Airline services provider AirTran Holdings, Inc. (AAI), the parent company of AirTran Airways, said Wednesday it swung to a profit in the third quarter, as lower aircraft fuel costs helped offset a decline in quarterly revenues.
For the third quarter, net income of AirTran Holdings was $10.43 million or $0.08 per share, compared to net loss of $94.55 million or $0.81 per share in the same quarter a year ago. The results represent a $105.0 million improvement over the third quarter of 2008.
Included in net income were $6.3 million of unrealized losses on future fuel hedge portfolio and a $6.4 million gain primarily related to retention of deposits from a terminated aircraft sales contract. Excluding items, the economic net income was $10.56 million or $0.08 per share for the quarter.
On average, 11 analysts' polled by Thomson Reuters expected earnings of $0.08 per share for the quarter. Analysts' estimate typically excludes one-time items.
Total operating revenues decreased 11.3% to $597.40 million from $673.29 million in the prior-year quarter, missing Street estimates of $600.47 million.
Operating income for the third quarter of 2009 was $37 million and is the second ever highest third quarter operating income. This compares to operating loss of $47.4 million last year.
Total operating expenses were down 22.2% at $560.37 million, compared to $720.71 million in the year-earlier quarter, as aircraft fuel costs declined 47.7% to $190.2 million in the quarter. Economic cost of aircraft fuel was $2.02 per gallon, much lower than $3.67 per gallon in the year-earlier quarter. Non-fuel operating costs increased to 6.00 cents per ASM, compared to 5.73 cents per ASM in the prior-year quarter.
For the quarter, traffic measured in revenue passenger miles decreased 1.7% to 5.17 billion RPMs from 5.26 billion RPMs in the year-ago period. Capacity or available seat miles were down 0.8% at 6.17 billion ASMs, compared to 6.22 billion ASMs in the prior-year quarter. Passenger load factor declined 0.8 points to 83.8% from 84.6% in the comparable quarter last year.
For the nine-month period, net income was $117.57 million or $0.86 per share, compared to net loss of $144.74 million or $1.36 per share in the year-earlier period. Total operating revenues decreased 11.2% to $1.74 billion from $1.96 billion in the prior-year period.
Looking ahead to the fourth quarter, the company said its total unit revenue per ASM will be down 7% to 8%, while expecting non-fuel unit operating cost per ASM to be up 1% to 2%. Average cost per gallon of fuel, all-in, is expected to range between $2.08 and $2.12.
AAI is currently trading at $5.07, down $0.33 or 6.11%, on a volume of 4.76 million shares.
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