AirTran Holdings, Inc., Reports 2007 Net Profit of $52.7 Million

ORLANDO, Fla., Jan. 29 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., , the parent company of AirTran Airways, Inc., today reported net income of $52.7 million for the full year 2007 or $0.56 per diluted share. For the fourth quarter, AirTran reported a net loss of $2.2 million or $0.02 per diluted share.

Included in the full year results is a charge associated with the termination of AirTran's exchange offer for Midwest Air Group and a gain on the sale of two aircraft. The combined impact of these two items resulted in a reduction of earnings of $2.8 million, net of tax, or $0.02 per diluted share. For the full year and fourth quarter of 2006, AirTran reported net income of $14.7 million or $0.16 per diluted share and a $3.6 million or $0.04 loss per diluted share, respectively.

"We finished the year with very strong revenue performance reflecting the high quality of our service and diversified network, which was especially important given the challenging operating environment and record high fuel costs in 2007," said Bob Fornaro, AirTran Airways' president and chief executive officer. "We are proud of our improved profitability, and our dedicated, hard-working Crew Members deserve all the credit. Their loyalty and outstanding customer service have taken AirTran Airways to new heights, and I look to our future performance with optimism."

During the fourth quarter, capacity grew by 15.1 percent and traffic rose by 25.5 percent, resulting in a load factor of 75.3 percent, a 6.3 point increase year over year. Revenues for the fourth quarter grew 26.5 percent and passenger unit revenue increased 9.4 percent. For the full year, capacity increased by 19.4 percent and traffic rose 25.0 percent, which resulted in a record load factor of 76.2 percent. Total revenues grew by 22.1 percent to a record $2.3 billion.

Commenting on the fourth quarter, Kevin Healy, senior vice president of marketing and planning for AirTran Airways, said, "With double-digit capacity growth and seven new destinations added to our growing network in 2007, we're pleased to report very strong unit revenue performance." He added, "While we remain in a very challenging business environment in 2008 our advance bookings and demand look strong, and I am optimistic about our revenue performance going forward."

AirTran Airways reduced its total operating unit costs for the year by 1.7 percent despite a 2.8 percent increase in the price of fuel. Non-fuel unit operating costs declined by 2.6 percent for the year. During the fourth quarter, non-fuel unit costs increased 2.2 percent due to significant weather events, increased maintenance, and distribution costs related to higher passenger traffic and revenues.

Commenting on the fourth quarter performance, AirTran Airways' senior vice president and chief financial officer Stan Gadek said, "I am very pleased that we have continued to lower our non-fuel unit costs for the sixth consecutive year. AirTran's ability to deliver a high quality product with an industry leading cost structure has enabled us to report a significant increase in profits."

Recent highlights of AirTran Airways' accomplishments include: -- Added ten new Boeing 737-700 aircraft in 2007, which increased our 737 fleet to 50 aircraft and total fleet to 137 aircraft. -- Initiated service to seven new destinations in 2007 - Charleston, S.C.; Daytona Beach, Fla.; Newburgh, N.Y.; Phoenix, Ariz.; Portland, Maine; St. Louis, Mo.; and San Diego, Calif. -- Secured financing on all aircraft deliveries through December 2008. -- Launched 30 new non-stop routes in 2007 throughout our network. -- Announced the commencement of service to San Juan, Puerto Rico beginning March 5, 2008. -- Created more than 800 new jobs throughout the company in 2007 for a total of nearly 8,900 Crew Members. -- Announced a multi-year partnership with the State of Florida and the City of Orlando for a new Operations Center that will create more than 120 new jobs in Central Florida over the next three years. -- Announced expansion of Milwaukee service with the addition of nonstop flights to New York (LaGuardia), Los Angeles, San Diego, and San Francisco, Calif., Boston, Mass. and Seattle, Wash. with flights starting in May 2008.

AirTran Holdings, Inc., will conduct a conference call to discuss quarterly results today at 9:00 a.m. Eastern Standard Time. A live broadcast of the conference call will be available via the Internet in the investor relations section at http://www.airtran.com/.

AirTran Holdings, Inc., a Fortune 1000 company, is the parent company of AirTran Airways, which offers more than 700 affordable, daily flights to 56 U.S. destinations. With nearly 8,900 friendly Crew Members and America's youngest all-Boeing fleet, AirTran Airways provides XM Satellite Radio and Business Class seating on every flight. For more information and free online booking, visit http://www.airtran.com/.

Editor's note: Statements regarding the Company's operational and financial success, business model, expectation about future success, improved operational performance and our ability to maintain or improve our low costs are forward-looking statements and are not historical facts. Instead, they are estimates or projections involving numerous risks or uncertainties, including but not limited to, consumer demand and acceptance of services offered by the Company, the Company's ability to maintain current cost levels, fare levels and actions by competitors, regulatory matters and general economic conditions. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, including but not limited to the Company's annual report on Form 10-K/A for the year ended December 31, 2006. The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.

Media Contacts: AirTran Airways Tad Hutcheson Judy Graham-Weaver Quinnie Jenkins 678.254.7442 Arne Haak (Financial) 407.318.5187 AirTran Holdings, Inc. Consolidated Statements of Operations (In thousands, except per share data and statistical summary) (Unaudited) Three Months Ended December 31, Percent 2007 2006 Change -------- -------- ------- Operating Revenues: Passenger $553,923 $439,843 25.9 Cargo 300 918 (67.3) Other 29,613 20,754 42.7 -------- -------- Total operating revenues 583,836 461,515 26.5 Operating Expenses: Salaries, wages and benefits 114,396 102,713 11.4 Aircraft fuel 221,105 163,470 35.3 Aircraft rent 60,622 60,618 0.0 Distribution 22,638 16,139 40.3 Maintenance, materials and repairs 39,532 28,723 37.6 Landing fees and other rents 32,238 24,068 33.9 Aircraft insurance and security services 5,902 6,797 (13.2) Marketing and advertising 8,897 9,263 (4.0) Depreciation 13,613 10,436 30.4 Other operating 50,000 37,187 34.5 -------- -------- Total operating expenses 568,943 459,414 23.8 -------- -------- Operating Income 14,893 2,101 - Other (Income) Expense: Interest income (4,386) (5,292) (17.1) Interest expense 20,448 15,065 35.7 Capitalized interest (2,134) (3,145) (32.1) Other 1,695 - - -------- -------- Other (income) expense, net 15,623 6,628 - -------- -------- Loss Before Income Taxes (730) (4,527) (83.9) Income Tax Expense (Benefit) 1,441 (972) - -------- -------- Net Loss $(2,171) $(3,555) (38.9) ======== ======== Loss per Common Share Basic $(0.02) $(0.04) (50.0) Diluted $(0.02) $(0.04) (50.0) Weighted-average Shares Outstanding Basic 91,786 91,092 0.8 Diluted 91,786 91,092 0.8 EBITDA $26,811 $12,537 - Operating margin 2.6 percent 0.5 percent 2.1 pts. Net margin (0.4)percent (0.8)percent 0.4 pts. Fourth Quarter Statistical Summary: Revenue passengers 5,934,141 5,017,232 18.3 Revenue passenger miles (000s) 4,313,551 3,438,110 25.5 Available seat miles (000s) 5,732,017 4,981,377 15.1 Block hours 134,119 121,470 10.4 Passenger load factor 75.3 percent 69.0 percent 6.3 pts. Break-even load factor 75.4 percent 69.7 percent 5.7 pts. Average fare $93.35 $87.67 6.5 Average yield per RPM 12.84 cents 12.79 cents 0.4 Passenger revenue per ASM 9.66 cents 8.83 cents 9.4 Operating cost per ASM 9.93 cents 9.22 cents 7.7 Fuel price neutral cost per ASM 9.25 cents 9.22 cents 0.3 Non-fuel operating cost per ASM 6.07 cents 5.94 cents 2.2 Average cost of aircraft fuel per gallon $2.45 $2.02 21.3 Gallons of fuel burned 90,307,722 80,932,598 11.6 Weighted-average number of aircraft 137 123 11.4 Twelve Months Ended December, Percent 2007 2006 Change ---------- ---------- ------- Operating Revenues: Passenger $2,198,910 $1,814,907 21.2 Cargo 3,433 3,861 (11.1) Other 107,640 73,315 46.8 ---------- ---------- Total operating revenues 2,309,983 1,892,083 22.1 Operating Expenses: Salaries, wages and benefits 451,818 390,348 15.7 Aircraft fuel 803,640 675,336 19.0 Aircraft rent 242,764 230,699 5.2 Distribution 88,461 69,888 26.6 Maintenance, materials and repairs 151,265 126,062 20.0 Landing fees and other rents 122,800 100,761 21.9 Aircraft insurance and security services 23,761 25,678 (7.5) Marketing and advertising 40,415 44,792 (9.8) Depreciation 48,485 30,078 61.2 Other operating 198,648 157,580 26.1 ---------- ---------- Total operating expenses 2,172,057 1,851,222 17.3 ---------- ---------- Operating Income 137,926 40,861 - Other (Income) Expense: Interest income (20,401) (21,714) (6.0) Interest expense 75,530 50,861 48.5 Capitalized interest (9,226) (12,943) (28.7) Gain on sale of aircraft (6,234) - - Midwest exchange offer expenses 10,650 - - Other 255 - - ---------- ---------- Other (income) expense, net 50,574 16,204 - ---------- ---------- Income Before Income Taxes 87,352 24,657 - Income Tax Expense 34,669 9,943 - ---------- ---------- Net Income $52,683 $14,714 - ========== ========== Income per Common Share Basic $0.58 $0.16 - Diluted $0.56 $0.16 - Weighted-average Shares Outstanding Basic 91,574 90,504 1.2 Diluted 104,319 92,436 12.9 EBITDA $181,740 $70,939 - Operating margin 6.0 percent 2.2 percent 3.8 pts. Net margin 2.3 percent 0.8 percent 1.5 pts. Net margin adjusted* 2.4 percent 0.8 percent 1.6 pts. Twelve Month Statistical Summary: Revenue passengers 23,780,058 20,051,219 18.6 Revenue passenger miles (000s) 17,297,724 13,836,378 25.0 Available seat miles (000s) 22,692,355 19,007,416 19.4 Block hours 531,559 463,854 14.6 Passenger load factor 76.2 percent 72.8 percent 3.4 pts. Break-even load factor 73.2 percent 71.8 percent 1.4 pts. Break-even load factor adjusted* 73.1 percent 71.8 percent 1.3 pts. Average fare $92.47 $90.51 2.2 Average yield per RPM 12.71 cents 13.12 cents (3.1) Passenger revenue per ASM 9.69 cents 9.55 cents 1.5 Operating cost per ASM 9.57 cents 9.74 cents (1.7) Fuel price neutral cost per ASM 9.47 cents 9.74 cents (2.8) Non-fuel operating cost per ASM 6.03 cents 6.19 cents (2.6) Average cost of aircraft fuel per gallon $2.23 $2.17 2.8 Gallons of fuel burned 359,759,033 310,925,717 15.7 Weighted-average number of aircraft 134 116 15.5 * Statistical calculations for 2007 exclude Midwest exchange offer expenses of $10.7 million and the gain related to the sale of two B737 aircraft of $6.2 million and the related tax effect.

Reconciliation of GAAP Financial Information to Non-GAAP Financial Information

Three Months and Twelve Months Ended December 31, 2007 and 2006 Within our press release, we make reference to certain non-GAAP financial measures including EBITDA. Earnings before income taxes, interest, depreciation and amortization ("EBITDA") is a supplemental non-GAAP financial measure used by management, as well as industry analysts, to evaluate operations and operating performance. We are also presenting EBITDA because it is used by some industry analysts and investors as a way to assess a company's ability to incur and service debt, make capital expenditures and meet working capital requirements. Our disclosure of non-fuel operating cost (non-fuel CASM) and fuel price neutral cost per available seat mile (fuel price neutral CASM) is consistent with financial measures reported by other airlines and analysts. We believe that non-fuel CASM and fuel price neutral CASM provide a better understanding of our operations. Both the cost and availability of fuel are subject to many economic and political factors and are therefore beyond our control. We have also disclosed net margin and break-even load factor as adjusted to exclude the impact of certain special items. We believe excluding special items in these measures assists investors in understanding the impact of special items on our operations and in comparing our operating results from period to period. We believe that these measures represent important internal measures of performance. Accordingly, where these non-GAAP measures are provided, it is done so that investors have the same financial data that management uses in evaluating performance with the belief that it will assist the investment community in assessing our underlying performance on a year- over-year and a quarter-over-quarter basis. However, because these measures are not determined in accordance with accounting principles generally accepted in the United States, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result the aforementioned measures as presented may not be directly comparable to similarly titled measures presented by other companies. The non-GAAP measures are presented as supplemental information and not as alternatives to any GAAP measurements. Amounts in '000's Three months ended Twelve months ended December 31, December 31, ---------------------- --------------------- 2007 2006 2007 2006 The following table ---------------------- --------------------- reconciles net income (loss) to EBITDA: Net income (loss) $(2,171) $(3,555) $52,683 $14,714 Add back: Income tax expense (benefit) 1,441 (972) 34,669 9,943 Interest expense, net 13,928 6,628 45,903 16,204 Depreciation 13,613 10,436 48,485 30,078 ---------------------- --------------------- EBITDA $26,811 $12,537 $181,740 $70,939 ====================== ===================== The following table reconciles net margin (loss) to net margin (loss) adjusted: Net income (loss) $(2,171) $(3,555) $52,683 $14,714 Plus: Midwest exchange offer expenses, net of tax - - 6,656 - Less: Gain, net of taxes - - (3,896) - Net income (loss), ---------------------- --------------------- adjusted $(2,171) $(3,555) $55,443 $14,714 ====================== ===================== Total operating revenues 583,836 461,515 2,309,983 1,892,083 Net margin (loss), adjusted (0.4%) (0.8%) 2.4% 0.8% ====================== ===================== The following table reconciles break-even load factor to break-even load factor adjusted: Total operating expenses $568,943 $459,414 $2,172,057 $1,851,222 Plus: Other (income) expense, net 15,623 6,628 50,574 16,204 Gain on sale of aircraft - - 6,234 - Less: Cargo revenue 300 918 3,433 3,861 Other revenue 29,613 20,754 107,640 73,315 Midwest exchange offer expenses - - 10,650 - ---------------------- --------------------- $554,653 $444,370 $2,107,142 $1,790,250 Average yield per RPM ====================== ===================== (cents) 12.84 12.79 12.71 13.12 ASMs (000) 5,732,017 4,981,377 22,692,355 19,007,416 Break-even load factor adjusted 75.4 69.7 73.1 71.8 ====================== ====================== The following table shows the calculation of non-fuel operating cost per ASM: Total operating expenses $568,943 $459,414 $2,172,057 $1,851,222 Less: aircraft fuel (221,105) (163,470) (803,640) (675,336) ---------------------- --------------------- Non-fuel operating cost $347,838 $295,944 $1,368,417 $1,175,886 ====================== ====================== ASMs (000) 5,732,017 4,981,377 22,692,355 19,007,416 Non-fuel operating cost per ASM (cents) 6.07 5.94 6.03 6.19 ====================== ====================== The following table shows the calculation of fuel price neutral cost per ASM: Gallons of fuel burned 90,307,722 359,759,033 Prior year cost of fuel (dollars/gallon) 2.02 2.17 Total operating expenses $568,943 $459,414 $2,172,057 $1,851,222 Aircraft fuel based on prior year price 182,422 780,677 Aircraft fuel for current period (221,105) (803,640) Adjusted total operating --------- ---------- expenses $530,260 $2,149,094 ========= ========== ASMs (000) 5,732,017 4,981,377 22,692,355 19,007,416 Fuel-neutral cost per ASM (cents) 9.25 9.22 9.47 9.74 ====================== ======================