Times could hardly be worse for U.S. airlines. Just as they emerge from their worst economic downtown ever, fuel prices are soaring into the stratosphere.

But World Air Holdings seems immune from the troubles plaguing commercial carriers.

KIMBERLY SMITH/Staff (ENLARGE)
World Air CEO Randy Martinez.
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The small but growing charter airline company based in Peachtree City saw its third consecutive year of profitability in 2004.

One reason: Half of its business comes from the U.S. military.

There's no shortage of demand to transport soldiers and cargo to and from the Middle East.

And as a charter, World Airways passes along 95 percent of the extra cost of jet fuel to its customers. In its military contracts, fuel price changes are reconciled monthly. With its other passenger and cargo charters, customers buy their own fuel.

World Air President and Chief Executive Officer Randy Martinez said the company has "focused on the basics: revenue generation, controlling the cost structure and taking care of our people."

Profit-sharing a motivator

On that last point, Martinez cites a profit-sharing plan that gives employees a cash bonus of up to 10 percent of their annual pay when the company does well.

They maxed out at 10 percent in 2004, when the airline logged a $25.6 million profit and saw its share price climb 81.8 percent.

World's pilots and flight attendants have had profit sharing for years. About three years ago, Martinez — then the president and chief operating officer — brought the remaining non-management employees into the fold.

"I believe it is a tremendous motivator," he said.

"They know their income is tied to how well the company does.

"You see it not just in the huge ideas that save hundreds of thousands of dollars but also on a nickel-and-dime basis. You see it in the way they negotiate better deals with our vendors, you see it in the questions employees ask."

Keeping workers happy is vital, he said, because "at the end of the day, it's not me the customer knows — it's the employees."

The company's 1,400 employees include 375 pilots, 575 flight attendants, 300 administrative personnel and 150 managers.

About 300 work in Peachtree City, while others are based all over the world because the company flies anywhere it is needed. (The airline is awaiting word on U.S. government permission to fly into Afghanistan and Baghdad.)

The company's corporate headquarters moved in 2000 from suburban Washington to Peachtree City mainly to cut rental costs. World Airways had been unprofitable when then-CEO Hollis Harris, former president of Delta Air Lines and a longtime resident of Peachtree City, moved the company.

Move to Peachtree City paid off

Martinez said the move was good for many reasons, including giving the company access to more experienced airline workers in Atlanta, including some former Delta people.

"We have raised the overall level of talent in the company," he said.

Harris retired April 1 of last year at age 72. Martinez admits it was "a little intimidating" to follow such a well-regarded leader. Harris' plain-spoken, folksy ways won him many fans at Delta and World.

Martinez, who worked with Harris for five years, said Harris paid a lot of attention to putting a management team in place before he left to smooth the transition.

The company has seen several other big changes in 2004 and early 2005. It formed World Air Holdings, then bought North American Airlines, a small charter passenger airline based in Jamaica, N.Y., for $35 million.

About 40 percent of North American's business is transporting U.S. military personnel.

The airline has eight leased aircraft — three Boeing 767s and five Boeing 757s — which are smaller than World Airways' 16 larger wide-body aircraft.

The acquisition "opens us up to new markets that we couldn't do because our planes were too big," Martinez said.

North American, which had revenue of $200 million in 2004, will keep its New York flight base and employees and will operate under its own name.

Martinez said much of this year will be focused on integrating the new airline into the company.

Besides easing the acquisition, the formation of a holding company allowed World to form its own insurance company, allowing it to save money on workers compensation, among other things.

Diversifying its customer base

World Airways has provided charter flights to the U.S. military for 50 years, and is the military's largest passenger carrier.

But the company also has worked hard in recent years to diversify its customer base.

"Frankly, I didn't like being so dependent on one customer," Martinez said.

The company recently signed its biggest commercial contract yet, a two-year cargo deal with EVA Airways worth $116 million.

World Airways also has a long history of humanitarian missions, including the first "babylifts" of Vietnamese orphans at the end of the war there.

This month, the company is paying for a group of former orphans to return to their homeland — some for the first time.

"In the past, World has been known as a small company with a big heart," Martinez said, adding he intends to continue the tradition.