AirTran Holdings, Inc., Reports Fourth Quarter and Year End Results

Jan. 29, 2009

- Fourth Quarter Recovery with Operating Income of $54.9 Million -

- Record Revenues of $589.4 Million -

- 2008 Net Loss of $273.8 Million -

ORLANDO, Fla. , Jan. 28 /PRNewswire-FirstCall/ -- AirTran Holdings, Inc., (NYSE: AAI), the parent company of AirTran Airways, Inc., today reported a net loss of $273.8 million for the full year 2008, or $2.51 per diluted share, which included non-operating losses of $150.8 million related to changes in fair value on the Company's out-of-the-money fuel hedge contracts. During the fourth quarter, AirTran unwound approximately 78 percent of its 2009 fuel hedge contracts in order to mitigate the potential for additional losses on further oil price declines. For the fourth quarter, AirTran reported a net loss of $118.4 million, or $1.00 per diluted share, which also included non-operating losses of $147.7 million related to fuel hedge contracts. AirTran ended the fourth quarter with $340.5 million in unrestricted cash and investments, its highest year-end balance since 2005.

The fourth quarter results demonstrated the benefits of AirTran Airways' plan for adapting to the year's high-cost energy environment, the unrest in the capital markets, and an uncertain economy. In the second quarter 2008, the Company initiated steps to position the airline to react to these challenges by enhancing the airline's liquidity and reducing capacity and capital expenditures aggressively through the disposition of aircraft and the deferral of Boeing 737 deliveries while sustaining a low-cost structure. These actions combined with the recent decline in fuel prices resulted in a record fourth quarter operating income of $54.9 million on record fourth quarter revenues of $589.4 million.

"2008 was an especially tough and challenging year," said Bob Fornaro , AirTran Airways' chairman, president and chief executive officer. "We thank our dedicated, hard-working Crew Members and our loyal customers for helping us overcome the many obstacles we faced in 2008. Our Crew Members continue to strive to provide exceptional customer service, and a high-quality product while offering value to the traveling public. Despite the industry challenge shifting from high oil costs to concerns regarding consumer demand, our 2008 initiatives have us well positioned to return to profitability in 2009."

Revenues for the fourth quarter grew 1.0 percent to $589.4 million. Despite a 6.5 percent decrease in capacity, fourth quarter traffic fell just 2.2 percent, resulting in a record fourth quarter load factor of 78.7 percent, a 3.4 point increase over 2007. Passenger unit revenues in the fourth quarter were up 6.8 percent to 10.32 cents per available seat mile (ASM). Total unit revenues were up 7.9 percent to 11.00 cents per ASM, the highest fourth quarter level achieved in the Company's history.

For the full year, capacity increased by 4.9 percent and traffic rose 9.6 percent, which resulted in a load factor of 79.6 percent. Total annual revenues grew by 10.5 percent to $2.6 billion. Passenger unit revenues increased 4.6 percent to 10.14 cents per available seat mile (ASM). Total unit revenues were up 5.3 percent to 10.72 cents per ASM, the highest annual level AirTran has ever achieved.

Commenting on the fourth quarter performance, AirTran Airways' senior vice president and chief financial officer Arne Haak said, "2008 presented multiple financial challenges. With a resiliency and a 'can-do-attitude' that defines AirTran, we reacted promptly and decisively to address these challenges. We are committed to being disciplined managers, maintaining our low cost advantage, and we believe that AirTran is now better positioned for the uncertainty that lies ahead in 2009."

Highlights of AirTran Airways' 2008 accomplishments include:

-- Raised over $375 million in financing/credit transactions resulting in the Company's highest year-ending balance of unrestricted cash and investments since 2005 -- Completed the sale or rescheduling of 46 aircraft, which resulted in repayment of over $220 million in debt obligations in 2008 and the reduction of over $950 million in capital expenditures for 2009-2010 -- Recorded highest fourth quarter operating income in history of $54.9 million -- Initiated new service to Columbus, Ohio, and Harrisburg Pa., in November 2008 -- Announced new service to Branson, Mo., and Cancun, Mexico beginning in 2009 -- Strengthened our partnerships with The Coca Cola Company, The Hertz Corporation, Barclays, and eBay/PayPal

AirTran Holdings, Inc., will conduct a conference call to discuss the quarter's results today at 9:30 a.m. EST . A live broadcast of the conference call will be available via the Internet in the investor relations section at http://www.airtran.com.

AirTran Airways, a subsidiary of AirTran Holdings, Inc. (NYSE: AAI), a Fortune 1000 company, is ranked number one in the 2008 Airline Quality Rating study. The airline offers coast-to-coast flights, North America's newest all-Boeing fleet, friendly service and Business Class and complimentary XM Satellite Radio on every flight. To book a flight, 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 for the year ended December 31, 2007 . The Company disclaims any obligation or duty to update or correct any of its forward-looking statements.

* Attached: Consolidated Statements of Operations

Media Contact: Tad Hutcheson 678.254.7442 Investor Relations: Jason Bewley 407.318.5188 AirTran Holdings, Inc. Consolidated Statements of Operations (In thousands, except per share data and statistical summary) (Unaudited) Three Months Ended December 31, Percent 2008 2007 Change ---- ---- ------ Operating Revenues: Passenger $553,230 $553,923 (0.1) Cargo - 300 - Other 36,185 29,613 22.2 ------ ------ Total operating revenues 589,415 583,836 1.0 Operating Expenses: Salaries, wages and benefits 112,420 114,396 (1.7) Aircraft fuel 194,487 221,105 (12.0) Aircraft rent 60,387 60,622 (0.4) Distribution 23,319 22,638 3.0 Maintenance, materials and repairs 38,555 39,532 (2.5) Landing fees and other rents 32,748 32,238 1.6 Aircraft insurance and security services 5,246 5,902 (11.1) Marketing and advertising 9,361 8,897 5.2 Depreciation 15,394 13,613 13.1 Gain on sale of assets (5,503) - - Other operating 48,147 50,000 (3.7) ------ ------ Total operating expenses 534,561 568,943 (6.0) ------- ------- Operating Income 54,854 14,893 - Other (Income) Expense: Interest income 1,693 (4,386) - Interest expense 20,190 20,448 (1.3) Capitalized interest (492) (2,134) (76.9) Net losses on derivative financial instruments 147,686 1,695 - ------- ----- Other (income) expense, net 169,077 15,623 - ------- ------ Loss Before Income Taxes (114,223) (730) - Income Tax Expense 4,168 1,441 - --------- ------- Net Loss $(118,391) $(2,171) - ========= ======= Loss per Common Share Basic $(1.00) $(0.02) - Diluted $(1.00) $(0.02) - Weighted-average Shares Outstanding Basic 118,034 91,786 28.6 Diluted 118,034 91,786 28.6 EBITDA $(77,438) $26,811 - EBITDA adjusted* $(84,951) $28,506 - Operating margin 9.3 percent 2.6 percent 6.7 pts. Operating margin adjusted* 8.4 percent 2.6 percent 5.8 pts. Net margin (20.1) percent (0.4) percent (19.7) pts. Net margin adjusted* (21.4) percent (0.2) percent (21.2) pts. Fourth Quarter Statistical Summary: Revenue passengers 5,754,446 5,934,141 (3.0) Revenue passenger miles (000s) 4,218,819 4,313,551 (2.2) Available seat miles (000s) 5,359,177 5,732,017 (6.5) Departures 61,142 65,515 (6.7) Block hours 126,159 134,119 (5.9) Passenger load factor 78.7 percent 75.3 percent 3.4 pts. Break-even load factor 95.0 percent 75.4 percent 19.6 pts. Average fare $96.14 $93.35 3.0 Average yield per RPM 13.11 cents 12.84 cents 2.1 Passenger revenue per ASM 10.32 cents 9.66 cents 6.8 Total revenue per ASM 11.00 cents 10.19 cents 7.9 Operating cost per ASM 9.97 cents 9.93 cents 0.4 Operating cost per ASM adjusted* 10.08 cents 9.93 cents 1.5 Non-fuel operating cost per ASM 6.35 cents 6.07 cents 4.6 Non-fuel operating cost per ASM adjusted* 6.45 cents 6.07 cents 6.3 Average cost of aircraft fuel per gallon $2.32 $2.45 (5.3) Average economic cost of aircraft fuel per gallon $4.10 $2.45 67.3 Gallons of fuel burned 83,999,581 90,307,722 (7.0) Weighted-average number of aircraft 137 137 - * Statistical calculations for 2008 and 2007 on an adjusted basis exclude gains and losses as detailed in the attached Reconciliation of GAAP Financial Information to Non-GAAP Financial Information. Twelve Months Ended December 31, Percent 2008 2007 Change ---- ---- ------ Operating Revenues: Passenger $2,413,609 $2,198,910 9.8 Cargo - 3,433 - Other 138,869 107,640 29.0 ------- ------- Total operating revenues 2,552,478 2,309,983 10.5 Operating Expenses: Salaries, wages and benefits 474,889 451,818 5.1 Aircraft fuel 1,194,938 803,640 48.7 Aircraft rent 242,464 242,764 (0.1) Distribution 100,400 88,461 13.5 Maintenance, materials and repairs 163,350 151,265 8.0 Landing fees and other rents 137,738 122,800 12.2 Aircraft insurance and security services 21,556 23,761 (9.3) Marketing and advertising 40,475 40,415 0.1 Depreciation 58,618 48,485 20.9 Gain on sale of assets (23,185) (6,234) - Impairment of goodwill 8,350 - - Other operating 204,895 198,648 3.1 ------- ------- Total operating expenses 2,624,488 2,165,823 21.2 --------- --------- Operating Income (Loss) (72,010) 144,160 - Other (Income) Expense: Interest income (3,679) (20,401) (82.0) Interest expense 78,080 75,530 3.4 Capitalized interest (5,355) (9,226) (42.0) Midwest exchange offer expenses - 10,650 - Net losses on derivative financial instruments 150,836 255 - ------- --- Other (income) expense, net 219,882 56,808 - ------- ------ Income (Loss) Before Income Taxes (291,892) 87,352 - Income Tax Expense (Benefit) (18,063) 34,669 - --------- ------- Net Income (Loss) $(273,829) $52,683 - ========= ======= Income (Loss) per Common Share Basic $(2.51) $0.58 - Diluted $(2.51) $0.56 - Weighted-average Shares Outstanding Basic 109,153 91,574 19.2 Diluted 109,153 104,319 4.6 EBITDA $(164,228) $181,740 - EBITDA adjusted* $(154,532) $186,411 - Operating margin (2.8) percent 6.2 percent (9.0) pts. Operating margin adjusted* (3.4) percent 6.0 percent (9.4) pts. Net margin (10.7) percent 2.3 percent (13.0) pts. Net margin adjusted* (10.3) percent 2.4 percent (12.8) pts. Twelve Month Statistical Summary: Revenue passengers 24,619,120 23,780,058 3.5 Revenue passenger miles (000s) 18,955,843 17,297,724 9.6 Available seat miles (000s) 23,809,190 22,692,355 4.9 Departures 260,120 261,505 (0.5) Block hours 549,226 531,559 3.3 Passenger load factor 79.6 percent 76.2 percent 3.4 pts. Break-even load factor 89.3 percent 73.2 percent 16.1 pts. Average fare $98.04 $92.47 6.0 Average yield per RPM 12.73 cents 12.71 cents 0.2 Passenger revenue per ASM 10.14 cents 9.69 cents 4.6 Total revenue per ASM 10.72 cents 10.18 cents 5.3 Operating cost per ASM 11.02 cents 9.54 cents 15.5 Operating cost per ASM adjusted* 11.09 cents 9.57 cents 15.9 Non-fuel operating cost per ASM 6.00 cents 6.00 cents - Non-fuel operating cost per ASM adjusted* 6.07 cents 6.03 cents 0.7 Average cost of aircraft fuel per gallon $3.25 $2.23 45.7 Average economic cost of aircraft fuel per gallon $3.60 $2.23 61.4 Gallons of fuel burned 367,168,620 359,759,033 2.1 Weighted-average number of aircraft 139 134 3.7 * Statistical calculations for 2008 and 2007 on an adjusted basis exclude gains and losses as detailed in the attached Reconciliation of GAAP Financial Information to Non-GAAP Financial Information. Reconciliation of GAAP Financial Information to Non-GAAP Financial Information Three Months and Twelve Months Ended December 31, 2008 and 2007

We prepare our financial statements in accordance with generally accepted accounting principles (GAAP). Within our press release, we make reference to certain non-GAAP financial measures including EBITDA, EBITDA adjusted, operating margin adjusted, and net margin adjusted. 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 disclosures may also exclude special or non-recurring items that we believe should be taken into consideration to more accurately measure and monitor our operating performance. Our disclosure of non-fuel operating cost per available seat mile (non-fuel CASM) is consistent with financial measures reported by other airlines and analysts. We believe that non-fuel CASM and non-fuel CASM adjusted 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. Our press release also contains information regarding the components of GAAP fuel expense and net gains and loss on derivative financial instruments. These amounts have been included as supplemental information.

We disclose both the average fuel cost per gallon and the average economic fuel cost per gallon. Average fuel cost per gallon is based on fuel expense as measured by GAAP and includes realized gains and losses on fuel related derivative instruments which are accounted for as hedges. Average economic fuel cost per gallon includes realized gains and losses on all fuel related derivative instruments, including those which were not accounted for as hedges.

We consider our fuel derivative contracts an important tool in managing costs related to jet fuel purchases. We believe it is important to assess our financial performances by including the effect of the quarterly net cash settlements and excluding the mark-to-market adjustments for our unrealized gains and losses recorded in the income statement for contracts settling in future periods.

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.

Dollars in thousands, unless otherwise noted Three months ended Twelve months ended December 31, December 31, ------------ ------------ 2008 2007 2008 2007 ---- ---- ---- ---- The following table reconciles net income (loss) to EBITDA and EBITDA adjusted: Net income (loss) $(118,391) $(2,171) $(273,829) $52,683 Add back: Income tax expense (benefit) 4,168 1,441 (18,063) 34,669 Interest, net 21,391 13,928 69,046 45,903 Depreciation 15,394 13,613 58,618 48,485 ------ ------ ------ ------ EBITDA $(77,438) $26,811 $(164,228) $181,740 Less: Gain on sale of assets 5,503 - 23,185 6,234 Impairment of goodwill - - (8,350) - Midwest exchange offer expenses - - - (10,650) Unrealized gains (losses) on derivative financial instruments 2,010 (1,695) (24,531) (255) ----- ------ ------- ---- EBITDA adjusted $(84,951) $28,506 $(154,532) $186,411 ======== ======= ========= ======== The following table calculates operating margin adjusted: Operating income (loss) $54,854 $14,893 $(72,010) $144,160 Less: Gain on sale of assets 5,503 - 23,185 6,234 Impairment of goodwill - - (8,350) - ------- ------- ------- ------- Operating income (loss) adjusted $49,351 $14,893 $(86,845) $137,926 ======= ======= ======== ======== Total operating revenues $589,415 $583,836 $2,552,478 $2,309,983 -------- -------- ---------- ---------- Operating margin, adjusted 8.4% 2.6% -3.4% 6.0% === === ==== === The following table calculates net margin adjusted: Net income (loss) $(118,391) $(2,171) $(273,829) $52,683 Less: Gain on sale of assets, after tax 5,503 - 23,185 3,896 Impairment of goodwill - - (8,350) - Midwest exchange offer expenses - - - (6,656) Unrealized gains (losses) on derivative financial instruments , after tax 2,010 (1,059) (24,531) (159) ----- ------ ------- ---- Net income (loss), adjusted $(125,904) $(1,112) $(264,133) $55,602 ========= ======= ========= ======= Total operating revenues $589,415 $583,836 $2,552,478 $2,309,983 -------- -------- ---------- ---------- Net margin, adjusted -21.4% -0.2% -10.3% 2.4% ===== ==== ===== === The following table calculates operating cost per ASM adjusted: Total operating expenses $534,561 $568,943 $2,624,488 $2,165,823 Add: gain on sale of assets 5,503 - 23,185 6,234 Less: impairment of goodwill - - (8,350) - ------- ------- ------- ------- Operating costs, adjusted $540,064 $568,943 $2,639,323 2,172,057 ======== ======== ========== ========= ASMs (000) 5,359,177 5,732,017 23,809,190 22,692,355 --------- --------- ---------- ---------- Operating cost per ASM (cents) adjusted 10.08 9.93 11.09 9.57 ===== ==== ===== ==== The following table calculates non-fuel operating cost per ASM and non- fuel operating cost per ASM adjusted: Total operating expenses $534,561 $568,943 $2,624,488 $2,165,823 Less: aircraft fuel (194,487) (221,105) (1,194,938) (803,640) -------- -------- ---------- -------- Operating costs, adjusted $340,074 $347,838 $1,429,550 $1,362,183 ======== ======== ========== ========== ASMs (000) 5,359,177 5,732,017 23,809,190 22,692,355 Non-fuel operating cost per ASM (cents) 6.35 6.07 6.00 6.00 ==== ==== ==== ==== Total operating expenses $534,561 $568,943 $2,624,488 $2,165,823 Less: aircraft fuel (194,487) (221,105) (1,194,938) (803,640) Add: gain on sale of aircraft 5,503 - 23,185 6,234 Less: impairment of goodwill - - (8,350) - ------- ------- ------- ------- Non-fuel operating cost, adjusted $345,577 $347,838 $1,444,385 $1,368,417 ======== ======== ========== ========== ASMs (000) 5,359,177 5,732,017 23,809,190 22,692,355 Non-fuel operating cost per ASM (cents) adjusted 6.45 6.07 6.07 6.03 ==== ==== ==== ==== The following table provides detail of certain components of aircraft fuel expense and calculates average economic cost of aircraft fuel per gallon: Aircraft fuel expense per GAAP 194,487 221,105 1,194,938 803,640 Add Realized (gains) losses on derivatives that do not qualify for hedge accounting, recorded in net (gains) losses on derivatives 40,327 16,936 Add Realized (gains) losses on derivatives related to 2009 contracts terminated, recorded in net (gains) losses on derivatives 109,370 109,370 ------- ------- Economic fuel expense $344,184 $1,321,244 ======== ========== ========== =========== Gallons of fuel burned 83,999,581 90,307,722 367,168,620 359,759,033 ---------- ---------- ----------- ----------- Economic fuel expense per gallon (dollars) $4.10 $2.45 $3.60 $2.23 ===== ===== ===== ===== The following table reconciles net income (loss) and earnings (loss) per share to net income (loss) adjusted and earnings (loss) per share adjusted: Net income (loss) $(118,391) $(273,829) Add back: Impairment of goodwill - 8,350 Realized and unrealized (gains) losses on derivative financial instruments related to 2009 contracts 107,360 133,901 Less: Gain on sale of assets, after tax (5,503) (23,185) ------ ------- Net income (loss), adjusted $(16,534) $(154,763) ======== ========= Diluted shares outstanding 118,034 109,153 ------- ------- Earnings (loss) per share, adjusted $(0.14) $(1.42) ====== ======

SOURCE AirTran Holdings, Inc.