AirTran posts record profit for 2009
AirTran finished 2009 with a bang, posting a better-than-expected fourth-quarter profit that propelled the company to a record full-year profit. AirTran reported earnings of $17.1 million (11 cents a share) during the October-to-December period. TheStreet.com says “excluding items, the carrier earned $10.1 million, or 7 cents a share. Analysts surveyed by Thomson Reuters had estimated 3 cents.”
The Associated Press writes “for the year, AirTran’s profit of $134.7 million was a record. That was equivalent to 95 cents a share, compared to a loss of $266.3 million, or $2.44 a share, for 2008.” Despite the positive earnings report, AirTran says its revenue per available seat mile — a standard metric for assessing revenue in the industry — dropped by about 10% during the quarter. That was more than the 7%-8% the company had been expecting, according to The Wall Street Journal.
The Journal writes “AirTran has been cutting fares from its already low cost structure and thus hurting its unit revenue.” AP adds “AirTran’s average fare was $90.75 in the fourth quarter, compared to $96.14 a year earlier. … Larger rivals like Delta Air Lines and American Airlines lost money in 2009. (But) AirTran … has low costs that allow it to cut ticket prices and still make money.”
The Journal adds AirTran “also has been tightening its belt on costs.” Additionally, the Journal says AirTran “has relied on strong ancillary revenue from things like baggage fees. In addition, it has started increasing capacity, while it continues to shift focus to profitable routes while sloughing off unprofitable ones.” Most of the new capacity comes from more efficiently utilizing its existing aircraft, with AP noting “AirTran won’t take delivery of any more airplanes until 2011.”
As for 2009, AirTran says in a press release that it “continued to diversify its coast-to-coast network and has increased its traffic to record levels in the Milwaukee and Orlando markets. AirTran Airways now offers flights to more cities from Orlando than any other airline and serves 18 of the top 20 markets from Milwaukee. This continued network diversification has paved the way for successful expansion into the Caribbean from Atlanta, Baltimore, and Orlando.”
“Further diversifying our network strengthens our Company and allows us to maximize revenue opportunities,” Kevin Healy, AirTran Airways’ senior vice president, marketing and planning, says in the release. “Expanding our presence in key markets like Baltimore, Milwaukee, and Orlando has been very successful … . We have established a strong platform for future growth.”