AirTran ends quarter with $445.9 million in cash

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AirTran ended the second quarter with an unrestricted cash and investment balance of $445.9 million.

During the quarter, the airline took several steps to raise capital. On a concurrent offering of common equity and convertible notes, the airline raised $147 million (net of fees). It also secured a commitment for a letter of credit facility of up to $150 million. In addition, AirTran renegotiated an agreement with its primary credit card processor that includes an extension of the term through 31 December, 2009.

The airline reported a net loss of $13.5 million for the quarter compared with net income of $42.1 million in the year-earlier period.

To adapt to a new operating environment, the airline has decided to cut capacity and defer deliveries.

In May, AirTran Airways announced that it would defer the delivery of 18 Boeing 737-700s, originally scheduled for delivery between 2009 through 2011 to 2013 through 2014. A second agreement was recently reached with Boeing to defer four additional deliveries of 737-700 aircraft from 2009 to 2015.

AirTran also sold two Boeing 737-700 aircraft in April and completed agreements to sell four additional Boeing 737-700 aircraft. It holds an agreement in principle for a fifth Boeing 737-700 aircraft during the remainder of 2008.

The airline is now planning for capacity to be down 7%-8% during the last four months of 2008. In addition, the airline is currently targeting a 4%-8% capacity reduction in 2009.

“We have taken significant actions to address the challenges of high fuel and a slowing economy,” says Arne Haak, senior vice president of finance, treasurer and CFO for AirTran Airways. “During the quarter we further reduced our industry leading non-fuel CASM by 3.2% to 5.73 cents per seat mile. We are focused on cash preservation and liquidity and have made significant progress in strengthening our cash position. We continue to work towards additional actions on each front.”