AirTran Reports $107.1 Million Third Quarter Loss

AirTran Holdings, Inc. reported a net loss of $107.1 million, or $0.91 per diluted share for the third quarter 2008, which included non-operating losses related to its fuel hedging program of $41.5 million, which was comprised of $55.5 million of unrealized losses and $14.0 million of realized gains.

During the same quarter of 2007, AirTran reported net income of $10.6 million or $0.11 per diluted share. Fuel costs –which represented over 50 percent of AirTran’s expenses for the quarter and rose to historically high levels- contributed significantly to AirTran’s third quarter loss.

As of Sept. 30, 2008, AirTran had $318.1 million of unrestricted cash and investments. In addition, as of Sept. 30, 2008, AirTran had $84.2 million of restricted cash. Non-fuel unit costs continued to decline in the third quarter to 5.88 cents further strengthening AirTran’s cost advantage relative to the industry.

For fuel, the average economic cost per gallon increased 63.1 percent to $3.67 as compared to $2.25 in the third quarter of 2007. Total fuel expense for the quarter was $363.9 million, up $149.0 million from the prior year. Revenues for the third quarter grew 10.6 percent to $673.3 million.

Third quarter traffic rose by 9.4 percent on a 3.6 percent increase in capacity, resulting in an all-time quarterly record load factor of 84.6 percent, a 4.5 point increase over 2007. Unit revenues in the third quarter were up 5.6 percent to 10.21 cents per available seat mile (ASM).

AirTran reduced capacity in September by nearly 10 percent and our unit revenue grew over 13 percent despite the travel disruptions caused by an active tropical storm season in the Southeastern United States and a weakening economic climate.

AirTran is now planning for capacity to be down 6 to 7 percent during the fourth quarter of 2008. In addition, the company is currently targeting a 3 to 7 percent capacity reduction in 2009.