AirTran reports 1st-quarter profit despite recession

AirTran Airways aai, the discount carrier, provided a bright spot Wednesday for a beleaguered U.S. airline industry. It posted a profit for the first three months of the year.

Parent company AirTran Holdings said it had a profit of $28.7 million despite a 9% drop in revenue, compared with a restated loss of $35.4 million for the first quarter of last year.

Not even long-profitable discounter Southwest Airlines had been able to claim a profit so far, as major airlines the last two weeks have reported first-quarter losses attributable to so few people flying in this recession.

Continental Airlines cal on Wednesday followed previous announcements by American Airlines, Delta Air Lines and United Airlines. Continental said it lost $136 million in the first quarter because of a falloff in traffic and business travelers saving money by moving back in planes to coach class.

The woes of U.S. airlines reflect a deep downturn globally in air traffic and are having a ripple effect. Boeing, the giant U.S. airplane maker, reported that its first-quarter profit dropped by half, as airlines have postponed delivery of new planes.

Boeing ba also forecast lower earnings for the year as demand for the Chicago-based company's jetliners has tumbled.

The aircraft manufacturer said it earned $610 million, or 86 cents a share, compared with $1.2 billion, or $1.62 a share, in the first three months of last year.

In response, Boeing said it planned to slash spending and restructure parts of its business. Earlier this year, Boeing said it would cut 10,000 jobs and slow production of some of its commercial jetliners.

Wednesday's results included a charge of 38 cents related to planned production cuts of its twin-aisle 777, plans to delay stepped-up production of its 747-8 and 767 planes, and lower anticipated prices.

Revenue edged up 3% to $16.5 billion. Boeing shares rose 65 cents, or 1.8%, to close at $37.30.

J.B. Groh, an analyst at D.A. Davidson & Co., said investors were encouraged by Boeing's indication that the 787 program remains on schedule, with the first test flight of the next-generation aircraft scheduled for this quarter and deliveries slated to begin early next year.

AirTran, whose route system is focused in North America, isn't exposed to overseas markets like its bigger competitors. It said its first-quarter profit was equivalent to 21 cents a share, compared with a loss in the same period last year of 38 cents.

AirTran shares closed at a 52-week high of $6.93, an increase of $1.35, or 24.2%.

AirTran CEO Robert Fornaro said the profit reflected the decision by the Orlando-based carrier to begin cutting the number of seats it was offering when fuel prices skyrocketed last summer — a move that has paid off as travel has slumped.

"AirTran Airways was among the first airlines to react to the changing economic environment, and we are among the first to show signs of recovery," Fornaro said in a statement.

Continental also has slashed its capacity, but not enough to offset a 11.2% falloff in traffic in the first quarter compared with a year ago.

"This was a very tough quarter no matter how you look at it," Continental CEO Lawrence Kellner said.

The Houston-based carrier said it lost the equivalent of $1.10 a share for the first quarter, compared with a loss a year ago of 82 cents a share on $82 million in losses. Continental shares fell $1.40, or 9.3%, to close at $13.60.