We keep flying high

[B717mech]

AirTran to offer 8.65 million common shares
September 19, 2003 07:27:00 AM ET



NEW YORK, Sept 19 (Reuters) - AirTran Holdings Inc. (AAI), the parent of discount carrier AirTran Airways, on Friday said it plans a public offering of 8.65 million common shares.

The Orlando, Florida-based company said it may sell an additional 1.3 million shares to cover over-allotments. AirTran shares closed Thursday on the New York Stock Exchange at $17.71.

AirTran said it intends to use proceeds to redeem $35 million of its 11.27 percent senior secured notes now held by Boeing Capital Loan Corp., a Boeing Co. (BA) unit, and to buy from Boeing Capital warrants for 1 million AirTran common shares. It said it intends to use remaining proceeds for working capital and other expenses.

Morgan Stanley is arranging the share offering, AirTran said. REUTERS

© 2003 Reuters

[Nugget]

Do you realize that this is a bad sign? I'm not sure why you'd point out a cash shortage as a positive indicator. It's a possible explanation for why we saw several directors recently dumping their airtran holdings, too.

Airtran shares fell over 4% in today's morning trading over this news.

[dbaker]

Indeed nothing to brag about. What was the timing of the director sales?

Certainly there is the possibility of insider trading implications if they made those sales based on information that had yet to be released to their shareholders.

[jetmech717]

yeah the information was "DAM, the price of the stock has tripled. I think I'll cash in a few options". Lets not look to stupid here fellows. It doesnt take a genious to figure out the math on that one. Money in the hand
keep scrapping though.

[B717mech]

look guys I know you don't like AirTran and you will find any reason to talk down about it. I see this as a good thing. Releasing 8.6 million shares. One that does drive the price down, but on the brighter side it gives us more investors. So I don't see how this is really a bad thing.

[Nugget]

There's a great chasm of difference between a director "cashing in a few options" and a director selling all or nearly all of their airtran holdings. The trade advisories that mduell pointed out were instances of airtran directors who sold 99% or more of their shares.

Moreover, airtran isn't "releasing" shares, they're "issuing" shares. This dilutes the current investors, effectively reducing the value of every single share of airtran stock that exists. Companies do this when they need quick cash and the cash is found at the expense of every single existing investor.

If there are 1000 shares of a company and you own 100 shares, you own 10% of that company. If the comapny then issues another 1000 shares, you only own 5% of the company without having sold any shares or taken any money in compensation for the loss of ownership. It's a raw deal.

[haze]

AirTran has started expanding very rapidly again, and this is simply funding for further expansion

[haze]

It also increases AirTran's market capitilization, which if you read the thread I posted about "AirTran Lapping the Field" meets and/or exceeds the market capitalization of Northwest and Continental already. Looks like AirTran is not willing to just sit around and rest on their laurels, but is taking a proactive approach to further expansion and market capitilization. All without dipping into cash reserves which should be saved for much leaner times. Now Nugget, are you sure (as a moderator of some of these boards) you're willing to go that far out on a limb (stating AirTran has a cash shortage) without actually researching the matter? Apparently you are, since AirTran is in great shape cashwise. jetmech717, let these fellas look stupid all they want. It just proves our point

[haze]

AirTran Financial Stats (latest quarter):

Market Capitalization: $1.3 Billion
Outstanding Shares: 73.4 Million
P/E: 19.25
Current Price to Projected 2004 Earnings Ratio: <15
CASH: $284,869,600


...with a current P/E of less than 20 (less than 15 on '04 "industry" projections at current pricing) plus cash reserves of nearly $300 million, this whole "overvalued and short-of-cash" charade dbaker and Nugget are trying to pull off just doesn't fly

[Nugget]

Selling off a chunk of the company to raise cash is not "expansion". The airline isn't any better off, its ownership just becomes more diluted.
The intrinsic value of a company and its potential for success is unrelated to its market capitalization. Market capitalization is a neutral aspect when evaluating the health of a company.

And again, if profit comes at the expense of proper maintenance, then its a pyrrhic victory.

[haze]

The facts folks, just look at these facts, not all the smoke and mirrors dbaker and Nugget are tossing around in here. They're counting on you to be intellectually lazy and for you to just take them on their word, but we're here to tell you that their word is pure propoganda. Just plain lying. They try to gang up on us "truth defenders" using the mob mentality. They try to condescend from their high horse with phrases like "you have reading comprehension problems" and "you don't even realize what you're saying" and "you're being eaten alive in here." They try to skew the truth with four photos of the same accident claiming they're seperate events, with a caption reading "...crashed, missing part of the fuselage" when that's not the case, with statements like "cash shortage" when there is none. They like to think their frequent flier selves from Texas know more about AirTran maintenance than two AirTran technicians. And so on, and so on, forever.

But reality is finally starting to take hold here, and not by accident. jetmech717 and b717 may know one another, but I don't know them from Adam. We're just all here for the same reason: to reveal the fraud of this portion of the site. Funny how it took us three ganging up on the mob mentality that used to exist in here to finally shine the light of truth on the whole AirTran situation. Fighting fire with fire. Also funny how we don't hear much from dbaker anymore since he no longer has free reign to spread untruths. We've called his bluff on many issues and he simply has no rebuttal. We definately comprehend what we're reading, realize what we're saying, and know who's being eaten alive. And now so does everyone else. We've exposed with fact their attempts to deceive. We've exposed the fact that they're simply frequent fliers trying to argue aircraft maintenance with two skilled aircraft technicians. Essentially, we've exposed the AirTran portion of this site for what it really is: pure slander.

Touche' gentlemen

[haze]

Originally Posted by Nugget

Selling off a chunk of the company to raise cash is not "expansion".

Ummmm, nobody ever said selling is expansion. "Do you even understand what you're reading?" "You seem to have reading comprehension problems."

Brisk and extensive expansion costs mounds of money, and public offerings of common stock are always the best way to finance that. Dipping into cash reserves is better suited for economic emergencies in lean times, something AirTran is not currently experiencing despite the fact that most other airlines are.

So, am I hearing you correctly when you claim that AirTran's cash reserve of nearly $300 million constitutes a "cash shortage"? If not, your entire argument is baseless

[haze]

Originally Posted by Nugget

And again, if profit comes at the expense of proper maintenance, then its a pyrrhic victory.

But they're not in Epirus fighting the Romans, they're in Atlanta fighting Delta. And in DC fighting US Airways. And in Dallas fighting American. The only ones the battle is becoming too costly for are the big boys. AirTran can pretty much place their business model wherever they want and thrive, without cutting any corners on maintenance. All of those Diamond Awards for safety, maintenance, and training the FAA has bestowed upon AirTran since 1998 speaks to that issue loud and clear. AirTran eliminates it's costs by cutting out all those elitist "frills" that dbaker seems to enjoy so much up in first class and in airport lounges.

Sorry about that whole Roman tangent I went off on there with the Pyrrhic thing folks. I just can't resist a little fun when someone starts "word dropping" to sound superior. Just a side effect of having a minor in literature

[Nugget]

Originally Posted by haze

Sorry about that whole Roman tangent I went off on there with the Pyrrhic thing folks. I just can't resist a little fun when someone starts "word dropping" to sound superior. Just a side effect of having a minor in literature

Having a minor in literature is a great thing, and surely helps you to understand that often times people use words or phrases because they're appropriate and not just to "sound superior". Give me a little credit, eh?

[haze]

...given, that was a pretty good one, Nugget :P

[jetmech717]

Haze the man says:

AirTran eliminates it's costs by cutting out all those elitist "frills" that dbaker seems to enjoy so much up in first class and in airport lounges.

Not to shabby there haze, That is exactly one of the main reasons we can run so much more effeciently than other bigger airlines. Also our brand new planes require less maintenance and burn less fuel than the dc-9's so this is extra money for the company to bank. So if nugget says we are cutting back on maintenance then I guess we kinda are....If you mean that the B-717 doesnt break as much as DC-9 did. lol Other than that I ask him to prove his little opinion on that matter, and quit corrupting the people of this site.

Haze the great says:

They try to skew the truth with four photos of the same accident claiming they're seperate events, with a caption reading "...crashed, missing part of the fuselage" when that's not the case,

Man I am so proud right now. I am glad that someone actually see's this B.S. that is on the warning page that DBaker has created. He has just taken pictures and made incidents up out of his own head. I think soon some of the AirTran lawyers will be getting a call on this web site for mis-information, I'm sure it will be corrected then........................ Thank you sir haze

[haze]

First of all, thanks a ton for the props jetmech717. You know I definately get it, and I think we're finally starting to tilt the balance back to reality. But I'm not real good with accolades so try to hold off on the "Haze the Great" stuff, you're making me blush But again, thanks!

Now, on to this big insider selling problem. It does appear to be a mounting concern that one analyst in particular has noticed and commented on. Problem is, they don't have a problem with AirTran, they have the problem with Southwest's and Alaska's and America West's insider selling. Not to mention the pension shorfalls at American, Continental, Delta, and Northwest:

9/29/03 - AIR: Insider Selling, Pension Concerns in Barrons Story [delayed]


Ridgeland, MS, SEP 29, 2003 (EventX/Knobias.com via COMTEX) -- Airlines were panned in two Barron's stories over the weekend. LUV, ALK, and AWA were pointed out in a story on insider selling. Michael Painchaud, a founder and research director at Market Profile Theorems opined that the selling, "most clearly demonstrates an inflection point" for the industry. In another story, AMR, CAL, DAL and NWAC were cited for their pension situation. Bear Stearns analyst David Strine said the four companies have a combined $13.9 billion pension shortfall. He sees cash contributions to pension funds jumping from $594 million to nearly $1.8 billion in 2004.

GET KNOBIAS IN REAL-TIME: Delivery of this proprietary Knobias alert has been delayed by at least 10 minutes. To get all Knobias alerts in real-time daily, visit http://www.knobias.com/cmtx

Hasn't the argument of this thread been that AirTran's insider selling spells disaster for the future of it's bottom line? Funny then how Barron's sees Southwest's and Alaska's and America West's insider selling as troublesome, but doesn't seem concerned with AirTran's

[haze]

Originally Posted by Nugget

Do you realize that this is a bad sign? I'm not sure why you'd point out a cash shortage as a positive indicator...Airtran shares fell over 4% in today's morning trading over this news.

This is exactly why it's a good sign:

[ The Atlanta Journal-Constitution: 9/28/03 ]

AirTran expects to net $132 million from share offering

By RUSSELL GRANTHAM
The Atlanta Journal-Constitution


AirTran, which is the second largest carrier at Hartsfield International, plans to use part of the proceeds to repurchase about $47 million in debt and stock warrants held by a Boeing subsidiary. It said it will use the remainder for working capital and costs related to its planned aircraft fleet expansion.

There is no so-called "cash shortage." That's simply an ubsubstantiated myth, much like the rest of the baseless claims here on the AirTran portion of ITYT. As I stated before, AirTran has nearly $300,000,000 in cash reserves. And they are very wisely saving that for leaner times. AirTran is using the proceeds from this public offering to buy back outstanding debt and to further expand their already young new fleet, which are two very healthy excercises for the bottom line. Hey, didn't I just say something along those very lines last week? Four days before this article was published, mind you

[haze]

Why yes, I did:

Originally Posted by haze

AirTran has started expanding very rapidly again, and this is simply funding for further expansion

That from my post on Wednesday September 24th, almost a week prior to the article's release...

[haze]

Originally Posted by Nugget

Airtran shares fell over 4% in today's morning trading over this news.

...and are up 4% today, in light of what you thought was very bad news:

Corporate Snapshot
AIRTRAN HLDGS INC (NYSE:AAI)
Latest Quote


Last: 16.250
Close: 16.250
High: 16.400
Low: 15.620
Open: 15.620
Change: +0.63
Volume: 1,414,200


52 Wk High: 18.300
52 Wk Low: 2.510
%Change: 4.0%