Source: ATW Daily News Author: 06/17/2008
Subject Concerned: Airlines
AirTran Airways said second-quarter "yield growth has been slower" than expected "despite numerous fare increases," leading it to drop its unit revenue forecast to a year-over-year improvement of 1.5%-2% from April's prediction of 5%-6%.
It said in a filing with the US Securities and Exchange Commission that in "some" markets, "fares were increased too rapidly, which limited the company's ability to effectively manage close-in demand," resulting in an increased mix of lower-yield connecting traffic.
It did say, however, that bookings for the third quarter are ahead of last year at higher fares and that unit revenue should surpass the first half. In addition, it now expects non-fuel CASM to fall 2%-2.5% year-over-year rather than 1%-1.5% owing to "improved efficiencies and solid operating performance."
It also announced an additional 5% capacity cut beginning in September on top of the reduction announced this spring. That cut will result in a 5% total reduction year-over-year and a 15% drop from its initial plans for late 2008.
AirTran has sold two new 737-700s this quarter and said it has written agreements for the sale or disposal of an additional five unidentified aircraft this year. The capacity cut includes the cessation of services at New York Stewart.
It now expects to operate 135-140 aircraft by year end, down from its original target of 147. It is "prepared to further reduce its fleet size" if conditions warrant.