AirTran Holdings, Inc. Reports Net Income of $38.5 Million for 2010

- Operational Excellence Leads to #1 Ranking in The Wall Street Journal's Annual Airline Scorecard-
-Company Continues Strong Financial and Operational Performance in Anticipation of Merger With Southwest Airlines-

Press Release Source: AirTran Holdings, Inc. On Friday January 28, 2011, 11:00 am EST
ORLANDO, Fla., Jan. 28, 2011 /PRNewswire/ -- AirTran Holdings, Inc., (NYSE:AAI - News), the parent company of AirTran Airways, Inc., today reported net income of $38.5 million or $0.26 per diluted share on revenue of $2.6 billion for the full year 2010. With today's announcement, AirTran has reported profits for eight of the past nine years. For the fourth quarter of 2010, the Company recorded net income of $1.9 million or $0.01 per diluted share on revenue of $645.5 million.
"What we accomplished in 2010 should be a great source of pride for our 8,500 dedicated Crew Members," said Bob Fornaro, AirTran Airways' chairman, president and chief executive officer. "Most significantly, during 2010 we hit the ball out of the park with our outstanding operational performance and customer service. We also entered into a seven-year lease for expanded facilities at Hartsfield-Jackson Atlanta International Airport and completed a five-year agreement with our pilots. As we look forward to our pending acquisition by Southwest Airlines in 2011, our airline is in the best operational shape ever. We are very well positioned for the next chapter of our exciting history."
2010 marks the third consecutive year AirTran Airways has been recognized for its outstanding operational performance as the number one low-cost carrier in the prestigious Airline Quality Rating (Airline Quality Rating - Wichita State University - Purdue University) and the sixth consecutive year the airline has been ranked in the top three among major U.S. airlines in this highly-regarded, objective ranking.
During 2010, AirTran agreed to be acquired by Southwest Airlines, the largest low-cost airline in the U.S. The proposed acquisition is subject to customary shareholder and regulatory approvals and if approved, the acquisition of AirTran by Southwest Airlines is expected to occur in the second quarter of 2011.
2010 Accomplishments
In addition to securing a mutually-beneficial agreement with its pilots and solidifying its long-term future at the world's busiest airport, Hartsfield-Jackson Atlanta International Airport, AirTran Airways continued its industry leading operational performance in 2010. Recognition of this customer service excellence culminated in the number one ranking in The Wall Street Journal's annual airline scorecard.
The 2010 performance of AirTran Airways' operation led the industry and was the best in the airline's history. AirTran Airways was among industry leaders with 82.7 percent of flights arriving on-time, the airline completed 98.9 percent of its flights and continued its industry leading baggage handling performance with a new record low mishandled baggage rate of less than two bags per one thousand passengers.
In addition to these operational milestones, AirTran Airways' traffic increased 5.3 percent to more than 19.5 billion revenue passenger miles on a 3.3 percent rise in available seat miles during the year. The airline's load factor increased 1.6 points to 81.4 percent, and the number of enplaned passengers increased 3 percent to 24.7 million. Each of these metrics represents all-time records for the airline.
The Company ended the year with over $450 million in unrestricted cash and investments. During the year, AirTran also reduced its debt by more than $222 million, including the repurchase of over $90 million in convertible notes.
2010 Financial Performance
During 2010, AirTran reported operating income of $128.2 million, net income of $38.5 million, and diluted earnings per common share of $0.26. AirTran's 2010 operating income decreased by $48.8 million compared to 2009 largely due to the unfavorable impact of a 24.6 percent increase in our average cost of jet fuel per gallon.
For the year, total operating revenue increased $277.7 million to $2.6 billion. The increase in total operating revenue was driven by a 3.3 percent increase in capacity and an 8.3 percent increase in total revenue per available seat mile to 10.88 cents. The increase in AirTran Airways' average cost of jet fuel per gallon resulted in a $171.6 million rise in our aircraft fuel expenses during 2010.
During the fourth quarter of 2010, AirTran reported net income of $1.9 million and diluted earnings per common share of $0.01. Fourth quarter 2010 operating income decreased by $25.9 million compared to the fourth quarter of 2009 largely due to the unfavorable impact of a 17.2 percent increase in our average cost of jet fuel per gallon.
For the fourth quarter of 2010, total operating revenue increased $47.1 million to $645.5 million. The increase in total operating revenue was driven by a 0.9 percent increase in capacity and a 6.9 percent increase in total revenue per available seat mile to 11.04 cents. The increase in the airline's average cost of jet fuel per gallon resulted in a $33.4million increase in our aircraft fuel expense during the fourth quarter of 2010.
AirTran's fourth quarter 2010 operating results were also adversely impacted by the $21.6 million aggregate of the following: $4.4 million due to unusually severe winter weather; $1.3 million one-time and $3 million ongoing expenses related to the collective bargaining agreement with the pilots which became effective on December 1, 2010, and $12.9 million of legal fees and other expenses incurred in connection with both the proposed acquisition of AirTran by Southwest and certain litigation.