AirTran defies odds, soars

Carrier: Profits and steady service have helped the Florida-based airline distance itself from its predecessor, ValuJet.

November 10, 2002|By Paul Adams | Paul Adams,SUN STAFF

The clock starts ticking the minute an AirTran Airways plane touches down at Baltimore-Washington International Airport.

The low-fare airline's ground crew typically has 25 minutes to sweep the aisles, take on passengers, load luggage, fuel the plane and send it back down the runway for its next flight.

If that means pilot Randy Smith has to help toss bags into the cargo hold, so be it. Airplanes make money only when they're flying, and there's no room here for rigid work rules among the airline's unions.

"Some of the larger airlines can't be low-cost carriers because they simply have got a bureaucracy that won't allow them to be low-cost carriers," said Smith, taking a break from his preparations for a flight from BWI to Boston last week.

That focus on keeping costs low and productivity high has made AirTran Airways one of the few airlines in the nation to turn a quarterly profit since the terrorist attacks last year.

The company, which operates a hub out of Atlanta, earned $5.1 million in the second quarter of this year and $1.2 million in the third quarter as revenue increased by 22 percent. Analysts expect a profit for the year.

While major airlines have been busy parking planes and laying off thousands of employees, Orlando, Fla.-based AirTran continues to take delivery of new Boeing 717s and plans to expand by about 25 percent next year. It operates 398 flights a day to 40 destinations.

That means more low-fare flights are destined for BWI, where AirTran offers 24 daily departures and is on pace to become the second-biggest carrier behind low-fare leader Southwest Airlines. The airline is expected to expand its BWI operations to 35 or more flights a day in the next year.

"I think we can do more in Baltimore, but we also know who owns Baltimore, and it ain't us. It's [Southwest Chairman] Herb Kelleher," said Joe Leonard, AirTran's chairman and chief executive.

The only thing more remarkable than its continued growth is that the company is even around.

AirTran is the successor of ValuJet, the tragedy-scarred airline that few gave any chance of survival five years ago. The airline's name became synonymous with low quality and worse after oxygen generators caught fire in the cargo hold of Flight 592 in 1996, starting an intense blaze that doomed the plane within minutes of takeoff. Five crew members and 105 passengers perished in the Florida Everglades.

The disaster focused attention on the airline's aging fleet of DC-9s and raised questions about safety among small, start-up carriers.

The airline was shut down for three months after the crash, and passenger counts remained low after service was restored. Federal investigators placed most of the blame on a Miami maintenance contractor that improperly loaded the unmarked generators onto the flight.

In a bid to distance itself from the disaster, ValuJet bought AirTran - a smaller competitor with about a dozen planes - in 1997 and took its name.

The money-losing airline limped along until 1999, when Leonard, a former Eastern Airlines executive, took the helm and began an austerity program aimed at restoring profitability.

"I mean, they were dead and gone," said Stuart Klaskin, an aviation consultant with Klaskin, Kushner and Co. in Miami. "Joe Leonard, through a combination of skill and force of personality, led this thing through the dark ages."

A member of the old school of airline management, the plain-spoken Leonard rallied employees around his plan for greater cost-control and safety. He started by emulating Southwest's simple fare structure and adopting a similar self-deprecating marketing strategy aimed at softening its image.

AirTran also came up with some innovations that set it apart from competitors. Unlike Southwest, AirTran has assigned seating and a business class, allowing passengers to upgrade to a roomier leather seat in the front of the plane for $25.

"While we were down and had everybody making fun of us, people became very, very resourceful because they really had to to survive," said Robert L. Fornaro, whom Leonard hired as president and chief operating officer in 1999 in a management shakeout. "It had a tendency to pull people together."

Road to recovery

Key to the recovery plan was forging a tighter relationship with Boeing Co., which helped finance the airline's purchase of 717s in exchange for an equity stake in the company. The last of AirTran's older DC-9s will be phased out next year, leaving it with nothing but 717s.

When the transition is complete, AirTran says, it will have the industry's youngest fleet.

"It was a very important piece of changing the image of the airline," said Fornaro, who lives in McLean, Va., and commutes by plane to company headquarters in Orlando every week. "It clearly disassociates ourselves with ValuJet."

Rick Pedra, AirTran's Baltimore maintenance manager, talks about the Boeing plane as if it were a high-performance minivan.

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