Airtran 2010 Annual Report Download - page 57

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In 2009, our Board of Directors authorized, at management’s discretion, the repurchase, from time-to-time, of up to $50
million of our 7.0% convertible notes in open market transactions at prevailing market prices or in privately negotiated
purchases. During 2009, we repurchased $29.2 million of our 7.0% convertible notes resulting in a gain of $4.3 million.
During October 2009, we completed a public offering of $115.0 million of our 5.25% convertible senior notes due in 2016
and a public offering of 11.3 million shares of our common stock at a price of $5.08 per share. The net proceeds from the
two offerings aggregated $166.3 million, after deducting offering expenses, discounts and commissions paid to the
underwriters. The net proceeds were used for general corporate purposes including improving our overall liquidity.
See ITEM 8. “FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA, Note 4 – “Debt” for additional
information regarding our outstanding debt.
Year 2011 Cash Requirements and Potential Sources of Liquidity
Our 2011 cash flows will be impacted by a variety of factors including our operating results, payments of our debt and
capital lease obligations, and capital expenditure requirements. If consummated, the proposed acquisition of AirTran by
Southwest will have material impacts on the liquidity, sources and uses of liquidity, operating results, financial
commitments, and financial position of AirTran. The following discussion does not address the potential impacts of the
proposed acquisition of AirTran by Southwest.
Expenditures for acquisition of property and equipment, other than aircraft and aircraft parts, are anticipated to be
approximately $17 million during 2011. Additionally, during 2011, we currently have scheduled payments of $50 million
related to aircraft purchase commitments. Payments of current maturities of existing debt and capital lease obligations are
expected to aggregate $119.5 million during 2011, including the $50 million repaid in January 2011 under our revolving
line of credit facility.
We may need cash resources to fund increases in collateral provided to counterparties to our derivative financial
arrangements and our cash flows may be adversely impacted in the event that one or more credit card processors
withholds amounts that would otherwise be remitted to us. We provide counterparties to our derivative financial
instrument arrangements with collateral when the fair value of our obligation exceeds specified amounts. Our obligation
to provide collateral pursuant to fuel-related derivative financial instrument arrangements tends to be inversely related to
fuel prices; consequently, to the extent fuel prices decrease, we will experience lower fuel expense and higher collateral
requirements. Because we hedge significantly less than 100 percent of our fuel requirements, over time, a sustained
decrease in fuel prices tends to produce a net cash benefit even though a significant decrease in fuel prices may cause a
net use of cash in the period when prices decrease. As of December 31, 2010, we provided interest rate swap
counterparties with collateral aggregating $22.8 million.
Each agreement with our two largest credit card processors allows, under specified conditions, the processor to retain cash
related to future travel that such processor otherwise would remit to us (a holdback). During 2010, we amended our
agreement with our largest credit card processor on terms favorable to us in part because of our improved operating
performance. As of December 31, 2010, we were in compliance with our processing agreements and our two largest credit
card processors were holding back no cash remittances from us. Our potential cash exposure to holdbacks by our largest
two credit card processors, based on advance ticket sales as of December 31, 2010, was $179.9 million (after considering
the $50 million letter of credit issued in favor of our largest credit card processor). Even had there been no letter of credit
issued for the benefit of our largest credit card processor, as of December 31, 2010, neither of our two largest credit card
processors would have been entitled to holdback any cash remittances from us. While we may be subject to holdbacks in
the future in accordance with the terms of our credit card processing agreements, based on our current liquidity and
current forecast, we do not expect that our two largest credit card processors would be entitled to holdback cash amounts
during 2011.
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