Boeing, Rival Compete for AirTran Deal
AirTran Airways, a major customer of the Boeing 717 jetliner built in Long Beach, is weighing competing proposals for planes from Boeing Co. and its rival Airbus, AirTran’s chief executive said Tuesday.
Joe Leonard, who also is chairman of the low-fare, fast-growing carrier, said in an interview that AirTran planned to buy 100 planes in the next few years.
A decision to make the purchase from Airbus would be a blow to the Long Beach plant and to the 717, the last commercial jetliner built in Southern California.
But even if AirTran goes with Boeing, it might not place a full 717 order. Leonard said the proposal from Chicago-based Boeing was for its 737 series “as well as 717s or a combination of both.” The Airbus aircraft under consideration is the 120-seat A-319, he said.
AirTran’s fleet of 717s -- which seat 100 to 120 passengers -- stands at 57, and it expects to take delivery of an additional 16 by year-end. The 717s are replacing AirTran’s aging DC-9s.
In the past, Boeing has considered closing the Long Beach plant, which employs 3,000. Production has dropped to about one aircraft a month from 3.5 a month before the Sept. 11 attacks, according to Boeing.
So far, Boeing has delivered 116 of the 717s that airlines have ordered and has a backlog of 37. That would indicate at least three years of production left.
AirTran might makes its choice this summer, Leonard said, “although we don’t feel any pressure to accelerate a decision.”
Leonard’s comments came after AirTran reported a profitable first quarter. The carrier, whose parent is AirTran Holdings Inc. of Orlando, Fla., is one of the few making money these days, along with fellow discount carriers Southwest Airlines and JetBlue Airways, mainly because they have lower operating costs than the major airlines.
AirTran credits the 717, which is 24% more fuel-efficient than the older DC-9, for part of its profitability.
The carrier’s shares have nearly doubled this year. They rose 25 cents to $7.74 Tuesday on the New York Stock Exchange.
Ordering more planes would complement AirTran’s aggressive growth strategy, which includes new service from Los Angeles to its hub in Atlanta beginning in June.
The service will be a direct swipe at Atlanta-based Delta Air Lines, which dominates the route. JetBlue also is invading that turf, with flights from Long Beach to Atlanta starting May 8.
Leonard said “it’s going to be tough” to take market share on that route, but “this is a market that’s never been stimulated with low-cost competition.”
AirTran has been hurt, like the rest of the industry, by the travel slump stemming from the weak economy, the terrorist attacks and the Iraq war. But the airline now has posted four straight profitable quarters.
In the first quarter, AirTran earned $2 million, or 3 cents a share, contrasted with a loss of $3 million a year earlier. First-quarter revenue jumped 31% to $208 million, from $159.3 million.
AirTran and other airlines have options to buy 78 of Boeing’s 717s. AirTran has options on six planes, so additional orders might amount to exercising some or all of those options.
