With its USD38.5 million net income for 2010 down 71.4%, AirTran managed to eke out its eighth consecutively profitable year while recording USD1.9 million net income for the fourth quarter. Operating margin for the year the dropped 1.7 points to 4.9% while net margin dropped 4.3% to 1.5%.
"What we accomplished in 2010 should be a great source of pride for our 8500 dedicated crew members," said AirTran chairman Bob Fornaro. "As we look forward to our pending acquisition by Southwest Airlines in 2011, our airline is in the best operational shape ever. We are very well positioned for the next chapter of our exciting history."
The statement, however, belied some dramatic swings in its 2010 fortunes. For the year, total operating revenue rose 11.9% to USD2.6 billion driven by a 3.3% capacity increase to 24 billion available seat miles and an 8.3% increase in total revenue per available seat mile to 10.88 cents. Yield jumped 7% to 12.03 cents as PRASM rose 9.1% to 9.79 cents. Operating income dropped 27.6% to USD128.2 million.
While all that may be good, the expense side painted a cloudy picture with double-digit increases as its peers were far more successful in reining in costs. Full-year operating expenses suffered from a 24.6%, or USD171.6 million, jump in average fuel costs. Total operating expenses rose 15.1% to USD2.4 billion. Cost per available seat mile (CASM) outpaced the rise in PRASM as it rose 11.4% to 10.35 cents. CASM ex fuel jumped 5.8% to 6.75 cents.
During the fourth quarter of 2010, AirTran reported a decline in operating income by USD25.9 million to USD246,000 compared with the fourth quarter of 2009 when it was USD26.1 million largely due to the unfavourable impact of a 17.2% increase in the average cost of jet fuel per gallon. For the quarter, operating margin was zero, down 4.4 points, while net was down 2.6 points to 0.3%.
Total operating revenues increased 7.9% to US645.5 million driven by a 0.9% increase in capacity to 5.8 billion ASMs and a 6.9% increase in total revenue per available seat mile to 11.04 cents. PRASM jumped 6.5% to 9.86 cents while yield rose only slightly, 2.9% to 12.23 cents.
The increase in the airline's average cost of jet fuel per gallon resulted in a USD33.4 million increase in aircraft fuel expense during the fourth quarter of 2010. Total operating expenses again outpaced revenue gains, rising 12.7% to USD645.2 million. The company cited USD 21.6 million in pilot, weather and merger related expenses. These included USD4.4 million on unusually severe winter weather; USD1.3 million one-time and USD3 million ongoing expenses related to its pilot contract which became effective 1-Dec-2010 and USD12.9 million of legal fees and other merger-related expenses as well as litigation.
AirTran Airways posted all-time records in its key traffic metrics as traffic increased 5.3% to more than 19.5 billion revenue passenger miles on a 3.3% rise in available seat miles to 5.8 billion during the year. The airline's load factor increased 1.6 points to 81.4 per cent, and the number of enplaned passengers increased 3% to 24.7 million. CASM rose 11.8% to 11.03 cents while ex fuel CASM rose 10% to 7.15 cents.
The company ended the year with more than USD450 million in unrestricted cash and investments. During the year, AirTran also reduced its debt by more than USD222 million, including the repurchase of more than USD90 million in convertible notes.
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