Attached files

file filename
8-K - AIRTRAN AIRWAYS FORM 8-K 12.09.09 - AIRTRAN HOLDINGS INCform8-k.htm
EXHIBIT 99.1
 
  December 2009
  December 2009
 Investor Update
 Investor Update
 
 

 
2
 Certain of the statements contained herein should be considered “forward-looking statements,” including within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may”, “will”,
“expect,” “intend,” “indicate,” “anticipate,” “believe,” “forecast,” “estimate,” “plan, “ “guidance,” “outlook,” “could, “ “should,” “continue”
and similar terms used in connection with statements regarding the outlook of AirTran Holdings, Inc., (the “
Company” or “AirTran”). Such
statements include, but are not limited to, statements about the Company’s: expected financial performance and operations, expected fuel
costs, the revenue and pricing environment, future financing plans and needs, overall economic condition and its business plans, objectives,
expectations and intentions. Other forward-looking statements that do not relate solely to historical facts include, without limitation,
statements that discuss the possible future effects of current known trends or uncertainties or which indicate that the future effects of known
trends or uncertainties cannot be predicted, guaranteed or assured. Such statements are based upon the current beliefs and expectations of
the Company’s management and are subject to significant risks and uncertainties that could cause the Company’s actual results and financial
position to differ materially from the Company’s expectations. Such risks and uncertainties include, but are not limited to, the following: the
Company’s ability to grow new and existing markets, the Company’s ability to maintain or expand cost advantages in comparison to various
competitors, the impact of high fuel costs; significant disruptions in the supply of aircraft fuel and further significant increases to fuel prices;
the Company’s ability to attract and retain qualified personnel; labor costs and relations with unionized employees generally and the impact
and outcome of labor negotiations; the impact of global instability, including the current instability in the Middle East, the continuing impact of
the U.S. military presence in Iraq and Afghanistan and the terrorist attacks of September 11, 2001 and the potential impact of future hostilities,
terrorist attacks, infectious disease outbreaks or other global events that affect travel behavior; adequacy of insurance coverage; reliance on
automated systems and the potential impact of any failure or disruption of these systems; the potential impact of future significant operating
losses; the Company’s ability to obtain and maintain commercially reasonable terms with vendors and service providers and its reliance on
those vendors and service providers; security-related and insurance costs; changes in government legislation and regulation; competitive
practices in the industry, including significant fare restructuring activities, capacity reductions and in-court or out-of-court restructuring by
major airlines and industry consolidation; interruptions or disruptions in service at one or more of the Company’s hub or focus airports;
weather conditions; the impact of fleet concentration and changes in fleet mix; the impact of increased maintenance costs as aircraft age
and/or utilization increases; the Company’s ability to maintain adequate liquidity; the Company’s ability to maintain contracts that are critical to
its operations; the Company’s fixed obligations and its ability to obtain and maintain financing for operations, aircraft financing and other
purposes; changes in prevailing interest rates; the Company’s ability to operate pursuant to the terms of any financing facilities (particularly
the financial covenants) and to maintain compliance with credit card agreements; the Company’s ability to attract and retain customers; the
cyclical nature of the airline industry; economic conditions; risks associated with actual or potential acquisitions or other business
transactions including the Company’s ability to achieve any synergies anticipated as a result of such transactions and to achieve any such
synergies in a timely manner, and other risks and uncertainties listed from time to time in the Company’s reports to the Securities and
Exchange Commission. There may be other factors not identified above of which the Company is not currently aware that may affect matters
discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. All forward-looking
statements are based on information currently available to the Company. Except as may be required by applicable law, AirTran assumes no
obligation to publicly update or revise any forward-looking statement to reflect actual results, changes in assumptions or changes in other
factors affecting such estimates. Additional factors that may affect the future results of the Company are set forth in the section entitled “
Risk
Factors
” in the Company’s Annual Report on Form 10-K for the period ended December 31, 2008, or as supplemented in the Company’s
subsequently filed periodic reports, which are available at www.sec.gov and at www.AirTran.com.
 Safe Harbor
 
 

 
3
 AirTran Investment Highlights
n Great combination of low costs, diversified network,
 and high quality
  Lowest cost major airline in the U.S.
  Ranked #1 in the Airline Quality Rating
n Company has been successfully repositioned for
 good times and bad
  Acted quickly to mitigate record high oil in 2008
  Strong net income in 2009
n Favorable industry backdrop going forward
  Capacity remains disciplined
  Improving yield trends
  Ancillary revenue initiatives
 
 

 
n Business Class on every flight
n Assigned seating
n Wi-Fi on every flight
n Over 100 channels of free XM Satellite Radio
n Oversized luggage bins
n Friendly Crew Members
n Broad distribution network
n New aircraft - average age is 6 years
4
 AirTran Product: Low Fares and Major Airline Amenities
 
 

 
5
n Industry leading low costs
n Conservative fleet plan and modest growth
n Strong ancillary revenues
  Less dependent on initial sale to passenger
n Better diversified network
  Fewer price sensitive connections, less exposure to any single competitor
n Improved fuel hedge portfolio
n Better capitalized
  $172.5MM capital raise and extension of $175MM credit facility
n Industry backdrop remains favorable
 AirTran is Well Prepared for Economic Uncertainty
 
 

 
6
(Cents)
Note: Excludes fuel and special items
Industry Cost Comparison
Non-Fuel Unit Costs at 740 Miles for First Nine Months 2009
 AirTran’s Cost Advantage Remains Strong
47% Higher
4% Higher
 
 

 
7
n Productive workforce at all levels
n Young, simplified fleet
  Fuel efficient
  Attractive ownership costs
n Efficient use of facilities
n Competition for heavy maintenance contracts
n Low cost distribution
  Over 70% of sales are directly with AirTran (1-800-AirTran and airtran.com)
 What Creates AirTran’s Low Cost Advantage?
 
 

 
JetBlue
AirTran
Independence
Southwest
United
America West
Northwest
Continental
Alaska
American
JetBlue
AirTran
Southwest
United
Alaska
America West
Northwest
American
Continental
ATA
AirTran
JetBlue
Northwest
Alaska
Southwest
Frontier
Continental
American
US Airways
United
AirTran
JetBlue
Southwest
Northwest
Frontier
Continental
Alaska
United
American
Delta
JetBlue
AirTran
Frontier
Northwest
Southwest
Continental
United
Alaska
American
ATA
8
Notes:  (1) AQR Rating compiled by Wichita State University / University of Nebraska, Omaha.
  (2) Based on DOT reports for on-time performance, denied boardings, mishandled baggage, and customer complaints
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Airline Quality Rating for Major Continental U.S. Airlines
2007
2006
2005
2008
2009
AirTran Has High Quality & Industry Leading Low Costs
 
 

 
9
(Aircraft)
  Previous Plan:
 Fleet Plan Well-Suited for Economic Uncertainty
n Currently 138 aircraft: 86 717s / 52 737-700s
  Deferred / sold 47 aircraft from 2008-2011 fleet plan
  Reduced capital requirements by nearly $1 billion through 2010
  No permanent aircraft financing requirements until Q2 2011
28%
24%
20%
5%
(2-3)%
3-4%
2-3%
ASM
Growth
147
161
175
188
 
 

 
10
(Millions)
 Strong Ancillary Revenue Growth
43%
45%
54%
36%
>45% Yr/Yr Growth
* Select ancillary revenues are recorded in passenger revenues
28%
24%
20%
5%
(2-3)%
ASM
Growth
AirTran Ancillary Revenue
n Well-suited for low cost carriers
n High net margins
 
 

 
11
 AirTran Has Successfully Diversified Its Network
 % ASMs
2000
2002
2004
2006
2008
2010E
 Atlanta
91%
76%
67%
64%
58%
48%
 Florida
29%
35%
34%
38%
45%
43%
 Baltimore
 0%
13%
13%
 9%
11%
14%
 Milwaukee
 0%
 3%
 3%
 2%
 7%
13%
 Caribbean
 0%
 1%
 1%
 0%
 3%
 7%
 
 
 
 
 
 
 
 Daily Flights
278
362
492
650
713
713
Note: Totals >100% as percentage of ASMs represents capacity from a city/region to the entire AirTran network at year-
end
Source: 2010E based on March 2010 schedule
 
 

 
12
Boston
Flint
Moline
Buffalo
Dayton
Dallas/Ft. Worth
Houston
New Orleans
Memphis
Bloomington
Minneapolis
Akron/
Canton
Newport News
New York (LGA)
Ft. Lauderdale
 AirTran Had a Regional Route Network in 2000
Gulfport/Biloxi
Fort Walton Beach
Miami
Ft. Myers
Orlando
Jacksonville
Savannah
Myrtle Beach
Atlanta
Raleigh/Durham
Greensboro
Washington, D.C. (IAD)
Philadelphia
Newark
Chicago
Tampa
Cities: 31
Routes: 40
 
 

 
13
Portland
Boston
Las Vegas
Burlington
Flint
San Juan
Cancun
Montego Bay
Aruba
Moline
Pittsburgh
Buffalo
Rochester
Dayton
San Diego
Los Angeles
Phoenix
Seattle
San Francisco
Dallas/Ft. Worth
Houston
San Antonio
New Orleans
Atlanta
Pensacola
Memphis
Branson
Wichita
Kansas City
St. Louis
Bloomington
Knoxville
Indianapolis
Charleston
Columbus
Milwaukee
Minneapolis
Chicago
Detroit
Akron/
Canton
Richmond
Washington, D.C. (IAD)
Washington, D.C. (DCA)
Newport News
Asheville
Raleigh/Durham
Charlotte
Harrisburg
Allentown
New York (LGA)
Philadelphia
Atlantic City
Baltimore
White Plains
Charleston
Jacksonville
Tampa
Sarasota
Ft. Myers
Miami
Nassau
Ft. Lauderdale
West Palm Beach
Orlando
Key West
Denver
Lexington
Routes: 59
 AirTran’s 2009 Atlanta Network Has Grown to 59 Cities
Omaha
Des Moines
 
 

 
14
Portland
Boston
Las Vegas
Burlington
Flint
San Juan
Cancun
Montego Bay
Aruba
Pittsburgh
Buffalo
Rochester
Dayton
San Diego
Los Angeles
Phoenix
Seattle
San Francisco
Dallas/Ft. Worth
Houston
San Antonio
New Orleans
Branson
Wichita
Kansas City
St. Louis
Knoxville
Indianapolis
Charleston
Columbus
Milwaukee
Minneapolis
Chicago
Detroit
Akron/
Canton
Richmond
Washington, D.C. (IAD)
Washington, D.C. (DCA)
Newport News
Raleigh/Durham
Charlotte
Harrisburg
Allentown
New York (LGA)
Philadelphia
Atlantic City
Baltimore
White Plains
Charleston
Jacksonville
Tampa
Sarasota
Ft. Myers
Miami
Nassau
Ft. Lauderdale
West Palm Beach
Orlando
Key West
Denver
Lexington
Asheville
 AirTran Now Serves the Most Destinations from Orlando
Routes: 43
Memphis
Omaha
Des Moines
Atlanta
Bloomington
Moline
Pensacola
 
 

 
15
Portland
Boston
Las Vegas
Burlington
Flint
San Juan
Cancun
Montego Bay
Aruba
Moline
Pittsburgh
Buffalo
Rochester
Dayton
San Diego
Los Angeles
Phoenix
Seattle
San Francisco
Dallas/Ft. Worth
Houston
San Antonio
New Orleans
Atlanta
Pensacola
Memphis
Branson
Wichita
Kansas City
St. Louis
Bloomington
Knoxville
Indianapolis
Charleston
Milwaukee
Minneapolis
Chicago
Detroit
Akron/
Canton
Washington, D.C. (DCA)
Newport News
Asheville
Raleigh/Durham
Charlotte
Harrisburg
Allentown
New York (LGA)
Philadelphia
Atlantic City
Baltimore
White Plains
Charleston
Jacksonville
Tampa
Sarasota
Ft. Myers
Miami
Nassau
Ft. Lauderdale
West Palm Beach
Orlando
Key West
Denver
Lexington
Routes: 24
 AirTran Has Replaced US Airways’ Baltimore Network
Omaha
Des Moines
Columbus
Washington, D.C. (IAD)
Richmond
 
 

 
16
Portland
Boston
Las Vegas
Burlington
Flint
San Juan
Cancun
Montego Bay
Aruba
Moline
Pittsburgh
Buffalo
Rochester
Dayton
San Diego
Los Angeles
Phoenix
Seattle
San Francisco
Dallas/Ft. Worth
Houston
San Antonio
New Orleans
Atlanta
Pensacola
Memphis
Branson
Wichita
Kansas City
Knoxville
Charleston
Columbus
Minneapolis
Detroit
Akron/
Canton
Richmond
Washington, D.C. (IAD)
Washington, D.C. (DCA)
Newport News
Asheville
Raleigh/Durham
Charlotte
Harrisburg
Allentown
New York (LGA)
Philadelphia
Atlantic City
Baltimore
White Plains
Charleston
Jacksonville
Tampa
Sarasota
Ft. Myers
Miami
Nassau
Ft. Lauderdale
West Palm Beach
Orlando
Key West
Denver
Lexington
Routes: 24
 AirTran is Now Milwaukee’s Largest Mainline Carrier
Omaha
Des Moines
Milwaukee
St. Louis
Indianapolis
Bloomington
Chicago
 
 

 
17
Portland
Boston
Dallas/Ft. Worth
Las Vegas
Denver
Minneapolis
Burlington
San Antonio
Flint
Houston
San Juan
Cancun
Montego Bay
Aruba
Ft. Myers
Tampa
Charleston
Knoxville
Charlotte
Raleigh/Durham
Detroit
Allentown
Pittsburgh
Newport News
Washington, D.C. (DCA)
Baltimore
Atlantic City
Philadelphia
New York (LGA)
White Plains
Buffalo
Rochester
West Palm Beach
Ft. Lauderdale
Miami
Nassau
Key West
Sarasota
New Orleans
Kansas City
Branson
Wichita
Columbus
Dayton
Charleston
Akron/
Canton
San Diego
Los Angeles
Phoenix
Seattle
San Francisco
Lexington
Asheville
Jacksonville
Orlando
 AirTran’s 2009 Network is Nationwide and Diversified
Cities: From 31 to 69
Routes: From 40 to 173
Memphis
Omaha
Des Moines
Milwaukee
Pensacola
Atlanta
Moline
Harrisburg
Chicago
Bloomington
St. Louis
Indianapolis
Washington, D.C. (IAD)
Richmond
 
 

 
18
18
 
 
Crude Price
Period
Hedge %
$50
$70
$90
Q409
54%
$62
$69
$70
Q110
46%
$61
$73
$79
Q210
41%
$62
$75
$81
Q310
33%
$63
$77
$85
Q410
35%
$63
$77
$85
2010
38%
$62
$75
$82
 AirTran is Committed to Reducing Fuel Cost Volatility
n Hedge portfolio was restructured in 2008
n One of few airlines to actively hedge in 2009
Example: If crude was $90 in 2010, our cost would
be the equivalent of $82/bbl on 38% of our fuel
54%
46%
41%
35%
33%
Note: Assumes crack spread at 15% of crude price
 
 

 
19
(Billions)
(Billions)
Legacy Airline Domestic Net Income
Legacy Airline’s Domestic Networks Remain Unprofitable
Source: DOT Form 41 Filings
Annual
Cumulative
 
 

 
20
 
AirTran:
 
Delta:
 
Southwest:
 
-2% to -3%
 
-7% to -9%
 
-5% to -6%
2009 Planned
Domestic Capacity
Note: Domestic capacity change for 2009
Northeast
-6%
Midwest
-8%
 
Southwest
-5%
Mountain
-6%
West
-8%
South
-8%
Industry Losses Results in Disciplined Domestic Capacity
 
Las Vegas:
 
St. Louis:
 
Cincinnati:
Major Capacity Reductions
 
US Airways
 
American
 
Delta
 
 

 
21
21
Source: DOT Form 41 Filings
(Trillions)
Continental U.S. Available Seat Miles
 
82%
79%
76%
72%
69%
64%
61%
59%
57%
56%
 
6%
7%
8%
10%
12%
14%
14%
14%
14%
15%
 
12%
14%
16%
18%
19%
22%
25%
27%
29%
29%
Legacy
Regional
LCC
Domestic Capacity Now at Lowest Level In Over a Decade
(2-3%)
 
 

 
22
(ASM Growth)
 AirTran Yr/Yr Growth Largely Focused in Milwaukee
7%
6%
1%
AirTran Q409 Available Seat Mile Growth
 
 

 
23
(ASMs in
Millions)
 AirTran’s Milwaukee Network Has Matured
AirTran Milwaukee Daily ASMs
n AirTran now serves 18 of the top 20 markets
 
 

 
24
n Track record of profitability was restored in 2009
  Record net income in 2009
  Consumers are increasingly value-oriented
  Softening consumer demand has been offset by lower fuel, capacity reductions,
 and strong growth in ancillary revenues
n Significant non-fuel cost advantage versus competitors will
 remain intact
n Balance sheet has been strengthened
  $172.5MM capital raise and extension of $175MM credit facility
n Q4 2009 outlook
  Capacity up 7%
  Total unit revenue down -7% to -8%
  All-in fuel price net of hedges $2.08 to $2.12
  Non-fuel unit costs up 1% to 2%
 Outlook for AirTran Remains Positive
 
 

 
25
n Industry leading low costs and a high quality product drives
 strong 2009 profitability across multiple market segments
n Significant cost advantage resulting in share shift in
 leisure markets
  Business Class / Wi-Fi / assigned seats appeal to high-yielding travelers
n Company has been successfully repositioned for
 good times and bad
  Disciplined fleet plan
  Diversified network
  Effective hedge portfolio
n Industry backdrop remains favorable going forward
  Capacity remains disciplined
  Ancillary revenue initiatives work well for low cost carriers
n Remain poised to capitalize on opportunities
 AirTran Investment Summary