Airtran 2006 Annual Report Download - page 21

•the possible need to modify internal controls over financial reporting in order to comply with the Foreign Corrupt Practices Act, the Sarbanes-Oxley Act of
2002 and the rules and regulations promulgated thereunder; and
•loss of customer goodwill.
For these reasons, AirTran may fail to successfully complete the integration of an acquired entity, or to realize the anticipated benefits of the integration of an
acquired entity. Actual cost savings and synergies which may be achieved from an acquired entity may be lower than AirTran expects and may take a longer time
to achieve than AirTran anticipates. Other acquisition related risks include risks associated with higher costs or unexpected difficulties or problems with acquired
assets or entities including different flight equip ment, outdated or incompatible technologies, labor difficulties, or an inability to realize anticipated synergies and
efficiencies. Whether within anticipated timeframes or at all, one or more of such acquisition-related risks, if realized, could have an adverse impact on AirTran’s
business, financial condition, results of operations, or operations. For a discussion of the particular risks and uncertainties associated with a potential acquisition
of Midwest, see the section captioned “ RISK FACTORS—Risk Factors Relating to AirTran and the Combined Company ” in the prospectus in registration statement
on Form S-4 and all amendments thereto filed with the SEC in connection with AirTran’s Exchange Offer, which is incorporated herein by reference.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
OPERATING AIRCRAFT FLEET :
We operated the following owned and leased aircraft as of December 31, 2006:
Number of Weighted-Average
Aircraft Type Passenger Seats Owned Leased Total Age (Years)
B717 117 8 79 87 4.3
B737-700 137 18 22 40 1.2
Total 26 101 127 3.3
As of December 31, 2006, we had 60 Boeing 737 aircraft on order scheduled to be delivered in the year indicated:
Firm Aircraft Deliveries
B737
2007 12
2008 15
2009 18
2010 14
2011 1
Total 60
The above schedule includes two B737 aircraft scheduled for delivery in the second quarter 2007 which we have agreed to sell to an airline which operates outside
of the United States. We anticipate recognizing a gain if and when each sale occurs.
Of the 60 B737 aircraft on order, we have secured debt financing for ten B737 aircraft scheduled for delivery in 2007 and for five of the aircraft scheduled to be
delivered in 2008 through arrangements with financial institutions. While our intention is to finance the remainder of the aircraft on order via a combination of
debt and lease financing we have not yet arranged for such financing. Additionally, we have sale/leaseback commitments from an aircraft leasing company with
respect to six spare engines to be delivered through 2010. During 2006, we entered into a sale/leaseback agreements related to one of these spare engines.
There can be no assurance that sufficient financing will be available for all B737 aircraft deliveries or for other capital expenditures not covered by firm financing
commitments. Should fuel prices remain high and if we are unable to generate revenues to cover our costs, we may slow our growth, including the sale, lease or
sublease of certain numbers of our aircraft.
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