Source: ATW Daily News Author: Sandra Arnoult 02/19/2008
Subject Concerned: Opinion Airlines Aviation Fuel Airport
AirTran Airways CEO Robert Fornaro said last week that mergers are a good idea for struggling airlines that may need to reduce capacity but not for AirTran, which has been profitable consistently for nearly a decade and should benefit from consolidation.
Speaking at an Aero Club luncheon in Washington, Fornaro said, "The industry needs to evolve and the quicker the better ... It creates larger competitors for us to contend with but we can compete with anyone out there," adding that the carrier "would seek assets and opportunities in any merger."
He said he expected it would have expanded opportunities at certain airports, as gates likely would be reallocated following a merger to ensure fair competition. "We need access to East Coast markets. These are being closed to competition," he said, mentioning New York as a market it would like to serve more frequently.
AirTran reported 2007 net income of US$52.7 million, more than triple the US$14.7 million earned the prior year. But it is facing similar cost pressures to the legacy carriers, driving the consolidation speculation. It now spends 42 cents of every US$1 on fuel.
"We can't hide from it," Fornaro said. "We could offset fuel prices with revenue over the past few years, but the revenue potential for raising prices might not be there. At some point the rate of domestic growth will turn negative."