Airtran loses money
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Airtran loses money
October 26, 2006
AirTran Holdings, parent of low-cost airline AirTran Airways, on Thursday posted a net loss for the third quarter, due in part to a USD$1.5 million tax charge and restrictions on carry-on luggage.
But the carrier will likely return to profitability in the fourth quarter thanks to higher fares and fuller planes, Chief Financial Officer Stan Gadek said.
The Orlando-based airline said the quarterly loss amounted to USD$4.3 million, compared with a profit of USD$964,000 a year earlier.
The carrier said total operating revenue rose more than 30 percent to USD$487.3 million.
AirTran Chief Executive Joe Leonard said in a statement the carrier suffered in the third quarter because of government imposed restrictions on carry-on luggage. Bookings have begun to return to normal, he said.
AirTran also took a USD$1.5 million tax charge related to a 2005 promotion, the expense of which will be recognized as future revenue, the company said.
The carrier, known for an aggressive growth strategy, reiterated it would curb capacity growth in 2007.
Most major airlines have cut capacity -- the number of seats for sale -- in recent months, allowing for higher fares and fuller aircraft.
During that time, AirTran frequently added service on routes from which other airlines were retreating. The airline expects to grow its capacity by nearly 25 percent this year and scale back growth to near 20 percent in 2007.
CEO Leonard said that slower growth is merely part of a multiyear cycle for AirTran. "We're still growing very fast," he said.
(Reuters)
AirTran Holdings, parent of low-cost airline AirTran Airways, on Thursday posted a net loss for the third quarter, due in part to a USD$1.5 million tax charge and restrictions on carry-on luggage.
But the carrier will likely return to profitability in the fourth quarter thanks to higher fares and fuller planes, Chief Financial Officer Stan Gadek said.
The Orlando-based airline said the quarterly loss amounted to USD$4.3 million, compared with a profit of USD$964,000 a year earlier.
The carrier said total operating revenue rose more than 30 percent to USD$487.3 million.
AirTran Chief Executive Joe Leonard said in a statement the carrier suffered in the third quarter because of government imposed restrictions on carry-on luggage. Bookings have begun to return to normal, he said.
AirTran also took a USD$1.5 million tax charge related to a 2005 promotion, the expense of which will be recognized as future revenue, the company said.
The carrier, known for an aggressive growth strategy, reiterated it would curb capacity growth in 2007.
Most major airlines have cut capacity -- the number of seats for sale -- in recent months, allowing for higher fares and fuller aircraft.
During that time, AirTran frequently added service on routes from which other airlines were retreating. The airline expects to grow its capacity by nearly 25 percent this year and scale back growth to near 20 percent in 2007.
CEO Leonard said that slower growth is merely part of a multiyear cycle for AirTran. "We're still growing very fast," he said.
(Reuters)