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AirTran Holdings, Inc. Reports Strong Net Income of $78.4 Million in Second Quarter
--- Record Year to Date Operating Profit of $113.9 Million -
ORLANDO, Fla., July 22, 2009 /PRNewswire-FirstCall via COMTEX/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported net income of $78.4 million or $0.56 per diluted share for the second quarter of 2009. This represents a $93.3 million improvement over the same quarter of 2008, reversing a net loss of $14.8 million or $0.14 per diluted share.

Operating income during the second quarter was $66.2 million. Year-to-date, the Company has achieved record operating income of $113.9 million, resulting in an operating margin of 9.9 percent, AirTran's best first half performance since 2001. Load factors were at all time highs of 80.7 percent for the quarter and 78.6 percent year-to-date.

Included in net income for the second quarter were $31 million of unrealized gains on the Company's future fuel hedge portfolio, $3.3 million of gains on extinguishment of debt, net of tax, and a $2.4 million write-off of capitalized interest on the disposition of aircraft. Excluding these items, the economic net income for the second quarter of 2009 was $46.6 million or $0.34 per diluted share.

"We are proud of the continued extraordinary performance of our 8,500 dedicated Crew Members from coast to coast, and we are delighted to report significantly improved financial results as reflected by our strong quarterly net income," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "We remain committed to providing low fares and a superior product that our loyal passengers value."

During the second quarter, AirTran Airways continued to add service from its principal operating locations of Atlanta, Baltimore, Milwaukee, and Orlando as well as initiating new service to Allentown, Pa., Asheville, N.C., Atlantic City, N.J., Branson, Mo., Charleston, W.Va., and Knoxville, Tenn. Specifically, the Company increased capacity in Milwaukee by over 30 percent as compared to last year and is now the second largest airline serving Milwaukee and its surrounding communities, including Northern Illinois.

"We are extremely pleased with our customers' response to AirTran's expanded network services and particularly to our growth in Milwaukee," said Kevin Healy, senior vice president of marketing and planning for AirTran Airways. "It is clear that our industry-leading combination of low fares and high-quality amenities, such as new Boeing jets, Business Class, and Inflight Wi-Fi on every flight, is highly valued by our customers across our network."

AirTran Airways was among the first airlines to react to the changing economic environment in 2008 through a series of proactive initiatives, which included reducing and reallocating capacity, enhancing liquidity, selling and deferring aircraft, and unwinding fuel hedges. "Our year-to-date results continue to reflect the rewards of the many difficult decisions we made as a Company last year," said Arne Haak, senior vice president of finance, treasurer and chief financial officer for AirTran Airways. "The combination of reduced capacity, lower fuel prices, and the lowest cost structure of any major airline allows us to compete effectively in what remains a challenging and uncertain economy."

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

  • AirTran is the first and only major airline to equip each and every aircraft with high-speed Inflight Wi-Fi service.

  • 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.

  • Launched service to six new markets: Allentown, Pa., Asheville, N.C., Atlantic City, N.J., Branson, Mo., Charleston, W.Va., and Knoxville, Tenn.

  • Added five new destinations to our Orlando schedule for a total of 35, which represents more destinations served from Orlando than any other airline.

  • Increased capacity by more than 30 percent year-over-year in Milwaukee. Now offering 235 weekly departures, including new service to Denver, Minneapolis, Minn. and St. Louis.

  • Repurchased $29.2 million of our outstanding 7% debt securities year-to-date.

  • Partnered with comedian Mark Malkoff in a Gogo Inflight Wi-Fi campaign that resulted in more than 80 million media impressions and set a new Guinness World Record for most flight segments flown on a commercial aircraft during a 30-day period.

AirTran Holdings, Inc. will conduct a conference call to discuss the quarter's results today at 9:00 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. (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. AirTran is the only major airline with Gogo Inflight Internet on every flight and offers coast-to-coast service on North America's newest all-Boeing fleet. Its low-cost, high-quality product also includes assigned seating, 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)
678-254-7442
Jason Bewley (Investor Relations)
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
                          2009                2008           Change
                          ----                ----          -------

    Operating Revenues:
      Passenger       $536,971            $658,634            (18.5)
      Other             66,682              34,746             91.9
                        ------              ------
        Total operating
         revenues      603,653             693,380            (12.9)

    Operating Expenses:
      Salaries,
       wages and
       benefits        122,784             123,392             (0.5)
      Aircraft fuel    159,903             368,127            (56.6)
      Aircraft rent     60,558              60,841             (0.5)
      Distribution      25,019              27,685             (9.6)
      Maintenance,
       materials
       and repairs      49,468              43,441             13.9
      Landing fees
       and other
       rents            37,365              33,681             10.9
      Aircraft
       insurance
       and security
       services          5,244               5,547             (5.5)
      Marketing and
       advertising      10,237               9,698              5.6
      Depreciation      14,104              14,765             (4.5)
      (Gain) loss
       on asset
       dispositions      2,384              (6,543)               -
      Impairment
       of goodwill           -               8,350                -
      Other operating   50,421              50,837             (0.8)
                        ------              ------
        Total operating
         expenses      537,487             739,821            (27.3)
                       -------             -------
    Operating
     Income (Loss)      66,166             (46,441)               -

    Other (Income)
     Expense:
      Interest income     (699)             (2,682)           (73.9)
      Interest expense  19,749              20,291             (2.7)
      Capitalized
       interest           (725)             (2,201)           (67.1)
      Other             (3,974)                  -                -
      Net gains on
       derivative
       financial
       instruments     (27,335)            (43,560)           (37.2)
                       -------             -------
    Other (income)
     expense, net      (12,984)            (28,152)           (53.9)
                       -------             -------
    Income (Loss)
     Before Income
     Taxes              79,150             (18,289)               -

    Income Tax
     Expense
     (Benefit)             712              (3,459)               -

                       -------            --------
    Net Income (Loss)  $78,438            $(14,830)               -
                       =======            ========

    Income (Loss) per
     Common Share
      Basic              $0.65              $(0.14)               -
      Diluted            $0.56              $(0.14)               -

    Weighted-average
     Shares
     Outstanding
      Basic            120,155             109,097             10.1
      Diluted          149,113             109,097             36.7

      Operating margin    11.0  percent       (6.7) percent    17.7  pts.
      Net margin          13.0  percent       (2.1) percent    15.1  pts.
      Net margin,
       adjusted*           7.7  percent       (4.6) percent    12.3  pts.

    Second Quarter
     Statistical
     Summary:
      Revenue
       passengers    6,208,390           6,533,427             (5.0)
      Revenue
       passenger
       miles (000s)  4,818,428           5,128,676             (6.0)
      Available
       seat miles
       (000s)        5,968,902           6,457,117             (7.6)
      Passenger
       load factor        80.7  percent       79.4  percent     1.3  pts.
      Departures        64,058              69,071             (7.3)
      Average
       stage length
       (miles)             743                 742              0.1
      Average fare      $86.49             $100.81            (14.2)
      Average yield
       per RPM           11.14  cents        12.84  cents     (13.2)
      Passenger
       revenue per
       ASM                9.00  cents        10.20  cents     (11.8)
      Total revenue
       per ASM           10.11  cents        10.74  cents      (5.9)
      Operating
       cost per ASM       9.00  cents        11.46  cents     (21.5)
      Operating
       cost per ASM,
       adjusted*          8.96  cents        11.43  cents     (21.6)
      Non-fuel operating
       cost per ASM       6.33  cents         5.76  cents       9.9
      Non-fuel operating
       cost per ASM,
       adjusted*          6.29  cents         5.73  cents       9.8
      Average cost
       of aircraft
       fuel per gallon   $1.72               $3.75            (54.1)
      Average economic
       cost of aircraft
       fuel per gallon   $1.76               $3.65            (51.8)
      Gallons of
       fuel burned
       (000s)           92,813              98,261             (5.5)
      Operating
       aircraft in
       fleet at end
       of period           136                 143             (4.9)
      Average daily
       aircraft
       utilization
       (hours)            11.2                11.6             (3.4)
      Full-time
       equivalent
       employees at
       end of period     8,200               8,279             (1.0)

      * 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
        second 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 $917 thousand and $1.3 million increase to operating
        loss and net loss, respectively, for the three months ended June 30,
        2008.


                             Six Months Ended
                                  June 30,                  Percent
                          2009                2008           Change
                          ----                ----          -------

    Operating
     Revenues:
      Passenger     $1,023,072          $1,225,063            (16.5)
      Other            122,536              64,708             89.4
                       -------              ------
        Total
         operating
         revenues    1,145,608           1,289,771            (11.2)

    Operating Expenses:
      Salaries,
       wages and
       benefits        240,732             242,299             (0.6)
      Aircraft fuel    292,773             636,569            (54.0)
      Aircraft rent    120,989             121,692             (0.6)
      Distribution      45,234              50,224             (9.9)
      Maintenance,
       materials
       and repairs      95,911              84,773             13.1
      Landing fees
       and other
       rents            71,149              68,794              3.4
      Aircraft
       insurance
       and security
       services         10,316              10,840             (4.8)
      Marketing and
       advertising      21,598              21,166              2.0
      Depreciation      28,221              28,113              0.4
      (Gain) loss
       on asset
       dispositions      3,306              (6,543)               -
      Impairment
       of goodwill           -               8,350                -
      Other
       operating       101,506             105,321             (3.6)
                       -------             -------
        Total
         operating
         expenses    1,031,735           1,371,598            (24.8)
                     ---------           ---------
    Operating
     Income (Loss)     113,873             (81,827)               -

    Other (Income)
     Expense:
      Interest income   (1,377)             (4,464)           (69.2)
      Interest expense  40,979              40,743              0.6
      Capitalized
       interest         (1,065)             (5,826)           (81.7)
      Other             (4,296)                  -                -
      Net gains on
       derivative
       financial
       instruments     (28,225)            (38,370)           (26.4)
                       -------             -------
    Other (income)
     expense, net        6,016              (7,917)               -
                         -----              ------
    Income (Loss)
     Before Income
     Taxes             107,857             (73,910)               -

    Income Tax
     Expense
     (Benefit)             712             (23,723)               -

                      --------            --------
    Net Income
     (Loss)           $107,145            $(50,187)               -
                      ========            ========

    Income (Loss) per
     Common Share
      Basic              $0.89              $(0.50)               -
      Diluted            $0.78              $(0.50)               -

    Weighted-average
     Shares
     Outstanding
      Basic            119,993             100,605             19.3
      Diluted          149,220             100,605             48.3

      Operating margin     9.9  percent       (6.3) percent    16.2  pts.
      Net margin           9.4  percent       (3.9) percent    13.3  pts.
      Net margin,
       adjusted*           6.4  percent       (5.0) percent    11.4  pts.

    Six Month
     Statistical
     Summary:
      Revenue
       passengers   11,553,073          12,251,746             (5.7)
      Revenue
       passenger
       miles (000s)  8,904,609           9,476,075             (6.0)
      Available
       seat miles
       (000s)       11,327,284          12,228,154             (7.4)
      Passenger
       load factor        78.6  percent       77.5  percent     1.1  pts.
      Departures       123,017             132,641             (7.3)
      Average stage
       Length (miles)      735                 734              0.1
      Average fare      $88.55              $99.99            (11.4)
      Average yield
       per RPM           11.49  cents        12.93  cents     (11.1)
      Passenger revenue
       per ASM            9.03  cents        10.02  cents      (9.9)
      Total revenue
       per ASM           10.11  cents        10.55  cents      (4.2)
      Operating
       cost per ASM       9.11  cents        11.22  cents     (18.8)
      Operating
       cost per ASM,
       adjusted*          9.08  cents        11.20  cents     (18.9)
      Non-fuel
       operating
       cost per ASM       6.52  cents         6.01  cents       8.5
      Non-fuel operating
       cost per ASM,
       adjusted*          6.49  cents         6.00  cents       8.2
      Average cost
       of aircraft fuel
       per gallon        $1.66               $3.39            (51.0)
      Average economic
       cost of aircraft
       fuel per gallon   $1.69               $3.34            (49.4)
      Gallons of
       fuel burned
       (000s)          176,166             187,866             (6.2)
      Operating
       aircraft in
       fleet at end
       of period           136                 143             (4.9)
      Average daily
       aircraft
       utilization
       (hours)            10.9                11.3             (3.5)
      Full-time
       equivalent
       employees at
       end of period     8,200               8,279             (1.0)

      * 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 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 $1.1 million and $1.8 million increase to operating loss
        and net loss, respectively, for the six months ended June 30, 2008.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

Three and Six Months Ended June 30, 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 derivatives 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 related 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 useful 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      Six months ended
                                          June 30,               June 30,
                                          --------               --------
                                       2009       2008        2009        2008
                                       ----       ----        ----        ----
    The following table
     calculates net margin,
     adjusted:
        Net income (loss)          $78,438   $(14,830)   $107,145    $(50,187)
            Gain on debt
             extinguishment,
             net of taxes           (3,262)         -      (3,584)          -
            Unrealized gains
             on derivative
             financial instruments,
             net of taxes          (30,960)   (21,373)    (33,923)    (18,129)
            (Gain) loss on
             asset dispositions,
             net of taxes            2,384     (4,089)      3,306      (4,089)
            Impairment of goodwill       -      8,350           -       8,350
                                   -------      -----      ------       -----
        Net income (loss),
         adjusted                  $46,600   $(31,942)    $72,944    $(64,055)
                                   =======   ========     =======    ========
        Total operating revenues  $603,653   $693,380  $1,145,608  $1,289,771
                                  --------   --------  ----------  ----------
                Net margin,
                 adjusted              7.7%      -4.6%        6.4%       -5.0%
                                      ====       ====        ====        ====
    The following table
     calculates operating cost
     per ASM, adjusted:
        Total operating expenses  $537,487   $739,821  $1,031,735  $1,371,598
            Gain (loss) on
             asset dispositions     (2,384)     6,543      (3,306)      6,543
            Impairment of
             goodwill                    -     (8,350)          -      (8,350)
                                    ------     ------      ------      ------
        Operating expenses,
         adjusted                 $535,103   $738,014  $1,028,429  $1,369,791
                                  ========   ========  ==========  ==========
        ASMs (000)               5,968,902  6,457,117  11,327,284  12,228,154
                                 ---------  ---------  ----------  ----------
            Operating cost per
             ASM (cents),
             adjusted                 8.96      11.43        9.08       11.20
                                      ====      =====        ====       =====
    The following table
     calculates non-fuel
     operating cost per ASM and
     non-fuel operating cost per
     ASM, adjusted:
        Total operating expenses  $537,487   $739,821  $1,031,735  $1,371,598
            Aircraft fuel         (159,903)  (368,127)   (292,773)   (636,569)
                                  --------   --------    --------    --------
        Operating expenses,
         adjusted                 $377,584   $371,694    $738,962    $735,029
                                  ========   ========    ========    ========
        ASMs (000)               5,968,902  6,457,117  11,327,284  12,228,154
            Non-fuel operating
             cost per ASM
             (cents)                  6.33       5.76        6.52        6.01
                                      ====       ====        ====        ====

        Total operating expenses  $537,487   $739,821  $1,031,735  $1,371,598
            Aircraft fuel         (159,903)  (368,127)   (292,773)   (636,569)
            Gain (loss) on
             asset dispositions     (2,384)     6,543      (3,306)      6,543
            Impairment of
             goodwill                    -     (8,350)          -      (8,350)
                                    ------     ------      ------      ------
        Non-fuel operating
         expense, adjusted        $375,200   $369,887    $735,656    $733,222
                                  ========   ========    ========    ========
        ASMs (000)               5,968,902  6,457,117  11,327,284  12,228,154
            Non-fuel operating
             cost per ASM
             (cents) adjusted         6.29       5.73        6.49        6.00
                                      ====       ====        ====        ====
    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                 $159,903   $368,127    $292,773    $636,569
            Realized (gains)
             losses on
             derivatives that do
             not qualify for
             hedge accounting,
             recorded in net
             (gains) losses on
             derivatives             3,625     (9,363)      5,698      (9,363)
                                     -----     ------       -----      ------
        Economic fuel expense     $163,528   $358,764    $298,471    $627,206
                                  ========   ========    ========    ========
        Gallons of fuel burned
         (000s)                     92,813     98,261     176,166     187,866
                                    ------     ------     -------     -------
            Economic cost of
             aircraft fuel per
             gallon                  $1.76      $3.65       $1.69       $3.34
                                     =====      =====       =====       =====

    The following table calculates diluted
     earnings per share, adjusted for the three
     months ended June 30, 2009:

    Net income                                              $78,438
         Gain on debt extinguishment, net of taxes           (3,262)
         Unrealized gains on derivative financial
          instruments, net of taxes                         (30,960)

         Loss on asset dispositions, net of taxes             2,384
                                                              -----
              Net income, adjusted                          $46,600
         Plus income effect of assumed conversion-interest
          on convertible debt                                   956
                                                                ---
    Income after assumed conversion, diluted                $47,556
    Adjusted weighted-average shares outstanding, diluted   140,132
    Diluted earnings per share, adjusted                      $0.34
                                                              =====

SOURCE AirTran Holdings, Inc.

http://www.airtran.com

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