AirTran Holdings, Inc., Reports Record First Quarter Net Income of $28.7 Million
Posted on: Wednesday, 22 April 2009, 05:50 CDT
- 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)
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
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)
Maintenance,
materials and
repairs 46,443 41,332 12.4
Landing fees and
other rents 33,784 35,113 (3.8)
Aircraft
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
Capitalized
interest (340) (3,625) (90.6)
Other (322) - -
Net (gains)
losses on
derivative
financial
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
Outstanding
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)
Operating
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)
Less:
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
Less:
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
=====
COMPANY ESTIMATES/FORWARD LOOKING STATEMENTS
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.
Source: PR Newswire
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