AirTran Bolsters Liquidity, Increases Financial Flexibility

AirTran Holdings, Inc., said that AirTran Airways, its principal credit facility lender, and its largest credit card processor, respectively, have entered into agreements extending and modifying both AirTran’s credit facility and its credit card processing agreement, resulting in enhanced liquidity and improved financial flexibility for AirTran.

These transactions are effective immediately, and as a result, AirTran expects to end the current fiscal quarter with more than $400 million of unrestricted cash and short-term investments.

AirTran and its lender have extended the expiration date of its combined letter of credit and revolving line of credit facilities to Dec. 31, 2010. The amount AirTran can now borrow under its revolving line of credit facility has increased from $90 million to $125 million.

The total size of the credit facility has been reduced from $215 million to $175 million as a result of AirTran’s re-optimization of the letter of credit facility from $125 million to $50 million. AirTran Airways and its largest credit card processor have recently agreed to extend the current credit card processing agreement from Dec. 31, 2009, to Dec. 31, 2010.

As a result of the enhancements to the credit facilities and the revised covenants of our two largest credit card processing agreements, AirTran was not subject to any cash holdbacks as of Sept. 30, 2009, with its two largest card processors.