Attached files
| file | filename |
|---|---|
| 8-K - AIRTRAN FORM 8-K FOR RAYMOND JAMES 2010 GROWTH AIRLINE CONFERENCE 02.04.10 - AIRTRAN HOLDINGS INC | form8-k.htm |
February
2010
February
2010
Raymond
James
Raymond
James
2010
Growth Airline Conference
2010
Growth Airline Conference
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.
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
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
good times and bad
― Acted quickly to
mitigate record high oil in 2008
― Record 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 7 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 Recovery
6
(Cents)
Note:
Excludes fuel and special items
Industry Cost
Comparison
Non-Fuel Unit Costs
at 738 Miles for 2009
AirTran’s
Cost Advantage Remains Strong
49%
Higher
5%
Higher
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
7
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
8
(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 Q1 2011
|
28%
|
24%
|
20%
|
5%
|
(2)%
|
3-4%
|
3-4%
|
ASM
Growth
Growth
147
161
175
188
9
AirTran
Has Successfully Diversified Its Network
|
%
ASMs
|
2000
|
2002
|
2004
|
2006
|
2008
|
2010E
|
|
Atlanta
|
91%
|
76%
|
67%
|
64%
|
58%
|
47%
|
|
Florida
|
29%
|
35%
|
34%
|
38%
|
45%
|
41%
|
|
Baltimore
|
0%
|
13%
|
13%
|
9%
|
11%
|
13%
|
|
Milwaukee
|
0%
|
3%
|
3%
|
2%
|
7%
|
13%
|
|
Caribbean
|
0%
|
1%
|
1%
|
0%
|
3%
|
6%
|
|
|
|
|
|
|
|
|
|
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
10
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
11
Boston
Dallas/Ft.
Worth
Las
Vegas
Denver
Minneapolis
San
Antonio
Houston
San
Juan
Cancun
Montego
Bay
Aruba
Pittsburgh
Newport
News
Rochester
Kansas
City
Columbus
Akron/
Canton
San
Diego
Los
Angeles
Phoenix
Seattle
San
Francisco
Milwaukee
Moline
Chicago
Gulfport
Memphis
Branson
Wichita
St.
Louis
Indianapolis
Bloomington
New
Orleans
Dayton
Atlantic
City
New
York (LGA)
White
Plains
Buffalo
Richmond
Jacksonville
West
Palm Beach
Ft.
Lauderdale
Miami
Nassau
Orlando
Baltimore
Washington,
D.C. (DCA)
Washington,
D.C. (IAD)
Raleigh/Durham
Charlotte
Philadelphia
Atlanta
Tampa
Pensacola
Sarasota
Ft.
Myers
AirTran’s
2009 Atlanta Network Has Grown to 57 Cities
Flint
Detroit
Grand
Rapids
Charleston
Knoxville
Lexington
Asheville
Allentown
Harrisburg
Key
West
Portland
Omaha
Des
Moines
Routes:
57
12
Portland
Dallas/Ft.
Worth
Las
Vegas
Minneapolis
San
Antonio
Houston
San
Juan
Montego
Bay
Aruba
Rochester
San
Diego
Los
Angeles
Seattle
San
Francisco
Branson
Wichita
New
Orleans
Cancun
White
Plains
New
York (LGA)
Philadelphia
Atlantic
City
Washington,
D.C. (DCA)
Washington,
D.C. (IAD)
Newport
News
Richmond
Raleigh/Durham
Charlotte
Knoxville
Lexington
Buffalo
Boston
Allentown
Akron/
Canton
Pittsburgh
Jacksonville
Orlando
West
Palm Beach
Ft.
Lauderdale
Miami
Nassau
Gulfport
Memphis
St.
Louis
Kansas
City
Omaha
Des
Moines
Moline
Bloomington
Indianapolis
Chicago
Milwaukee
Phoenix
Denver
Harrisburg
Atlanta
Pensacola
Tampa
Sarasota
Ft.
Myers
Key
West
Baltimore
AirTran
Now Serves the Most Destinations from Orlando
Flint
Grand
Rapids
Asheville
Columbus
Dayton
Charleston
Detroit
Routes:
44
13
Portland
Dallas/Ft.
Worth
Las
Vegas
Minneapolis
San
Antonio
Houston
San
Juan
Montego
Bay
Aruba
Rochester
San
Diego
Los
Angeles
Seattle
San
Francisco
Branson
Wichita
New
Orleans
Cancun
White
Plains
New
York (LGA)
Philadelphia
Atlantic
City
Washington,
D.C. (DCA)
Washington,
D.C. (IAD)
Newport
News
Dayton
Charleston
Richmond
Raleigh/Durham
Charlotte
Asheville
Knoxville
Lexington
Columbus
Buffalo
Boston
Allentown
Akron/
Canton
Pittsburgh
Jacksonville
Orlando
West
Palm Beach
Ft.
Lauderdale
Miami
Nassau
Gulfport
Memphis
St.
Louis
Kansas
City
Omaha
Des
Moines
Moline
Bloomington
Indianapolis
Chicago
Milwaukee
Phoenix
Denver
Harrisburg
Atlanta
Pensacola
Tampa
Sarasota
Ft.
Myers
Key
West
Baltimore
AirTran
Capitalized on Baltimore’s Capacity Reductions
Flint
Grand
Rapids
Detroit
Routes:
24
14
Portland
Dallas/Ft.
Worth
Las
Vegas
Minneapolis
San
Antonio
Houston
San
Juan
Montego
Bay
Aruba
Rochester
San
Diego
Los
Angeles
Seattle
San
Francisco
Branson
Wichita
New
Orleans
Cancun
White
Plains
New
York (LGA)
Philadelphia
Atlantic
City
Washington,
D.C. (DCA)
Washington,
D.C. (IAD)
Newport
News
Dayton
Charleston
Richmond
Raleigh/Durham
Charlotte
Asheville
Knoxville
Lexington
Columbus
Buffalo
Boston
Allentown
Akron/
Canton
Pittsburgh
Jacksonville
Orlando
West
Palm Beach
Ft.
Lauderdale
Miami
Nassau
Gulfport
Memphis
St.
Louis
Kansas
City
Omaha
Des
Moines
Moline
Bloomington
Indianapolis
Chicago
Milwaukee
Phoenix
Denver
Harrisburg
Atlanta
Pensacola
Tampa
Sarasota
Ft.
Myers
Key
West
Baltimore
AirTran
is Now Milwaukee’s Largest Mainline Carrier
Flint
Detroit
Grand
Rapids
Routes:
24
15
Portland
Dallas/Ft.
Worth
Las
Vegas
Minneapolis
San
Antonio
Flint
Houston
San
Juan
Montego
Bay
Aruba
Rochester
San
Diego
Los
Angeles
Seattle
San
Francisco
Branson
Wichita
New
Orleans
Cancun
White
Plains
New
York (LGA)
Philadelphia
Atlantic
City
Baltimore
Washington,
D.C. (DCA)
Washington,
D.C. (IAD)
Newport
News
Richmond
Raleigh/Durham
Charlotte
Knoxville
Lexington
Buffalo
Boston
Allentown
Akron/
Canton
Pittsburgh
Jacksonville
Orlando
West
Palm Beach
Ft.
Lauderdale
Miami
Nassau
Gulfport
Memphis
St.
Louis
Kansas
City
Omaha
Des
Moines
Moline
Bloomington
Indianapolis
Chicago
Milwaukee
Phoenix
Denver
Harrisburg
Atlanta
Pensacola
Tampa
Sarasota
Ft.
Myers
Key
West
AirTran’s
2010 Network is Nationwide and Diversified
Grand
Rapids
Detroit
Columbus
Dayton
Charleston
Asheville
Change
from 2000
Cities:
From 31 to 69
Routes:
From 40 to 177
16
16
|
|
|
Crude
Price
|
||
|
Period
|
Hedge
%
|
$50
|
$70
|
$90
|
|
Q110
|
46%
|
$62
|
$73
|
$80
|
|
Q210
|
40%
|
$62
|
$75
|
$83
|
|
Q310
|
37%
|
$65
|
$77
|
$88
|
|
Q410
|
39%
|
$65
|
$77
|
$88
|
|
2010
|
40%
|
$63
|
$75
|
$84
|
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 $70 in 2010, our cost would
be the equivalent of $75/bbl on 40% of our fuel
be the equivalent of $75/bbl on 40% of our fuel
46%
40%
39%
37%
Note: Assumes
crack spread at 10% of crude price
17
(Billions)
(Billions)
Legacy
Airline Domestic Net Income
Legacy
Airline’s Domestic Networks Remain Unprofitable
Source:
DOT Form 41 Filings and company reported financials
Annual
Cumulative
18
18
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%)
19
AirTran
Southwest
Delta
+5%
+1%
-13%
Domestic
Capacity
2010
vs. 2007
Northeast
-9%
Midwest
-13%
Southwest
-9%
Mountain
-11%
West
-11%
South
-10%
Industry
Losses Result in Disciplined Domestic Capacity
Domestic Capacity
Change
2010
vs. 2007
Source:
DOT Form 41 Filings
20
(ASM
Growth)
AirTran
Yr/Yr Growth is Diversified Beyond Milwaukee
3
- 4 %
1
- 1½ %
2
- 2½ %
AirTran
2010 Available Seat Mile Growth
21
(ASMs
in
Millions)
Millions)
AirTran’s
Milwaukee Network Has Matured
AirTran
Milwaukee Daily ASMs
n AirTran now serves
18 of the top 20 markets
22
Milwaukee
Plays Big Role in Downsized Chicago Region
(Daily
Seats 000s)
Chicago
/ Milwaukee
Region Capacity
Region Capacity
Milwaukee
population: 3.4 million
23
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
and strong growth in ancillary revenues
n Significant non-fuel
cost advantage versus competitors will
remain intact
remain intact
n Balance sheet has
been strengthened
― $172.5MM capital
raise and extension of $175MM credit facility
n Q1 2010
outlook
― Capacity up 7% to
8%
― Total unit revenue
up 2.5% to 3.5%
― All-in fuel price
net of hedges $2.25 to $2.30
― Non-fuel unit costs
up 2.5% to 3%
Outlook
for AirTran Remains Positive
24
n Industry leading low
costs and a high quality product drives
strong 2009 profitability across multiple market segments
strong 2009 profitability across multiple market segments
n Significant cost
advantage resulting in share shift in
leisure markets
leisure markets
― Business Class /
Wi-Fi / Assigned Seats appeal to high-yielding travelers
n Company has been
successfully repositioned for
good times and bad
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
