AirTran Airways plans to shrink its Atlanta hub as high oil costs put pressure on the airline, the company's executives said Tuesday.
[ Post your comments below. ]
|
High oil prices mean it makes less sense to fly "lower-yielding leisure customers," AirTran's Chief Financial Officer Arne Haak said during an investor conference call. "This will result in our Atlanta hub getting smaller."
The Orlando-based airline has rapidly grown its Atlanta hub in recent years, bringing in more price competition against market leader Delta Air Lines.
"We created the market in Atlanta for low fares, for close-in regional business fares," AirTran Chief Executive Bob Fornaro said during the conference call. "Quite frankly, those average prices need to come up." When prices go up, the market will contract, and Fornaro said the number of flights AirTran has this summer is "too much."
Aside from cutting back in Atlanta, the airline also expects to close more operations in other cities it serves.
Fornaro also said that mechanics represented by the Teamsters have voted against a proposed pay cut. AirTran announced earlier this month that it plans to cut employee pay by 5 percent to 15 percent.
"Over time we will go back again to the Teamsters," Fornaro said. Haak said if the airline is not successful in cutting pay, it will need to reduce its fleet further, "and that will result in more terminations."
AirTran reported Tuesday that it lost $13.5 million in the second quarter and will cut flight capacity by 7 percent to 8 percent in the last four months of this year and by 4 percent to 8 percent in 2009 — steeper cuts than previously planned. Fornaro hopes to increase that capacity cut to as much as 10 percent, depending on how many planes the airline can sell off. The company also is deferring deliveries of four more aircraft from Boeing — for a total of 22 deferrals.
Though the airline is cutting back its operations, Fornaro said the airline may consider adding international routes such as to Cancun or to places in the Caribbean.
During the investor conference call on the airline's financial results, Fornaro said, "Clearly we are disappointed."
The company's second-quarter loss is equivalent to 12 cents per share. That compares to a profit of $42.1 million, or 42 cents per share, a year earlier, according to AirTran.
The airline's plans for additional capacity cuts come as airlines across the industry shrink to cope with high fuel costs. AirTran had previously planned to cut capacity by 5 percent instead of earlier plans to grow 10 percent.
The company also said it has negotiated an extension of its credit card processing agreement through Dec. 31, 2009, and agreed to a requirement by the credit card processor to hold back cash. The company said it now has a commitment for a line of credit of up to $150 million to cover part of the credit card processors' potential hold-back requirements. Hold-back requirements have contributed to problems for other airlines, including Denver-based Frontier Airlines, an AirTran partner. Frontier filed for Chapter 11 bankruptcy protection in April.
AirTran said its revenues in the second quarter ended June 30 were $693.4 million. That's up 13 percent from $613.5 million in the year-ago quarter. But its operating expenses were $738.9 million, up 37.9 percent from $535.7 million a year earlier.
Vote for this story!

Is it therapy to buy a pair of shoes? Discuss ... or nominate your favorite place to find those shoes!

McDonald's has unveiled a line of bigger burgers that will satisfy large appetites and scare cardiologists.

Photos: Janet Jackson, Monica, Maxwell, Jamie Foxx, New Edition, Keri Hilson, Ciara and more!

Husband and wife architects created a modern house that's still warm and inviting.

"My confidence is through the roof ... I can do anything," says Sonya Moste of Fayetteville.

Francoeur's Franks? Shef's Chefs? Just some of the passionate fans who have cheered the team.
Comments
By LMAO
Jul 31, 2008 11:40 AM | Link to this
By Jess
Jul 30, 2008 10:23 AM | Link to this
AirTran s-cks anyway. I hear they are firing left and right and since the economy is so bad, they are finding any small thing to fire about.
This is true Jess. It is the most senior employees they are targeting as well, the ones that have given them 5 - 6 - 7 - 8 and more years of their lives, and have worked their way up to a somewhat liveable salary. They are targeting them because they are earning more money than some one they can hire in at half of the pay out. Then when these loyal employees try and collect unemployment to make ends meet while the look for another job they are denied that too. The ones they are hiring in at bottom level pay are inexperienced which effects youby way of the level of service you get tops side and ground level. What a wonderful airline!
By LMAO
Jul 31, 2008 11:13 AM | Link to this
By airtran consumer
Jul 30, 2008 4:39 PM | Link to this
What I want to know is when they are talking about scaling back here in Atlanta, What type of scalin back are we talking about????? Are they cutting the number of flights out of here or are they completely coming out of Atlanta? I am a frequent flyer with Airtran and I have NEVER had any issues with their quality like I have with other airlines. I just need to know where I will need to go now to stay with Airtran.
If you only knew how much you were supporting the parasitic lifestyle of the CEOs of AirTran and other air carriers like them. They are cheap because they pay their laborers cheap. The ones that get your bags to your connecting flights, the ones that by the sweat of their brow, and the muscle pains in their backs, lift your 90# plus bag in the bellie of that aircraft because you are too cheap to pay a fee for a second checked bag and pack your whole household into one bag for a weekend trip, and the ones that are living from pay check to pay check or after putting in 8 hours + for back breaking labor and very little pay, go straight to another back breaking job just to keep food on their families tables. You sit in the comfort (sic) of a cramped seat with 2 huge jumbos on either side of you while the CEOs and the like live, ride, and dine in luxury on your dollar. You think about that "AirTran Consumer" next time you board one of those 717s or 737s. AirTran is the worste. You get what you pay for..
AirTran needs to go down!
By Tom
Jul 31, 2008 8:27 AM | Link to this
My fault. The delay time in the posts getting displayed threw me off. You are welcome. I try and help people understand the system (as much as possible...because it is complicated) when I can. But, you're comments about customer service, on the whole, are correct. It has SEVERELY deteriorated in the industry. Take it easy and I hope to see you in ATL soon:)
By InterestedReader
Jul 30, 2008 9:02 PM | Link to this
Yea. I don't know if you read my last response or not but I was saying thanks for explaining it...not trying to argue with you anymore. You made your case and it was good one sans customer service which we decided was irrelevant.
By Tom
Jul 30, 2008 8:22 PM | Link to this
Ok, I'm done. You can throw any airport out there you want and my answer stays the same. Airlines do not set delays into place. Airlines cannot control weather. The FAA puts delay programs into place to help meter the traffic into an airport when weather is around because they simply cannot handle a full load when weather is around. Thats the answer...plain and simple. It may not be an answer you want to hear, but its the truth. Its not perfect, but its what we have.
By InterestedReader
Jul 30, 2008 8:19 PM | Link to this
Interesting...well this has been enlightening. Thanks for taking the time out of your day to explain it to me!
By Tom
Jul 30, 2008 7:57 PM | Link to this
Memphis is the busiest cargo airport in the world just like Atlanta is for passengers and you don't see Fedex and Northwest having meltdowns.
The vast majority of FEDEX's operations occur at night when passenger traffic is low to nill.
Denver's airport has the same layout as Atlanta with not two but THREE hubs(3rd being 115 flights a day by SWA focus city) and they rarely have a meltdown. How do you explain that?
Again, these hubs your refer to are not the issue...its the total traffic. Airport layout is not the issue...its traffic. In May of this year, ATL had 82,398 total flights. Compared to the airport you picked, Denver, which had a total of 53,939 flights. Both of those numbers came from each individual airports websites.
USAir is actively working to improve PHL as is everyone with LGA. What are you doing in Atlanta to improve?
I, myself, am not doing anything to improve ATL. I don't have much control over that. I can tell you before the 5th runway was added it was an absolute mess. It was almost like Newark. Everyday at 1pm...delays....rain or shine. The 5th runway has really improved the flow into ATL...but it is still not perfect....obviously.
Why does ASA almost always cancel its evening flights to close in cities and delay them until 11pm before doing so? Why do Delta customer service people openly treat you like a pain in the butt that they'd rather not deal with
The customer service topic is not what we are talking about here. We are talking about delays at airports, not customer service. As for ASA's flight ops, I know it has been a big problem for them. Almost 2 years ago they had a big house cleaning over there and Delta really took an active role in trying to improve things. I haven't flown them in a while so I'm not sure what things are like now, or if they've even improved. But, I can tell you one thing, ASA is not causing delay's at ATL. They may cancel flights...but that is effecting them and only them...not the rest of the airport.
By InterestedReader
Jul 30, 2008 7:51 PM | Link to this
Let me add Dallas and Miami to list of airports that are more like Atlanta and somehow manage to do better in the South.
By InterestedReader
Jul 30, 2008 7:33 PM | Link to this
Memphis is the busiest cargo airport in the world just like Atlanta is for passengers and you don't see Fedex and Northwest having meltdowns. Denver's airport has the same layout as Atlanta with not two but THREE hubs(3rd being 115 flights a day by SWA focus city) and they rarely have a meltdown. How do you explain that? USAir is actively working to improve PHL as is everyone with LGA. What are you doing in Atlanta to improve? Why does ASA almost always cancel its evening flights to close in cities and delay them until 11pm before doing so? Why do Delta customer service people openly treat you like a pain in the butt that they'd rather not deal with?
By Tom
Jul 30, 2008 5:59 PM | Link to this
Interested Reader...I'm not trying to gang up on you here, but you wrote:
Same to you prick. I assure you it's not all the FAA. If it were all them there wouldn't be a noticably different experience with airlines other than Delta such as Southwest, US Airways, and American, and and at airports other than Atlanta such as Charlotte, Memphis, Orlando and Nashville when it was an American hub and today with Southwest
First of all, weather delays are set in motion by the FAA...that is a fact. Now, sometimes if weather is forecasted for later in the day, airlines will cancel flights early, so the airplanes don't get stuck in the other cities...this way the airplanes will be were they are supposed to be by night...and the schedule will operate normally the next day (All airlines practice this). But, weather delays are set by the FAA and you proved the point in your previous post. You said airports other than Atlanta...well...the airlines don't control the Atlanta airport...the FAA does. And when comparing ATL to CLT, MEM or MCO...you are really comparing apples to oranges. Atlanta is THE busiest airport in the world. The amount of traffic in and out of those other airports doesn't even compare to Atlanta. And when weather hits, the strains that are put on ATL are much great. As far as other airlines, well I promise you that USAir has the same problems with Philly and LaGuardia and American has problems with Chicago. One thing Southwest has done well is they typically try to fly into third tier airports. For instance, they don't fly to LaGuardia they fly to Islip. They don't fly to Boston, they fly to Providence. It helps them get around the delays a bit. But when the airspace problems really get bad, it hits them as well. I'm not trying to blame the FAA with any of this. The controllers do an amazing job with all of this. Its not perfect...but its what we got. Again, I'm not trying to gang up on you, just trying to help you understand the system.
[1 2 3 4 5 6 7] next
Commenting is open from 8 a.m. to 5 p.m. M-F, except on Tuesday when it's open until 9 p.m.
Post a comment
*HTML not allowed in comments. Your e-mail address is required.
Request a comment be removed