EX-99.1 2 ex99-1.htm PRESS RELEASE ex99-1.htm
EXHIBIT 99.1
 
 
FOR IMMEDIATE RELEASE
      
Media Contacts:
  
AirTran Airways
    
July 22, 2009
          
Christopher White (Media)
    
           
678.254.7442
    
           
 
    
           
Jason Bewley (Investor Relations)
    
            407.318.5188     
 
 
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/PRNewswire-FirstCall/-- 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.”
 
 
 
 
 

 
AirTran Reports Strong Net Income
Page Two
 
 
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 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 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.

 
(continued on next page)


 
 
 

 
  
Three Months Ended
June 30,
    
 
Percent
  
 
  
2009
    
2008
    
Change
  
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.


 
 
 

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

 
 
 
 

 
  
Six Months Ended
June 30,
    
 
Percent
  
 
  
2009
    
2008
    
Change
  
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 also disclose net income, adjusted, which we sometimes also refer to as economic profit. Net income, adjusted excludes special or non-recurring items and unrealized gains or losses on derivative financial instruments.
 
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
June 30,
  
Six months ended
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 expenses, 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
                          
 
CONTACT: Christopher White (Media), +1-678-254-7442; or Jason Bewley (Investor Relations), +1-407-318-5188, both of AirTran Airways