Fast-growing AirTran Airways said it's easing off the throttle even as it reported rebounding profits and plans to expand in the nation's financial and political capitals.
The discount carrier --- Delta Air Lines' biggest rival in Atlanta --- plans to add five daily flights out of New York's La Guardia Airport, plus an additional daily flight between Atlanta and Reagan National Airport near Washington, D.C., before year-end.
The move will allow the Orlando-based carrier to significantly expand its presence in the lucrative markets, which are both close-in airports favored by business travelers. AirTran has a dozen daily flights from La Guardia and five from Reagan National, mostly to Atlanta.
"It's a very big deal for us," AirTran Chief Executive Joe Leonard said Tuesday during a conference call with industry analysts on the company's third-quarter financial results.
AirTran Airways reported $10.6 million in net income for the late-summer quarter, handily beating a year-earlier loss of $4.6 million.
Still, AirTran executives also sounded a cautionary note Tuesday in response to soaring crude oil and jet fuel costs. Crude oil hit a record of almost $94 a barrel Monday before sliding Tuesday.
AirTran said it is postponing deliveries of three additional jets that were slated for next year, and it is also considering ways to cut fuel consumption such as reducing cruising speeds and climb rates.
With the additional deferrals, AirTran has cut 10 jets from its 2008 delivery schedule and reduced next year's planned capacity growth to 10 percent --- less than half its rapid expansion pace in recent years.
AirTran President Bob Fornaro said in an interview that the carrier may make bigger cuts if needed.
"We're not going to sit down and let our balance sheet erode and hope things get better," he said.
Such comments contrast with the strong financial results airlines posted for the past three months despite high fuel costs. Most carriers' profits soared this summer in the wake of moves by Delta and other big network airlines to cut domestic capacity and shift operations to more lucrative overseas flying. AirTran also moderated its expansion by slowing new aircraft deliveries, but it remained one of the fastest-growing companies in the industry.
The result: While summer travelers endured crowded planes and the worst airport delays in years, airlines have been reporting their best profits in years.
Third-quarter profits of the 11 major and discount carriers that have reported so far totaled almost $1.6 billion. The same carriers reported a combined loss of $736 million a year earlier, even though the third quarter is typically the industry's most profitable period.
JPMorgan analyst Jamie Baker applauded AirTran's slowdown and revised his fourth-quarter projections from a slight loss to a profit of 6 cents per share.
"At half the growth of 2007, [AirTran's unit revenues are] expected to rise at roughly double the rate, in our view, though any significant downsizing by Delta could obviously help," Baker said in a report.
AirTran's shares rose almost 6 percent Tuesday to $10.24, although most other carriers' shares also rose when crude oil prices pulled back.
In the most recent quarter, AirTran said it increased capacity almost 21 percent compared with last year, while its passenger traffic ballooned by almost a third. The carrier filled more than 80 percent of its seats with paying passengers, a record, although average fares fell slightly to $90.11 from $90.86 a year earlier.
AirTran's revenue rose 25 percent compared with a year earlier, to $609 million, well ahead of the growth in fuel, salaries and other operating expenses, which were up 16 percent, to $570 million.
