AirTran Holdings (AirTran), a leader in quality low fare air transport service in Atlanta hub, is expected to release its fourth quarter earnings on Wednesday, January 27, 2010. Last quarter ending September 2009, the company's positive earnings missed the street's estimate by 3.61%. However, in the last two quarters ending June 2009, the company reported higher earnings than the street's estimate.
AirTran Holdings conducts the flight operations, through its wholly owned subsidiary, AirTran Airways. The company operates scheduled airline service throughout the US with a concentration in the Eastern US. A majority of AirTran's flights originate or terminate at its largest hub in Atlanta, Georgia. AirTran's customer service includes online ticket purchasing, as well as self-service ticketing and check-in kiosks at its airline gates. It also provides disabled services and in-flight entertainment. In addition, the company offers customer loyalty programs, such as A+ Rewards program, A2B corporate travel program, AirTran U student travel program and AirTran Airways co-branded credit card.
The company reported a third quarter 2009 EPS of $0.08 (-0.98 in Q3-2008) on revenue of $597 million ($673 million). Passenger unit revenues declined 16% year-over-over to $0.858 as a result of a 15.2% year-over-year decline in yield. Other revenues increased $30 million or 79%. The decline is attributable to lower revenue from Labor Day holiday. To some extent lower revenue impact was offset by tight control on cost side. Total operating cost decreased by 22.2%, principally as a result of the decline in fuel prices during the quarter. This reduction in the average cost of jet fuel reduced the third quarter fuel cost by over $175 million year-over-year.
Analysts' estimates for the quarter ending December 2009 range from a low of -$0.02 to a high of $0.07, compared to a consensus estimate of $0.033. According to Thomson Financial, for the fiscal quarter ending December 2009, the consensus EPS forecast has increased over the past week from $0.030 to $0.033 (10.00%) and increased over the past month from $0.031 to $0.033 (6.45%). Of the 11 analysts making quarterly forecasts, 3 raised and 1 lowered their forecast.
Upward revision in earnings estimates is attributable to, expansion in Milwaukee, capacity increase over the previous year, declining year-over-year growth in non-fuel unit costs, and decline in year-over-year fuel costs. If the economic recovery pace increases, I believe that the company's investments and the series of high quality amenities like business class, corporate sales program, and fleet wide WiFi internet, should allow it to participate in a recovery that maybe driven by higher business travel demand.
In the last one year, the stock has gained more than 22.6%. The stock closed last Friday at $5.37, compared to 52 week range of $2.44 and $8.68. The company's earnings could support a price in excess of $6 in the next two quarters.
