Airtran 2010 Annual Report Download - page 30

Downgrades in our credit ratings may adversely affect our financing options, or increase our borrowing costs, which
could adversely affect our liquidity.
Currently, our public debt is rated below-investment grade. Our existing credit rating may adversely affect our borrowing
costs or ability to borrow. A reduction in our existing credit ratings could further adversely affect our borrowing costs or
ability to borrow.
The imposition of a holdback by one of our largest credit card processors could have a material adverse impact on our
liquidity.
Most airlines have agreements with organizations that process credit card transactions arising from the purchase of air
travel by their customers. Each of our agreements with our two largest credit card processors provides that a processor
may holdback monies related to future travel that such processor otherwise would remit to us (i.e., a “holdback”) in the
event that such processor reasonably determines that there has been a material adverse occurrence or certain other events
occur. Our exposure to credit card holdbacks consists of advance ticket sales that customers purchase with credit cards.
Once the customer travels, any related holdback is remitted to us. The imposition of holdbacks would adversely affect our
liquidity and could result in a material adverse effect on our business, including our financial condition, cash flows, and
operations.
We cannot assure you that we will be able to maintain our competitive low cost advantage.
We believe we currently have among the lowest non-fuel operating costs of major U.S. air carriers on an aircraft stage
length adjusted basis. However, since 2001, in order to respond to intense competition, the high price of fuel, and slower
general economic conditions, a number of our competitors have taken various actions in an effort to reduce their costs
including reducing employee headcount, limiting service offerings, renegotiating labor contracts, restructuring through the
bankruptcy process, and reconfiguring flight schedules, as well as other efficiency and cost-cutting measures. While we
believe our cost advantage remains significant, certain of our competitors’ actions have reduced our cost advantage, and
additional cost reductions could further reduce our cost advantage.
Our maintenance costs are expected to increase.
Our recent maintenance expenses have been lower than what we expect to incur in the future because of the relatively
young age of our B717 and B737 aircraft fleet. Our maintenance costs are expected to increase as our aircraft age and the
number of our aircraft under the manufacturer warranty decrease. Several of our maintenance contracts with third party
vendors also provide for annual contractual increases, either based on an inflation-index or a fixed amount.
Fuel is our largest operating cost. Our fuel hedging activities may not protect us in the event of rising fuel prices, and
we could sustain losses from our hedging activities.
We endeavor to manage and mitigate the risks of changes in aviation fuel prices, where we believe appropriate, by
entering into hedging arrangements. We do not enter into fuel hedge contracts for speculative purposes.
We typically hedge a portion of our exposure to aircraft fuel price increases with a portfolio of swaps and various types of
options using crude oil, heating oil, and aircraft fuel as the underlying commodity.
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