Fly_ATA
Posts: 594
Joined: Sat May 19, 2001 9:10 am

Airtran / ATA

Sun Mar 21, 2004 10:46 pm

I would love to hear thoughts / theories on why airtran makes money ( 100 mil ) last year and ATA made very little. Things to consider that make it a bit mind boggling at times : ATA has the lowest cost per mile of any carrier, and low wages by comparison. ATA also has the charter side / Military. Both carriers have new aircraft and airtran operates inside of a legacy carriers hub. I love the company I work for and bust my butt every day but I have to say im very curious how one carrier is rolling in dough but we seem to be fighting upstream.

theories ??
 
HlywdCatft
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RE: Airtran / ATA

Sun Mar 21, 2004 10:57 pm

One good guess would be because out of MDW you are competing against Southwest. Anybody who tries to compete against Southwest has troubles.

Air Tran is competing against Delta which is not exactly doing financially well, you are competing against the healthiest US Airline
 
727LOVER
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RE: Airtran / ATA

Sun Mar 21, 2004 11:01 pm

Excluding special items, Airtran made only 16 million.

http://www.businesswire.com/webbox/bw.012204/240225201.htm
Love Trumps Hate
 
Fly_ATA
Posts: 594
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RE: Airtran / ATA

Sun Mar 21, 2004 11:05 pm

looks more like 59.6 million for full year.
 
727LOVER
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RE: Airtran / ATA

Mon Mar 22, 2004 12:23 am

Whoops!!...You're right, sorry.  Nuts
Love Trumps Hate
 
ATA767
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RE: Airtran / ATA

Mon Mar 22, 2004 12:29 am

ATA has a more senior staff and much more expensive airplanes. Therir load factors a not outstanding and They are a larger outfit. This is some of the reasons they do not do as well.
 
panam330
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RE: Airtran / ATA

Mon Mar 22, 2004 12:44 am

AirTran has a homogenized fleet of 70-something brand new (I stress: brand new) B717s. ATA is still holding on to 25+ year old L1011s (I saw one in MCO last month- I love those birds!), and they have new B737-800s. Next, they have the B757-200/-300, which, obviously, have absolutely no commonality with the rest of the fleet. Fleet commonality does save the airline more money than people realize. I'm not sure about lease terms for the aircraft, but that could also be a factor. AirTran's block costs for the 717 are dirt cheap, IIRC. We'll compare the 737NG rates, when FL rolls in their fleet of 73G's.
Also, the airports they use as their general "hubs", and their route structures. TZ, as someone mentioned before, has military charters. They also have cross-country flights, IIRC. AirTran does not, if you don't count the wet-leased aircraft from Ryan Int'l. TZ hubs at IND and MDW- MDW is heavily saturated with WN service, and IND has it's fare share of service, too. WN alone could kill TZ on the spot, should they choose to. AirTran hubs at ATL, which is Delta's fortress hub. It's got almost no low-fare service, except for WN. FL is, therefore, flourishing in ATL.
 
PVD757
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RE: Airtran / ATA

Mon Mar 22, 2004 12:54 am

I also believe that Airtran has found some niche routes that are underserved by low-cost competition and have exploited smaller routes from ATL that DL would never and could never compete on. Flint would be one of these by example.
 
ny-jfk-lga
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RE: Airtran / ATA

Mon Mar 22, 2004 1:00 am

I don't think Southwest Airlines could kill ATA on the spot, if they chose to.
Bring back McDonnell Douglas & T W A!!
 
ifly2eat
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RE: Airtran / ATA

Mon Mar 22, 2004 4:31 am

ATA does however have the lowest cost per available seat mile of any U.S. airline. Watch what happens when AirTran introduces the B-737-700's into their fleet this summer. Also, watch ATA when we introduce business class this fall. It is called yield management and it will give us the flexibility to squeeze a few more dollars from business travelers for a bigger seat. Southwest couldn't kill ATA if they wanted to. Believe me they would have done it already. ATA is at point where it will either succeed beyond anyone's wildest dreams or fail all together. We have been under all the other airlines' "radar" for 30 years but now we are stealing some of their business. ATA will either have to put up or shut up in the next few years. If I was a betting man ATA will be a force to be reckoned with in the not too distant future. (God I hope I'm right.)
Fly the friendly skys and stay out of mine.
 
GLAGAZ
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RE: Airtran / ATA

Mon Mar 22, 2004 6:38 am

Is ATA planning a major European expansion by 05/06? To airports such as Shannon and Glasgow and others in central europe.
Neutrality means that u don't really care cos the struggle goes on even when ur not there, blind and unaware
 
ChiGB1973
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RE: Airtran / ATA

Mon Mar 22, 2004 7:37 am

WN killing TZ. OUCH! WN would not spend that kind of money to "kill" the third largest carrier of passengers out of Chicago and NUMBER 1 out of IND and MDW, even if I thought they could. I know it is about FL and TZ. I think you guys hit the nail on the head when you compare the price of aircraft. TZ's ordered a/c from Boeing and they were delivered brand new. There was no "middle man" like TWA/AA.

I would say SNN for sure in the next 2 years. I have heard rumors of PRG and MAN.
 
srbmod
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RE: Airtran / ATA

Mon Mar 22, 2004 8:07 am

TZ's ordered a/c from Boeing and they were delivered brand new. There was no "middle man" like TWA/AA.

The bulk of AirTran's 717 fleet is from the original 50 a/c order made by Valujet to MDD back in 1996. The other 20+ 717 are the ex-TWA a/c, plus the few that were earmarked for VuelaMex and two that will be in the fleet soon that are from HA. Also heard rumors of the Olympic ones heading over to the 'Tran as well.
 
Midway2AirTran
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RE: Airtran / ATA

Mon Mar 22, 2004 11:49 am

Before everyone goes on about Southwest, Delta, more experienced employees fleet commonality and the like, lets look at the RASMs for each. Does anyone know what ATA's RASM is? FL has one of the highest in the industry right now. The trick is the short-hops that bring higher yields per each mile than ATA's long haul. ATA's CASM's might be lower, but their longer-haul route map certainly does not have the yields you get out of flying the shorter hops. WN is also a good example of this, they have a high RASM as well. As Ifly2eat said earlier, ATA's new Business class product may help yields out a little more, not much else.

"AirTran has a homogenized fleet of 70-something brand new (I stress: brand new) B717s."

By the way, FL still had a significant number of old DC-9's throughout last year.
"Life is short, but your delay in ATL is not."
 
Midway2AirTran
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RE: Airtran / ATA

Mon Mar 22, 2004 12:11 pm

After looking at the route maps for both ATA and Southwest, it appears that though WN has a heavy presence in ATA's hubs, they only compete directly in the Florida and West coast markets. Maybe WN isn't as such a big factor to ATA as said on here afterall?
"Life is short, but your delay in ATL is not."
 
bonanzaair
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RE: Airtran / ATA

Mon Mar 22, 2004 1:53 pm

"Watch what happens when AirTran introduces the B-737-700's into their fleet this summer. "

Actually - Airtran is expecting cost to go lower with the 737 as they will immediately replace with wetleased Ryan planes on the west coast routes.


"By the way, FL still had a significant number of old DC-9's throughout last year."

Lets not forget the 737-200's either. While gone for a while now, there was a time when Airtran actually had three aircraft types, DC-9, 737-200, 717-200.

Bonanza
 
ATA767
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RE: Airtran / ATA

Mon Mar 22, 2004 2:45 pm

The funny thing is that you guya seem to think you can compare ATA to AirTran and WN. There is no comparison. Finacially they will differ as pointed out above and they reall service very different markets.
 
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BNE
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RE: Airtran / ATA

Mon Mar 22, 2004 6:35 pm

Maybe ATA would do better with a new name, wait haven't they tried that already.

Airtran with a base in Atlanta doesn't have any low fare competition to deal with. Also the 717 is probably the best aircraft for the market that they serve. Thinks will probably get even better when US Airways gets shut down.
Why fly non stop when you can connect
 
ifly2eat
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RE: Airtran / ATA

Mon Mar 22, 2004 11:16 pm

AirTran's cost will not go down when the new 737's get on the property. Its going to be double crew training (one vacancy on the new equipment can cause up to four training cycles.) Not to mention double the spare parts. The 717 and 737 have almost zero commonality. Ryan gives AirTran the airplanes and the crews for a set fixed price. For AirTran it is a fixed cost and the new airplanes will become a variable cost. Don't get me wrong I think AirTran does a good job and has a decent product but do not believe Forklift Joe's press releases about lower costs.
Fly the friendly skys and stay out of mine.
 
rumorboy
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RE: Airtran / ATA

Tue Mar 23, 2004 12:04 am

Initially the 737's will make FL's CASM go up a little. But over time you will see there CASM dip down. Why? Well for one thing There stage lengths will increase a whole lot over the next two years. Remember as of now they do not count Ryan's stage length. The revenue the get from Ryan is in "other revenue" on the balance sheet. The same goes for the costs. When they start replacing Ryan you will see there stage length increase. The trick though as stage length increases your yield usually does not go up(aka Jetblue and ATA). Both of those airlines have the lowest costs of the business but also have the lowests RASMs in the business. And in both cases there stage lengths are almost twice as long as SWA and Airtran. The spread between RASM and CASM(operating margin) is going to be the key. If they can sustain 8% operating margins they will do just fine. As a matter of fact if you listen to there conference calls lately all they talk about is operating margins instead of yield, RASM's and CASM's.

As far as spare parts are concerned Airtran got a hell of a deal from Boeing. They only pay for what they use. So the initial costs of setting up shop(usually 4-6 million dollars) is being picked up by Boeing. Almost the whole airplane is going to be power by the hour. Just like the 717. Saves millions!

The first few that go through training Boeing is paying for. The only thing Airtran has to pay is pilots salaries while they are in training. Very similar deal they got for the 717. As for the other training events that will be triggered from moving pilots 717 to 737 Airtran will have to pay up. Same goes for the maintenance personal. Boeing picked up the bill on that one too. Forklift Joe may done some stupid things in the past but he is the most cost conscious guy in the business. He can squeeze two nickels and get fifteen cents. In the LCC world that is very important.
 
elwood64151
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RE: Airtran / ATA

Tue Mar 23, 2004 12:46 am

Actually, I think what ATA is really dealing with right now is its debt and its depreciation.

ATA loses money to service its debt. Under its balance sheet under "Total Other Income (Expense)" for 2002, it listed a $34.2 million loss. I'm sure most of that was to service their outstanding debt of $509.4 million, much of which I would guess was probably used to obtain their current fleet of aircraft, since it has doubled from the previous 5 years.

In addition, ATA gets to take money off their taxes for "Depreciation and Amortization", the cost of the reduction in value of owned assets. No real money is lost there, but it helps to deflate the cost of both taxes and common stock dividends, without actually losing any cash money. D&A accounted for $76.7 million in operating costs for 2002.

Combined, these two areas make up $110.9 million of ATA's $175 million 2002 losses.

Granted, that still means ATA lost $98.3 million in cash in 2002, and without their debt load it might only have been $64.1 million. That's still a lot better than most other airlines.

By the way, ATA's 2002 RASM was 7.26 cents, and their CASM was 8.17 cents.

Cheers!
Those who fail to learn history are doomed to repeat it in summer school.
 
JayDavis
Posts: 1870
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RE: Airtran / ATA

Tue Mar 23, 2004 8:42 am

From my understanding, FL got a "helluva" deal from Boeing on these 737's.
According to my sources, the lawyers who helped negotiate the deal said that FL probably got the "best" deal they have ever see Boeing give and these groups of lawyers have dealt with Boeing on behalf of many other airlines for a very long time............

 
srbmod
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RE: Airtran / ATA

Tue Mar 23, 2004 9:50 am

The law firm that is working with AirTran on the new 737s is Crowe & Dunleavy of Oklahoma City. In fact, they've already applied for and have reserved the registrations for all of the 737s. Crowe & Dunleavy are one of the top firms in dealing with aviation-business issues.
http://www.crowedunlevy.com/CM/PracticeAreas/PracticeAreas99.asp

 
chicago757
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RE: Airtran / ATA

Tue Mar 23, 2004 12:28 pm

I hear ya Fly_ATA.......I work for ATA @ MDW. However, there are talks about us aquiring some 757s in the near future to serve overseas routes!!! If thats the case what other low-cost airline can manage that! Southwest sure as hell couldn't , and airtran no way!
Go White Sox!!!!
 
WMUPilot
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RE: Airtran / ATA

Tue Mar 23, 2004 9:56 pm

True, but the launch of overseas flights can kill us if we aren't careful. If management does this right and conciders all the options and whether we can make it a viable option, we can make lots of money on it. But if they just go rushing into this without concidering what the legacy carriers are going to do, like the transcon flights, we are going to get our ass handed to us on a platter.
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