AirTran posts 3Q profit of $10.4 million

AirTran Airways' financial results are benefiting from the discount carrier's low costs and laser focus on domestic routes where it believes it can make money, and it actually wants to grow in 2010 when other major carriers have more conservative plans.

Its Orlando, Fla.-based parent company reported Wednesday a $10.4 million third-quarter profit, or 8 cents a share, even though sales declined more than 11 percent. A year ago it reported a restated $94.6 million loss, or 81 cents a share.

The July-September results mark AirTran's third quarter in a row of profit as most major U.S. carriers struggle amid weak overall demand for business and international travel.

Revenue fell to $597.4 million from $673.3 million a year ago.

Excluding one-time items, its adjusted net income for the three months ended Sept. 30 was 8 cents a share, in line with analysts' slightly reduced expectations. The revenue figure was a little below the analysts' estimate of $600.5 million.

Executives said during a conference call with analysts that AirTran expects to increase capacity 2 percent to 4 percent next year. In March and again in July the airline said capacity, as measured by available seat miles, would be flat in 2010.

CEO Bob Fornaro said in an interview with The Associated Press after the call that AirTran took delivery of two more planes in late September that it hadn't planned to previously.

"I think consistent with what we're seeing in the market, we're feeling pretty good about our profitability," Fornaro said. He also noted that 34 percent of AirTran's 2010 fuel needs are hedged, protecting the airline from rising fuel prices.

Several other major carriers continue to post losses, albeit smaller ones in some cases, and they are being conservative with their capacity plans next year as the economy has only recently shown signs of improvement.

"I wouldn't say we are in a special place, but we've had a much better year than the rest of our competitors," Fornaro said. "We're solidly profitable."

AirTran has been trying to shift its focus from unprofitable routes to profitable ones, and it also has been working to make sure it has enough cash to continue to weather the downturn in travel demand.

In August, AirTran said it planned to stop flying to and from Newark, N.J., effective Sunday, and give its takeoff and landing slots there to Houston-based Continental Airlines Inc. in exchange for Continental slots at LaGuardia Airport in New York and Reagan National Airport in Washington. Continental has a hub at Newark Liberty International Airport, which is used by many travelers heading to or from New York City.

A slot is an interval of time during which an airline can takeoff or land its aircraft at an airport. Slots, especially at peak times of day and in busy corridors like the Northeast, are valuable to airlines.

AirTran, which has its hub in Atlanta, has over 700 daily flights to 67 destinations.

Separately, AirTran said union members approved a new four-year contract covering roughly 400 mechanics and inspectors in Atlanta, Orlando, Fla., Baltimore/Washington, Boston, Dallas/Fort Worth, Fort Lauderdale, Fla., and Milwaukee. The agreement includes better wages, benefits and working conditions.

AirTran shares fell 53 cents, or 9.8 percent, to close at $4.87 in Wednesday trading.

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