AirTran Airways (TRS)

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AirTran Airways traces its history back to 1993 when low-cost carrier ValuJet began service flying a DC-9 from Atlanta to Tampa.

The airline was taken public in June of 1994, after a year of tremendous growth in which it added 15 planes.

It became the fastest airline in the history of American aviation to make a profit, earning $21 million in 1994. In October of 1995, ValuJet placed an order with airplane manufacturer McDonnell Douglas for fifty MD-95 (renamed the B717-200 after McDonnell Douglas' merger with Boeing in 1996) jets with an option for fifty more; thus making it the first low cost airline to launch an aircraft.

Despite its commercial success, Valujet was widely disparaged by airline pilots as a “scab” operation because it initially hired many pilots who had crossed the picket lines at Eastern Airlines and various other carriers in the early 1990s. Even today, some unionists look down their noses at AirTran, even though the airline employs fewer than 25 such pilots.

The tables turned for ValuJet when, in May 1996, one of its DC-9 aircraft crashed into the Florida Everglades, killing all 110 on board. The airline was subsequently grounded by the FAA and the incident renewed skepticism about the safety and professionalism of low-fare airlines.

Within months of the grounding, the airline replaced virtually all its top managers. When operations resumed, the airline had committed to safety standards that in many cases exceeded regulatory requirements.

In November 1996, Joseph Corr, former CEO of Continental Airlines became CEO and President of ValuJet. He quickly merged with and took the name of AirTran Airlines, which flew B-737s. While the holding company - AirTran Holdings Inc. - moved its headquarters to Orlando, AirTran Airways remained in Atlanta, where it has become entrenched as the second largest airline at the nation’s number one airport.

A low-cost airline, AirTran flies primarily in short-haul markets principally in the eastern United States. Most of its flights still originate and terminate at its hub in Atlanta, Georgia. It has focused on trying to win repeat business by offering inexpensive business-class seats and becoming one of the first airlines to equip its entire fleet with XM Satellite Radio.  In 2006, its average fare was $90.58. At 9.74 cents, its operating cost per available seat mile (CASM) is among the lowest in the industry. As a comparison, Southwest Airlines reported CASM at 8.8 cents in 2006.

Joe Leonard named CEO

In January 1999, the board of directors at AirTran elected Joseph Leonard Chairman, Chief Executive Officer, and President of the company. The former chief operating officer for Eastern Airlines, Leonard is an aerospace engineer. A former manager at American Airlines, Northwest Airlines and The Boeing Co., Leonard was heading up marketing for aerospace manufacturer AlliedSignal when hired by AirTran. 

That year, Leonard began moving towards an all-Boeing fleet of B-717 aircraft, which Boeing stopped making in 2006. The airline retired its last DC-9 aircraft in January 2004, when it began adding Boeing 737-700s to its fleet. That year it hired its 1,000th pilot.

In August 2001, AirTran moved from the American Stock Exchange to the New York Stock Exchange, where it trades under the symbol AAI.

AirTran fared well financially in the wake of the Sept. 11, 2001 terrorism attacks compared to most major airlines. It remained profitable from 2002 to 2006, as its revenues more than doubled to nearly $2 billion. In 2006, profits nearly doubled to $15.5 million as revenue passenger miles shot up 20.5 percent. (For more details, FLTops members can view airline passenger traffic and financial data in our “Industry News & Analysis” gateway. 

In 2004, the company opened a new aircraft hangar and pilot training center in Atlanta, where it now operates 22 gates.

59 B737s on order through 2011

Today its fleet of 87 B717s and 41 B737s is among the youngest Boeing fleets in the industry. And it’s set to get younger still. The company took on $338.5 million in new debt in 2006 to finance new B737s. As of February, 2007 it held firm orders for 59 B737s to be delivered through 2011, including 12 scheduled for delivery in 2007 and another 15 in 2008. However, it had only secured financing for 10 of the 2007 orders and five of the 2008 orders as of February, 2007.

The B737s enabled AirTran to diversify beyond its Altanta hub and begin serving the Western United States. By 2007, Atlanta accounted for only 66 percent of its flight operations, compared to 90 percent in 2000. After Atlanta, AirTran’s  largest operations are at Baltimore/Washington International Airport and Orlando International Airport.

Since 2006, the airline has added Seattle; White Plains and Newburgh, N.Y.; Daytona Beach, Fla.; Phoenix, Ariz.; San Diego, Calif.; Portland, Or. and St. Louis  to its network.

Union recommends pilots reject latest contract

AirTran pilots are represented by the independent National Pilots Association. The NPA has been negotiating for a new agreement since their four-year contract became amenable in September 2005. The union negotiated a temporary agreement, or TA, under the auspices of the National Mediation Board in the spring of 2007 that would have paid its members more than their counterparts at Delta Air Lines. However, the union was forced to pull the agreement during ratification when it became obvious that line pilots would reject provisions governing work rules.

In August, the NPA's negotiating committee forwarded a second TA, but recommended its members not approve it. Balloting on the contract was expected to wind up in August, but NPA dissidents are already calling for the recall of NPA President Capt. Allen Philpot for failing to present an acceptable contract.

From October, 2006 until mid-August, AirTran’s management was distracted not only with contract negotiations but with its own unsolicited bid to buy Milwaukee-based Midwest Air Group. Leonard said the deal would extend AirTran's network into the Midwest, lessening its dependence on Atlanta and result in $60 million in annual cost savings. Leonard's dogged pursuit of Midwest won him admirers among the many in the industry and on Wall Street who say further consolidation is the only way to restore the industry's long-term health.

When Midwest’s board rejected AirTran’s second, higher bid this spring, Leonard lobbied Midwest’s largest shareholders, Milwaukee’s business community and the media to back the deal. In June, Midwest shareholder elected three directors nominated by AirTran, forcing Midwest’s board to meet with Leonard. But in the end Leonard was outflanked by Midwest CEO Tim Hoeksema, who quickly negotiated an all-cash sale to the private equity firm Texas Pacific Group. AirTran finally withdrew its unsolicited offer for Midwest Air in mid-August.

Leonard said the airline will be able to continue meeting its goals by growing organically, particularly now that it does not have to take on another $150 million in debt to finance the Midwest acquisition.  

Company highlights:

Joe Leonard	Chairman and CEO
Klaus Goersch	Vice President, Flight Operations
Headquarters:	Orlando, Fla.
Gateway:	Atlanta, Ga.
Primary route structure:	Flies coast-to-coast to 52 cities in the U.S. and Bahamas.
Number of employees:	Approximately 7,700
Number of pilots:	Approximately 1,500
Crew base:	Atlanta, Ga.
Union representation:	National Pilots Association (NPA)
Union agreement:	Four-year agreement that became amenable in September 2005 is currently in mediation under auspices of National Mediation Board.
Pay and benefits:	FLTops.com members can view a complete breakdown and comparison of major airline salaries by visiting the Pay Rates - Major Airline Pilots pages.
Minimum preferred requirements:	FLTops.com members can view more hiring information by visiting the Pilot Hiring pages.
Aircraft:	FLTops.com members can view an expanded breakdown of airline aircraft by visiting the Fleet pages.