- The Washington Times - Monday, May 4, 2009

ATLANTA | Robert L. Fornaro thinks of his first full year as chief executive of AirTran Airways — 2008 — as a “baptism by fire.”

As oil prices soared to a record $147 a barrel, the discount carrier known for its cheap fares posted an annual loss after years of steady profits.

Investors were concerned about whether the airline had enough cash and whether it could continue to grow in light of high fuel prices. AirTran cut flights, shed jobs, further reduced costs and instituted new fees on passengers for checked bags and other once-free amenities. And, for Mr. Fornaro, who says he only flew on a plane once before age 25, there were a lot of sleepless nights.

Now, AirTran, a unit of Orlando, Fla.-based AirTran Holdings Inc., may have righted its course. Among the nine largest U.S. carriers, it was one of only two that posted a profit for the first quarter, despite the weak economy and fewer travelers. JetBlue Airways was the other. The profit news pushed AirTran’s stock to a 52-week high.

And a big drop in fuel prices has benefited the carrier.

Dressed in a gray suit and checkered pattern tie, the 56-year-old Mr. Fornaro sat down recently with the Associated Press. He’s previously held aviation roles at Northwest Airlines and US Airways and has been chief of AirTran since Nov. 1, 2007. Mr. Fornaro offered his take on several issues, including baggage fees, airline finances, industry consolidation and executive compensation.

Excerpts of the interview follow.

Q: Does AirTran have any interest in acquiring another carrier or being acquired by another carrier?

A: Clearly we’ve seen Northwest and Delta come together, but I’m not sure we’re going to see another merger over the next two or three years. The financial condition of the carriers now is weak, and there are probably some real big issues that need to be resolved with the labor contracts. Two or three years ago, we thought that the best opportunity for us to expand in the Midwest was to acquire Midwest Airlines. … Since that time, Midwest has shrunk its operation. … We now feel that we can be much more successful going in on our own. Over the next two years, thinking about acquisitions will be very, very low on our priority list. (AirTran made a hostile takeover bid for Midwest in 2005, raising its offer several times over the next two years. Each time, its offer was rejected. Midwest ultimately agreed to be sold to a private equity firm.)

Q: After a loss last year, this year started with a profit, even though you have been discounting aggressively and many of your larger competitors posted heavy losses. How’d you do it?

A: Last year, we were not as well-equipped to deal with the downturn as I would have liked. We were growing too fast at a time when the domestic economy was weakening and fuel prices were going up daily. We stepped back, we reassessed our operation, we adjusted our capacity and obviously managed our costs and have very quickly rebounded.

Q: What are other airlines doing well that AirTran could be doing a better job of?

A: We try not to have all our comparisons versus other airlines. The reason for that is this is an industry that has struggled over decades. I’ve heard my whole career: While another airline is doing something, why shouldn’t we? That is a philosophy that has not served the airlines well, always copying other people.

Q: AirTran’s on-time performance has been roughly in the middle of the pack compared with other U.S. carriers in the last few Department of Transportation rankings. What steps are you taking to improve that?

A: Our goal is to be in the top half to the top quarter. Our most important metric is lost baggage. … I don’t believe a customer can tell the difference between an airline running 79 percent on time or 77. But a customer can tell the difference between an airline that loses bags 1.8 per 1,000 versus one that loses six to eight per 1,000.

Q: Fees were introduced when fuel prices soared. Now that oil prices are down, why are we seeing more fees? Why not simply raise ticket prices rather than add fees?

A: We do need other sources of revenue to be successful. If I had a choice, I would like to have one price, but all the analysis we have done says that we can collect more revenue by disaggregating the product and let the customer decide on which features they want. I haven’t seen one price point that will cover everything. The price point that the customer would want to pay would be too low for all of us to make a return.

Q: How often do you fly; business class or coach? Do you ever fly your competitors?

A: I fly probably every week, sometimes two. … It gives you an opportunity to stay close to the operation. Business class is certainly easier. I don’t have anybody looking over my shoulder when I’m working. But, we have a very comfortable coach class. … I do fly our competitors sometimes, perhaps to a destination we don’t fly or when another carrier’s schedule is more convenient.

Q: What, if anything, keeps you awake at night?

A: There were a couple months last year when I couldn’t sleep because it was tough with oil prices going up $3 or $4 a day. We’ve taken a lot of tough steps to right the ship, and I’m very comfortable where we are.

Q: What’s an average day for you like?

A: I get up early and tend to read a lot of newspapers at home and do some e-mails. … I like to walk around the office and stick my nose in and have time to focus on key priorities.

Q: What do you do on your days off?

A: I like to golf, but I seem to only be able to do it six or seven times a year. The summers, I tend to spend my weekends on the New Jersey shore.

Q: What’s your view on how much you should be paid during these tough economic times?

A: Shareholders are going to decide what people are paid and the board of directors will decide. … We actually considered pay cuts, but everybody at AirTran would have had to take them — the management, all our labor unions. … I don’t see any benefit to singling out a handful of people versus the entire team.

Q: Your bio says you played lacrosse and studied economics in college. Your career has been largely in aviation. What made you turn to the airline industry?

A: Growing up, aviation wasn’t a passion. To be honest with you, I only flew on one airplane prior to being 25 years old. … I ended up in my second year of work life joining TWA. What I found interesting about the industry is there’s a lot of cultural factors, there’s a lot of demographic factors, and movement of people and traffic.

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