AirTran posts first quarter loss

Washington DC
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AirTran Airways parent company has posted a net loss of $12 million for the first quarter 2010, compared with a profit of nearly $29 million last year.

Company officials blamed the decline to heavy snow storms over the winter season and a 50% increase in fuel expenses.

Revenue was up 11.7% to $605.1 million, with a record load factor of 77.2%. Operating expenses increased 21.8% to $602 million.

"Even though the weather was tough this winter we are experiencing significant revenue growth and passenger demand," says AirTran CEO and president Bob Fornaro. The severe weather, mostly along the east coast of the US, forced the cancellation of some 1,400 flights and cost an estimated $10 million.

In response to reports of merger talks from United Airlines, US Airways and Continental, Fornaro says that any plans for consolidation or mergers for AirTran are off the table for now.

"In terms of initiating something, our biggest focus is to improve our balance sheet and get to a position where we are better than we were in 2007," says Fornaro. "The balance sheet focus is critical."

Fornaro commented on the company's failed effort in 2007 to acquire Midwest Airlines, which was subsequently acquired by Republic Airways, saying AirTran would have paid too much, and then would have been saddled with integration costs.

"I think we will end up being the key mainline carrier in Milwaukee [Wisconsin] without acquiring the carrier," he says. AirTran currently holds a 30% market share out of Milwaukee.

Looking forward, Fornaro says he expects a "good April then exceptionally strong May and June going into summer."

AirTran has scaled back growth plans over the past few years but the carrier is predicting a slight improvement of up to 4% increase in ASMs in the second quarter. "Our priority is to put ourselves in a stronger footing before we consider a faster growth rate," says Fornaro.