Yet More Positive Outlook For Low Cost Carriers

[B717mech]

UPDATE 1-Airline business travel bottoms out- survey
October 06, 2003 3:59:00 PM ET


(Updates with more survey details, company comment)

By John Crawley

WASHINGTON, Oct 6 (Reuters) - The sharp decline in business travel fueling the downturn at major U.S. airlines has reached its low point, but the outlook for carriers remains bleak as more companies shop for bargains and cut back on trips, an industry survey found on Monday.

"While the falloff in business travel has bottomed out, according to the survey results, the revenue environment from this segment is as good as it is going to get for the foreseeable future," said Kevin Mitchell, chairman of the Business Travel Coalition.

That group, which represents corporate travel managers, surveyed 110 companies in the United States and Canada with more than $1 billion in travel spending for its annual report on industry trends.

"The major airlines' choices are to either improve cost and productivity or continue to cede market share to the low-fare airline segment," Mitchell said.

The survey found that 76 percent of the companies that were surveyed increased their travel on low-fare airlines in 2003 and 75 percent boosted their use of technology to purchase tickets on the Internet and enhance strategies to avoid or minimize travel.

Virtually all of the companies that have made those changes say they are permanent, the survey found.

"Travelers are being more cost effective and we're encouraging that," said Pete Buchheit, travel manager at power tool and hardware manufacturer Black & Decker Corp. (BDK).

Buchheit said the company now books nearly 40 percent of its domestic travel online and is relying more on low-fare carriers Southwest Airlines (LUV) and AirTran, a unit of AirTran Holdings (AAI). Both fly from Baltimore-Washington International airport near Black & Decker's Maryland headquarters.

Mitchell said 73 percent of these executives are dissatisfied with their airline contracts and nearly the same percentage believe better deals can be found online.

He predicted the shift to Internet booking will only strengthen online travel sites like airline-owned Orbitz and Expedia, and said big online booking outfits would soon be "invited" to bid on big travel contracts. "They may not be selected (right away) but they will be brought in and they will become a real force in corporate market," Mitchell said.

The survey also found that more business travelers are seeking alternatives to airlines like Amtrak or driving. Some, especially tech savvy younger executives and budget-conscious sales personnel, are more widely using teleconferencing and videoconferencing to avoid travel or they are planning trips more strategically. REUTERS

© 2003 Reuters

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How's this for "yet more positive outlook for low cost carriers"? Zacks has reiterated AAI's "strong buy" rating, even at current 52-week highs:

10/09/03 - Buy List Highlights: AirTran Holdings, i2 Technologies, MBNA Corporation, and PETsMART


CHICAGO, Oct 9, 2003 (BUSINESS WIRE) -- Zacks.com releases another list of stocks that are currently members of the coveted Zacks #1 Ranked list which has produced an average annual return of +33.6% since 1988 and has gained +13.3% annually since 2000 as the markets have been tumbling down. Among the #1 ranked stocks today we highlight the following companies: AirTran Holdings, Inc. (NYSE:AAI) and i2 Technologies, Inc. (NASDAQ:ITWO). Further they announced #2 Rankings (Buy) on two other widely held stocks: MBNA Corporation (NYSE:KRB) and PETsMART, Inc. (NASDAQ:PETM). To see the full Zacks #1 Ranked list or the rank for any other stock then visit. http://www.zacksrank1bw.zacks.com

Here is a synopsis of why these stocks have a Zacks Rank of 1 (Strong Buy). Note that a #1 Strong Buy rating is applied to 5% of all the stocks we rank:

AirTran Holdings, Inc. (NYSE:AAI), through its wholly owned subsidiary, AirTran Airlines, Inc., operates an affordable, no frills, limited frequency, scheduled airline serving short haul markets. Last week, AAI announced that passenger traffic, or revenue passenger miles (RPMs), was a record for the month of September. Based on RPMs, traffic grew by +37.6%, to 525.6 million RPMs, on an increase of +26% in capacity, based on available seat miles (ASMs). September's load factor reached 63.4% compared to 58% in September 2002. Third quarter figures will be released on October 22, 2003. Going back, in late July the company reported second quarter 2003 earnings, excluding special items, which beat both the consensus and the year-ago performance. Earnings estimates for this year and next have improved by approximately 4 cents and 2 cents respectively within the last week, with analysts expecting a +26% improvement in next year's earnings result over this year. AirTran Holdings has managed to weather the latest economic storms and looks to clearer skies ahead.