Loss means AirTran will cut Atlanta flights

AirTran Airways said it plans to further pare its Atlanta flight schedule next year after posting a $107.1 million loss in the third quarter.

The loss, which AirTran attributed primarily to high fuel costs, amounted to 91 cents per share. In the year-ago quarter, AirTran had a profit of $10.6 million, or 11 cents per share. But it has been in the red each quarter since then, with the latest loss also the largest.

AirTran shares dipped about 7 percent Thursday, to $3.20.

Orlando-based AirTran has its largest hub in Atlanta, and chief executive Bob Fornaro expects to cut capacity in Atlanta by roughly 8 percent to 10 percent next year. The cuts in Atlanta will likely be greater than AirTran’s overall cuts, which reflects both the company’s needs and fierce competition with local giant Delta Air Lines, he said.

While Delta has made significant cuts at its Cincinnati and Salt Lake City hubs, it is “really kind of hanging onto their biggest asset in Atlanta,” Fornaro said.

In response to a question during an investor conference call, Fornaro said AirTran would be “willing to sit down and talk to Southwest” about a code-share marketing agreement if Southwest were interested. Such deals enable carriers to book passengers on each others’ flights.

AirTran has developed the technical ability to code-share with another airline, and “it is now something that we would consider,” Fornaro said. Southwest spokesman Chris Mainz said the Dallas-based carrier is focused on Canada and Mexico for code-share deals.

Fornaro also said AirTran would consider expanding its limited cross-marketing relationship with Denver-based Frontier Airlines.

AirTran is not in any merger discussions, Fornaro said, but he did not rule out the idea. “We’d have to consider anything on its own merits.”

AirTran said revenues were $673.3 million in the quarter, up 10.6 percent from a year earlier. Expenses rose 26.2 percent to $719.4 million. The third quarter results included $41.5 million in losses related to fuel hedging.

“Our results have clearly been disappointing,” Fornaro said. He said the company is taking steps to better position the airline, including trimming capacity, reducing capital commitments and keeping costs low.

Fornaro said the company is no longer actively seeking worker pay cuts after some employee groups voted against them.