AirTran posts 1Q profit

AirTran Holdings Inc., parent of discount carrier AirTran Airways, said Wednesday it posted a first-quarter profit of $28.7 million despite a 9 percent drop in revenue, compared to a restated year ago loss of $35.4 million.

The results topped Wall Street expectations, a bright spot for the industry after several major carriers this week and last week posted hefty losses for the first three months of the year amid a steep decline in demand for air travel.

In Wednesday trading, AirTran shares rose $1.35, or 24.2 percent, to close at $6.93, a 52-week high.

The Orlando, Fla.-based company, which has its hub in Atlanta, said the profit for the January-March period was equivalent to 21 cents a share. The loss in the same period last year was 38 cents a share. A year ago, AirTran had reported a loss of $34.8 million in the first quarter, but restated that Wednesday to reflect the impact of an accounting change.

Revenue in the quarter fell to $542 million, versus $596.4 million a year ago.

On an adjusted basis, AirTran's first-quarter earnings per share were 20 cents. Analysts surveyed by Thomson Reuters, who generally exclude one-time items from their estimates, were expecting a profit of 4 cents a share on sales of $535.5 million.

"Our ability to report a profit today is rooted in the difficult decisions we made last year. AirTran Airways was among the first airlines to react to the changing economic environment and we are among the first to show signs of recovery," Chief Executive Robert Fornaro said in a statement.

Delta Air Lines Inc., Continental Airlines Inc. and the parents of United Airlines and American Airlines all posted first-quarter losses. Even discount carrier Southwest Airlines Co. posted a first-quarter loss.

Airlines are having a tough time filling their available seats despite large capacity cuts and aggressive discounting. AirTran has a low-cost structure and its route system is focused in North America and it isn't exposed, like its bigger rivals, to overseas markets that have been seeing especially weak demand of late.

At the same time, the U.S. recession has posed challenges for AirTran, just like it has for other carriers.

Analysts currently expect AirTran to post adjusted profits for the rest of the year. But a spike in fuel prices or a significant further drop in demand could change those projections.

Fornaro said in February that AirTran doesn't expect any overall growth until 2011, though it will add service in Milwaukee in a renewed effort to gain market share there. Flights in Milwaukee have increased more than 50 percent year over year and more than 30 scheduled daily departures are planned for the summer schedule, the airline said Wednesday.

Fornaro said previously AirTran will cut capacity in 2009 and likely will be flat in terms of capacity in 2010, but in 2011 it could grow at least 5 percent.

AirTran said Wednesday that its full-year available seat miles will be down 3 percent to 4 percent. For the second quarter, total unit revenue per available seat mile is expected to be down 2 percent to 4 percent, AirTran said.

AirTran offers over 700 daily flights to 61 destinations.

AirTran's annual meeting of shareholders is scheduled for May 20 in Orlando. At the meeting, shareholders will vote on the election of three directors for a term of three years each, the company's amended and restated long-term incentive plan and the appointment of Ernst & Young LLP as AirTran's independent registered public accounting firm for 2009.

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AirTran Airways: http://www.airtran.com