallon                 $1.59               $3.00            (47.0)
      Average economic
       cost of aircraft
       fuel per gallon        $1.62               $3.00            (46.0)
      Gallons of fuel
       burned            83,352,262          89,605,101             (7.0)
       aircraft in fleet
       at end of period         136                 140             (2.9)
      Average daily aircraft
       utilization (hours)     10.6                10.9             (2.8)
      Full-time equivalent
       employees at end
       of period              7,850               8,282             (5.2)

    * Statistical calculations for 2009 and 2008, on an adjusted basis,
      exclude gains and losses as detailed in the attached Reconciliation of
      GAAP Financial Information to Non-GAAP Financial Information. Our first
      quarter 2008 financial data has been restated to reflect the required
      retrospective application of our adoption of Financial Accounting
      Standards Board Staff Position APB 14-1, Accounting for Convertible Debt
      Instruments That May Be Settled in Cash Upon Conversion (Including
      Partial Cash Settlement).  The restatement resulted in a $159 thousand
      and $544 thousand increase to operating loss and net loss, respectively.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

Three Months Ended March 31, 2009 and 2008

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 net margin. 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 useful 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 losses 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, but does not include unrealized gains and losses recognized under GAAP.

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 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
                                                       March 31,
                                                    2009        2008
                                                    ----        ----

      The following table calculates net
       margin, adjusted:
          Net income (loss)                       $28,707    $(35,357)
          Loss on asset disposition                  (922)          -
          Gain on debt extinguishment                 322           -
          Unrealized gains (losses) on
           derivative financial
           instruments                              2,963      (5,190)
                                                    -----      ------
          Net income, adjusted                    $26,344    $(30,167)
                                                  =======    ========
          Total operating revenues               $541,955    $596,391
                                                 --------    --------
                  Net margin, adjusted                4.9%       -5.1%
                                                      ===        ====

      The following table calculates
       operating cost per ASM, adjusted:
          Total operating expenses               $494,248    $631,777
          Less: loss on asset disposition            (922)          -
                                                     ----        ----
          Operating expenses, adjusted           $493,326    $631,777
                                                 ========    ========
          ASMs (000)                            5,358,382   5,771,038
                                                ---------   ---------
              Operating cost per ASM (cents),
               adjusted                              9.21       10.95
                                                     ====       =====

      The following table calculates non-fuel
       operating cost per ASM and non-fuel
       operating cost per ASM, adjusted:
          Total operating expenses               $494,248    $631,777
          Less: aircraft fuel                    (132,870)   (268,442)
                                                 --------    --------
          Operating expenses, adjusted           $361,378    $363,335
                                                 ========    ========
          ASMs (000)                            5,358,382   5,771,038
                                                ---------   ---------
              Non-fuel operating cost per ASM
               (cents)                               6.74        6.30
                                                     ====        ====

          Total operating expenses               $494,248    $631,777
          Less: aircraft fuel                    (132,870)   (268,442)
          Less: loss on asset disposition            (922)          -
                                                     ----        ----
          Non-fuel operating cost, adjusted      $360,456    $363,335
                                                 ========    ========
          ASMs (000)                            5,358,382   5,771,038
                                                ---------   ---------
              Non-fuel operating cost per ASM
               (cents) adjusted                      6.73        6.30
                                                     ====        ====

      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         $132,870    $268,442

          Realized (gains) losses on
           derivatives that do not qualify for
           hedge accounting,  recorded in net
           (gains) losses on derivative
           financial instruments                    2,073
                                                    -----    --------
          Economic fuel expense                  $134,943    $268,442
                                                 ========    ========
          Gallons of fuel burned               83,352,262  89,605,101
                                               ----------  ----------
              Economic cost of aircraft fuel
               per gallon (dollars)                 $1.62       $3.00
                                                    =====       =====

    The following table calculates diluted earnings per share, adjusted
     for the three months ended March 31, 2009:

    Net income                               $28,707
              Loss on asset disposition         (922)
              Gain on debt extinguishment        322
              Unrealized gain on derivative
               financial instruments           2,963
          Net income, adjusted               $26,344
              Plus income effect of assumed
               conversion-interest on
               convertible debt                  956
    Income after assumed conversion, diluted $27,300

    Adjusted weighted-average shares
     outstanding, diluted                    138,084

    Diluted earnings per share, adjusted       $0.20


    The following table contains our year-over-year capacity projection for
    the remainder of 2009:

           Period                  Forecasted ASMs
           ------                  ---------------

           Q2 2009                      Down 7%
           Q3 2009                   Down 1% to 2%
           Q4 2009                    Flat to Up 2%
           2009 - Full Year          Down 3% to 4%

    The following table contains our year-over-year projections for Q2 2009
    total unit revenues, non-fuel operating unit costs, and average cost per
    gallon of fuel, all in:

                                     Q2 Projection

     Total unit revenue per ASM       Down 2% to 4%
     Non-fuel unit operating cost
      per ASM                      Up 8 1/2% to 9 1/2%
     Average cost per gallon
      of fuel, all-in                $1.75 to $1.80

SOURCE AirTran Holdings, Inc.

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