Airtran 2010 Annual Report Download - page 45

The foregoing description of the Merger Agreement is not a complete description of all of the parties’ rights and
obligations under the Merger Agreement and is qualified in its entirety by reference to the Merger Agreement, which was
filed as Exhibit 2.1 to AirTran's Current Report on Form 8-K filed with the SEC on September 27, 2010.
Year 2010 Route Network Initiatives
During 2010, we continued to develop our route network by: increasing our presence in Orlando, Baltimore, and
Milwaukee; initiating service to five domestic locations; and initiating service to one international destination. More
specifically, during 2010, we:
• Expanded our presence in Milwaukee along with SkyWest Airlines Inc., with whom we have a marketing agreement
to support our Milwaukee hub. Under this agreement, SkyWest Airlines now offers regional jet service between
Milwaukee and six destinations. We, together with our marketing partner, currently serve 25 non-stop destinations to
and from Milwaukee.
• Increased flying to the Caribbean in 2010 by adding service to Montego Bay, Jamaica, and extended our Caribbean
reach from Baltimore/Washington by adding new flights to San Juan, Puerto Rico. We have also announced service to
Punta Cana, Dominican Republic, which will commence in February 2011 and seasonal service to Bermuda, which
will commence in April 2011. We believe that we are enhancing the AirTran Airways travel experience by offering
flights to these popular tourist destinations.
Year 2010 Operating Results
During 2010, we reported operating income of $128.2 million, net income of $38.5 million, and diluted earnings per
common share of $0.26. During 2009, we reported operating income of $177.0 million, net income of $134.7 million, and
diluted earnings per common share of $0.95.
Our 2010 operating income decreased by $48.8 million compared to 2009, largely due to the unfavorable impact of the
24.6 percent increase in our average cost of jet fuel per gallon. Our total operating revenue increased $277.7 million to
$2.6 billion. The increase in our total operating revenue was driven by a 3.3 percent increase in capacity (as measured by
available seat miles) and a 8.3 percent increase in total revenue per available seat mile to 10.88 cents. The increase in our
average cost of jet fuel per gallon resulted in a $171.6 million increase in our aircraft fuel expense during 2010 compared
to what fuel expense would have been had jet fuel prices been at the average level we experienced during 2009. The
increase in our 2010 fuel expense is net of a $7.5 million refund of fuel taxes previously paid. Our 2010 operating results
were adversely impacted by $18.6 million of legal fees and other costs incurred in connection with both the proposed
acquisition of AirTran by Southwest and certain litigation.
Included in our 2010 results is a non-operating gain on derivative financial instruments of $8.4 million. The non-operating
gain on derivative financial instruments was largely attributable to unrealized increases in the fair value of our fuel-related
derivative assets, somewhat offset by realized losses on our fuel-related derivative assets. Included in our 2009 results are
gains on asset dispositions of $3.0 million, a non-operating gain on derivative financial instruments of $30.6 million, and
a non-operating gain on extinguishment of debt of $4.3 million. Our 2010 income tax expense was $20.6 million higher
than our 2009 income tax expense because 2009 income tax expense was favorably impacted by a reduction in the
valuation allowance for deferred tax assets.
37