AirTran Plans Milwaukee Growth

Jan 29, 2009
By Andrew Compart

AirTran will cut capacity by 4% this year but is increasing it substantially at Baltimore/Washington Airport and even more so in Milwaukee, where the airline’s executives see a big opportunity from the cutback and product changes implemented by Milwaukee-based Midwest.

“Our big focus is going to be in Milwaukee,” Bob Fornaro, AirTran’s chairman, president and CEO, declared during a conference call with stock analysts on AirTran’s fourth quarter financial results.

The airline lost $118.4 million in the fourth quarter, with some big fuel hedging-related losses. But with the capacity cuts it implemented in the fourth quarter, the sale or rescheduling of 46 aircraft, changes in its fuel hedging, the recent dramatic decline in fuel costs, record-high unit revenue and rising ancillary revenue from new baggage fees, AirTran executives said they are confident in a first quarter and full-year profit in 2009 if fuel prices stay as low as projected.

Atlanta, of course, will remain AirTran’s biggest city, with 60% of its overall capacity at its hometown hub in 2009. But that will be down from about 63% or 64% in 2008, Kevin Healy, the airline’s senior VP-marketing and planning, said in an interview with The DAILY. Healy said Atlanta capacity will shrink about 7%, with a reduction in short-haul flights in favor of more mid- and long-haul flying with a higher percentage of Atlanta-originating passengers.

AirTran, meanwhile, sees room to grow in Milwaukee, where it now operates about 20 daily departures. Healy said overall capacity in that market is down about 15% for the first quarter, but AirTran’s is up 63%, and it expects to operate about 30 daily departures there by summer. AirTran will end up with about 10% of its capacity in Milwaukee this year,, he said.

Healy and Fornaro said the airline’s brand recognition in Milwaukee has improved since it began increasing service there. They’re also encouraged by what they see as the deterioration in the Midwest product; Midwest has shifted the majority of its mainline fleet to 76-seat Embraer E170 aircraft operated by Republic Airways. “A carrier that was once known for premium service is pretty much a commuter airline right now, a regional carrier,” Fornaro said. Healy said AirTran is “largely competing against outsourced regional jets.”

At BWI, AirTran is growing some more in 2009 even as the other carriers there cut back. Overall capacity at BWI is down 7% in the first quarter, but AirTran is up 16%, Healy said. In the second quarter, overall capacity will be down 4% but AirTran’s will be 7% higher. -

Photo: AirTran

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