AirTran narrows quarterly loss, WestJet posts record 1Q profits

AirTran Holdings, Inc. has reported a net loss of $4.6 million for the first quarter 2006. The parent company of the low-cost carrier AirTran Airways posted a narrower quarterly loss helped by an accounting measure related to fuel charges.

During the first quarter, AirTran Airways’ unit revenue increased 11.1 percent primarily on the strength of a 10.6 percent improvement in yield. Load factor increased to 70.8 percent, setting an all-time first quarter record.

“We are pleased with our first quarter unit revenue improvement of 11 percent on a 24 percent growth in capacity. This is particularly rewarding given the negative impact on unit revenue resulting from the shift in the Easter Holiday from March to April, which we believe slowed our first quarter unit revenue growth by three-four percent year over year,” said Bob Fornaro, AirTran Airways’ president and chief operating officer.

Without the accounting measure, a credit worth $4.2 million, or five cents a share, AirTran would have lost $8.8 million, or 10 cents a share, more than the loss of seven cents expected by analysts.

AirTran’s chief financial officer, Stanley J. Gadek, said the credit corrected fuel expenses that had been miscalculated in previous quarters. Excluding one-time items, AirTran’s operating loss was $4.5 million, compared with a loss of $9.4 million a year earlier.

According to Reuters, Jamie Baker, JP Morgan airline analyst, in a research note, mentioned: “While respectable in the absolute on 24 percent capacity growth, we believe RASM (revenue per available seat mile) rose below the level of initial management expectations.”

On the other hand, WestJet announced its 2006 first quarter results, returning to first quarter profitability, with net earnings of $12.9 million up from the $9.6 million net loss experienced in the same quarter of 2005.

WestJet’s operating revenue for the first quarter of 2006 was $387.6 million, a 31.6 percent increase from the $294.6 million achieved in the first three months of 2005. Yield (revenue per revenue passenger mile) was 16.8 cents in the first quarter of 2006 compared to 15.2 cents in the same period in 2005, an increase of 10.5 percent.

Clive Beddoe, WestJet’s president and chief executive officer said, “I am very pleased to be able to report that our quarterly results for the first three months of 2006 mark the most successful first quarter in our history. With the Canadian airline industry returning to a more rational pricing environment, we returned to first quarter profitability reporting net earnings of $12.9 million. During this quarter, we have witnessed record breaking load factors as well as improved yields, all of which we have achieved while continuing to add capacity. This accomplishment which is hard to attain in the airline industry, is one we have now achieved over the past three quarters.”