"These results are unacceptable and we are taking numerous steps to adjust," said CFO Arne Haak, on the company's earnings conference call. He said slow RASM growth followed a 12.3% second-quarter capacity increase, by far the highest in the industry, and a shift in consumer behavior to buying less-expensive tickets. "The decision to continue growth through the summer was made early this year, with fuel at $100," Haak said.
Despite disappointing results, AirTran shares were trading up 51 cents, or 19%, at $3.21 Tuesday afternoon. The gain reflected falling oil prices, improved liquidity and possibly the impression that the carrier had beaten estimates.
At the end of June, AirTran had unrestricted cash and investment balance of $445.9 million, a record quarterly high. Additionally, it negotiated an extension with its primary credit card processor through 2009 and also received a commitment for a letter of credit facility up to $150 million, which could be applied to a credit card holdback. The deals addressed two problems: "Previously, we had no provisions for a holdback and the agreement was up for renewal at the end of the year," Haak said.