Fourth Quarter Recovery with Operating Income of $54.9 Million - Record Revenues of $589.4 Million - 2008 Net Loss of $273.8 Million
AirTran Holdings, Inc., (NYSE:AAI) , the parent company of AirTran Airways, Inc., reported a net loss of $273.8 million for the full year 2008, or $2.51 per diluted share, which included non-operating losses of $150.8 million related to changes in fair value on the Company's out-of-the-money fuel hedge contracts. During the fourth quarter, AirTran unwound approximately 78 percent of its 2009 fuel hedge contracts in order to mitigate the potential for additional losses on further oil price declines. For the fourth quarter, AirTran reported a net loss of $118.4 million, or $1.00 per diluted share, which also included non-operating losses of $147.7 million related to fuel hedge contracts. AirTran ended the fourth quarter with $340.5 million in unrestricted cash and investments, its highest year-end balance since 2005.
The fourth quarter results demonstrated the benefits of AirTran Airways' plan for adapting to the year's high-cost energy environment, the unrest in the capital markets, and an uncertain economy. In the second quarter 2008, the Company initiated steps to position the airline to react to these challenges by enhancing the airline's liquidity and reducing capacity and capital expenditures aggressively through the disposition of aircraft and the deferral of Boeing 737 deliveries while sustaining a low-cost structure. These actions combined with the recent decline in fuel prices resulted in a record fourth quarter operating income of $54.9 million on record fourth quarter revenues of $589.4 million.
"2008 was an especially tough and challenging year," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "We thank our dedicated, hard-working Crew Members and our loyal customers for helping us overcome the many obstacles we faced in 2008. Our Crew Members continue to strive to provide exceptional customer service, and a high-quality product while offering value to the traveling public. Despite the industry challenge shifting from high oil costs to concerns regarding consumer demand, our 2008 initiatives have us well positioned to return to profitability in 2009."
Revenues for the fourth quarter grew 1.0 percent to $589.4 million. Despite a 6.5 percent decrease in capacity, fourth quarter traffic fell just 2.2 percent, resulting in a record fourth quarter load factor of 78.7 percent, a 3.4 point increase over 2007. Passenger unit revenues in the fourth quarter were up 6.8 percent to 10.32 cents per available seat mile (ASM). Total unit revenues were up 7.9 percent to 11.00 cents per ASM, the highest fourth quarter level achieved in the Company's history.
For the full year, capacity increased by 4.9 percent and traffic rose 9.6 percent, which resulted in a load factor of 79.6 percent. Total annual revenues grew by 10.5 percent to $2.6 billion. Passenger unit revenues increased 4.6 percent to 10.14 cents per available seat mile (ASM). Total unit revenues were up 5.3 percent to 10.72 cents per ASM, the highest annual level AirTran has ever achieved.
Commenting on the fourth quarter performance, AirTran Airways' senior vice president and chief financial officer Arne Haak said, "2008 presented multiple financial challenges. With a resiliency and a 'can-do-attitude' that defines AirTran, we reacted promptly and decisively to address these challenges. We are committed to being disciplined managers, maintaining our low cost advantage, and we believe that AirTran is now better positioned for the uncertainty that lies ahead in 2009."
Highlights of AirTran Airways' 2008 accomplishments include:
• Raised over $375 million in financing/credit transactions resulting in the Company's highest year-ending balance of unrestricted cash and investments since 2005
• Completed the sale or rescheduling of 46 aircraft, which resulted in repayment of over $220 million in debt obligations in 2008 and the reduction of over $950 million in capital expenditures for 2009-2010
• Recorded highest fourth quarter operating income in history of $54.9 million
• Initiated new service to Columbus, Ohio, and Harrisburg Pa., in November 2008
• Announced new service to Branson, Mo., and Cancun, Mexico beginning in 2009
• Strengthened our partnerships with The Coca Cola Company, The Hertz Corporation, Barclays, and eBay/PayPal
