- The Washington Times - Tuesday, April 21, 2009

ATLANTA (AP) - AirTran Holdings Inc., parent of discount carrier AirTran Airways, reports first-quarter results on Wednesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: The Orlando, Fla.-based company, which has its hub in Atlanta, is expected to post a small adjusted profit for the January-March quarter.

Several major carriers have posted hefty loses this week and last week, including Delta Air Lines Inc. and the parents of United Airlines and American Airlines. Even discount carrier Southwest Airlines Co. posted a first-quarter loss.

Airlines are having a tough time filling their available seats despite large capacity cuts and aggressive discounting. AirTran’s route system is focused in North America and it isn’t exposed, like its bigger rivals, to overseas markets that have been seeing especially weak demand of late.

At the same time, the U.S. recession has posed challenges for AirTran, just like it has for other carriers. AirTran’s low-cost structure has helped the airline.

Analysts currently expect AirTran to post adjusted profits for each quarter this year.

A spike in fuel prices or a significant further drop in demand could change those projections.

Chief Executive Robert Fornaro said in February that AirTran doesn’t expect any overall growth until 2011, though it will add service in Milwaukee in a renewed effort to gain market share there.

Fornaro said AirTran will cut capacity in 2009 and likely will be flat in terms of capacity in 2010, but in 2011 it could grow at least 5 percent.

AirTran offers over 700 daily flights to 61 destinations.

BY THE NUMBERS: Analysts polled by Thomson Reuters, on average, expect AirTran to post a profit of 4 cents a share for the January-March quarter on sales of $535.5 million. Analysts’ projections generally exclude one-time items. On a net basis, the airline in the year-ago first quarter lost $34.8 million, or 38 cents per share, on revenue of $596.4 million.

ANALYST TAKE: Bob McAdoo, a senior research analyst with investment firm Avondale Partners, said in a recent note to clients that his firm currently rates AirTran and several other carriers as ‘Market Outperform,’ “We believe the market, for now, does not appreciate the fact that past and likely future capacity cuts will sustain these companies during this record-setting recession and will drive substantial earnings as the economy recovers,” he wrote.

WHAT’S AHEAD: AirTran’s annual meeting of shareholders is scheduled for May 20 in Orlando. At the meeting, shareholders will vote on the election of three directors for a term of three years each, the company’s amended and restated long-term incentive plan and the appointment of Ernst & Young LLP as AirTran’s independent registered public accounting firm for 2009.

STOCK PERFORMANCE: AirTran shares rose less than 1 percent during the first quarter. Its shares closed Jan. 2 at $4.51, and ended the quarter March 31 at $4.55.


On the Net:

AirTran Airways: https://www.airtran.com

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