Airtran 2001 Annual Report Download - page 14

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Other revenues decreased $18.0 million (54.4 percent). Excluding alitigation settlement gain
of
$19.6 million
in
1999, other revenues increased $1.6
million or
12.1
percent on ayear-over-year basis.
Operating Expenses
Operating expenses decreased by $52.5 million (8.8 percent). Excluding the 1999 pre-tax
SFAS
121
impairment charge
of
$147.7 million to reduce
the book value of our DC-9 aircraft, operating expenses increased by $95.2 million or 21.3 percent. CASM increased by 13.2 percent, primarily due
to a105.5 percent increase
in
aircraft fuel expense. Excluding fuel costs, CASM decreased approximately
1.0
percent to 6.9 cents per ASM.
Salaries, wages and benefits increased $16.7 million (13.8 percent overall
or
5.9 percent on aCASM basis) primarily due to contractual wage rate
increases and additional personnel required for the higher
level
of
operations
in
2000.
Aircraft fuel expense increased
$72.1
million (105.5 percent overall or 92.0 percent on aCASM basis) primarily due to increases
in
the cost
of
fuel.
During 2000, the average cost
of
aircraft fuel per gallon was approximately $1.01, compared to an average cost per gallon
in
1999
of
approximately
$0.50. The cost of aircraft fuel was net
of
approximately $5.3 million and $14.2 million in gains from hedging activities
in
2000 and 1999, respectively.
Maintenance, materials and repairs decreased
$13.1
million (15.2 percent overall or 20.9 percent
on
aCASM basis) primarily due to alesser number
of
8737
and DC-9 airframe and engine repairs performed during 2000
in
accordance with
our
maintenance schedule. The timing
of
maintenance to
be performed
is
determined by the number
of
hours the aircraft and engines are operated and their age.
Distribution expenses increased $2.7 million
(7.2
percent overall, but flat on aCASM basis) primarily due to an increase
in
commissionable sales
generated by travel agents, offset by arate reduction from 8.0 percent to 5.0 percent during the fourth quarter
of
1999.
Landing fees and other rents increased $1.7 million (6.5 percent overall, but flat on aCASM basis) primarily due to increased departures. On aCASM
basis, these expenses remained flat on ayear-over-year basis. We operated 101,644 departures
in
2000 and 96,858 departures
in
1999, an increase
of
4.9 percent.
Aircraft rent increased $7.7 million
(159.1
percent overall or 144.4 percent on aCASM basis) primarily due to the lease financing associated with five
of
the eight new 8717s delivered during 2000, as well as the sale-leaseback of seven DC-9 aircraft
in
the fourth quarter of 1999.
Depreciation expense decreased $5.4 million
(19.1
percent overall or 25.0 percent on aCASM basis) primarily due to the reduction
in
book
value of
our DC-9 fleet as aresult
of
the 1999 SFAS
121
impairment charge and the sale-leaseback
of
seven DC-9 aircraft
in
the fourth quarter
of
1999.
Other operating expenses increased
$12.1
million (20.6 percent overall or 13.0 percent on aCASM basis) primarily due to increased passenger related
expenses associated with the greater number of passengers served, and to costs related to supporting and maintaining our existing automation systems.
Impairment loss/lease termination expenses reflect the decision we made
in
the fourth quarter
of
1999 to accelerate the retirement
of
our owned DC-9
fleet to accommodate the introduction
of
the 8717 fleet. This $147.7 million impairment charge was recorded
in
accordance with
SFAS
121
and is
discussed
in
Note
13
to the consolidated financial statements.
Nonoperating Expenses
Interest expense, net, increased 36.7 percent, primarily due to the debt financing of eight 8717 aircraft delivered
in
the third and fourth quarters
of
1999, as well as three 8717s delivered in the fourth quarter 2000. The 1999 deliveries were financed utilizing the proceeds from the issuance
of
enhanced equipment trust certificates (EETCs). Three of the 2000 deliveries were financed utilizing
debt
issued by an affiliate of the airframe manu-
facturer. Offsetting aportion
of
the Increased Interest expense, interest income increased 76.0 percent as aresult
of
higher invested cash balances.
Provision for
Income
Taxes
As
of
December
31,
2000,
we
had not recognized any benefit from the future use
of
operating loss canyforwards, because our evaluation
of
all the
available evidence
in
assessing the realizability
of
tax benefits
of
such loss carryforwards indicated that the underlying assumptions
of
future profitable
operations contained risks that did not provide sufficient assurance to recognize such tax benefits at that time. As aresult, income tax expense
was
$0
and $2.7 million
in
2000
and 1999, respectively. The 1999 tax expense resulted from the utilization
of
aportion
of
our $141.0 million
of
NOL