Airtran 2000 Annual Report Download - page 30

No assurance can be given that future results will be achieved, and actual events or results may differ materially as a result of risks facing us or actual events
differing from the assumptions underlying such statements. Such risks and assumptions include, but are not limited to:
•consumer demand and acceptance of services offered by us;
•our ability to achieve and maintain acceptable cost levels;
•fare levels and actions by competitors;
•regulatory matters, general economic conditions, commodity prices; and
•changing business strategy and results of litigation.
Additional information concerning factors that could cause actual results to vary materially from the future results indicated, expressed or implied in such
forward-looking statements is contained elsewhere in our Form 10-K for the year ended December 31, 2000.
All forward-looking statements made in connection with this Report are expressly qualified in their entirety by these cautionary statements. We disclaim any
obligation to update or correct any of our forward-looking statements.
Quantitative and Qualitative Disclosures About Market Risk
Market Risk-Sensitive Instruments and Positions
We are subject to certain market risks, including interest rates and commodity prices (i.e., aircraft fuel). The adverse effects of changes in these markets pose
a potential loss as discussed below. The sensitivity analyses do not consider the effects that such adverse changes may have on overall economic activity,
nor do they consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ. See the Notes to the consolidated
financial statements for a description of our financial policies and additional information.
Interest Rates
As of December 31, 2000 and 1999, the fair value of our long-term debt was estimated to be $439.0 million and $392.3 million, respectively, based upon
discounted future cash flows using current incremental borrowing rates for similar types of instruments or market prices. Market risk, estimated as the
potential increase in fair value resulting from a hypothetical one percent decrease in interest rates, was approximately $11.1 million as of December 31, 2000,
and approximately $11.0 million as of December 31, 1999.
Aircraft Fuel
Our results of operations are impacted by changes in the price of aircraft fuel. Excluding the impairment charges, aircraft fuel accounted for 25.9 percent and
15.3 percent of our operating expenses in 2000 and 1999, respectively. Based on our 2001 projected fuel consumption, a 10 percent increase in the average
price per gallon of aircraft fuel for the year ending December 31, 2000, would increase fuel expense for the next twelve months by approximately $9.7 million,
net of hedging instruments outstanding at December 31, 2000. Comparatively, based on 2000 fuel usage, a 10 percent increase in fuel prices would have
resulted in an increase in fuel expense of approximately $10.0 million, net of hedging instruments utilized during 2000. In 2000, we entered into fuel-hedging
contracts consisting of fixed-price swap agreements and collar structures to protect against increases in aircraft fuel prices. At December 31, 2000, we had
hedged approximately 50 percent of our projected fuel requirements for the first quarter of 2001 and approximately 30 percent of our projected requirements
for the remainder of 2001.