AirTran Crashes on Rumors
CHARLOTTE, N.C. -- Shares of
AirTran
(AAI)
plunged 35% late Friday, a drop likely triggered by perceived similarities with
Frontier
that AirTran says are baseless.
Frontier
Friday morning, to protect itself from a credit card processor's effort to boost its withholding of ticket revenues. While Frontier's shares plunged more than 69%, AirTran shares were steady most of the day until beginning a steep decline shortly after 3 p.m. The shares shed more than $2 to close at $4.13, down 34.6%.
Yet Airtran has no credit card holdback at all, and "we don't anticipate one," spokesman Tad Hutcheson said Friday.
At year-end, the Orlando, Fla.-based carrier had $350 million in cash on revenue of $2.3 billion. The cash balance today is higher now, Hutcheson said. "It's been growing," he said.
The run on the stock was apparently triggered by an afternoon
Associated Press
story that referred to a report early this week, by Calyon Securities analyst Ray Neidl, which suggested that Frontier and AirTran were both at risk of bankruptcy due to increased credit card company withholding.
"Frontier is a great airline, but financially we're much stronger," said Hutcheson. "We're not in the same league with them. We are one of the strongest low-cost carriers out there."
