NEW YORK (AP) - AirTran Airways said Friday it will put off buying 18 Boeing
737-700 planes for up to five years as it slows growth in response to high fuel
costs.
The announcement came just three days after JetBlue Airways Corp. made a
similar move, deferring delivery of 21 new Airbus jetliners for four to five
years.
The discount carriers, like the rest of the airline industry, are eager to
cut back on spending as they struggle to cope with soaring fuel prices and a
slowing U.S. economy. AirTran, a subsidiary of AirTran Holdings Inc., recently
slashed plans for capacity growth through next year.
"All carriers are facing a need to adjust their fleet plans," said airline
consultant Mike Boyd, president of The Boyd Group in Evergreen, Colo. "Remember,
at $125 oil prices, and within the current airline operating structure, those
new airliners are functionally obsolete the minute they leave the factory."
Orlando, Fla.-based AirTran was scheduled to receive the new planes starting
next year and continuing through 2011. It will now take delivery in 2013 and
2014.
The change means the carrier will receive 23 planes between 2009 and 2011,
down from 41 previously planned.
In a statement, President and Chief Executive Bob Fornaro said that delaying
the order will help the carrier meet its goal of maintaining or possibly even
cutting capacity starting in September and continuing through at least 2009.
Major carriers such as AMR Corp.'s American Airlines can easily mothball
older planes to cut capacity, Boyd noted, but carriers with relatively young
fleets like AirTran need to keep virtually all their planes flying to cover
their aircraft costs.
By reducing the number of available seats, airlines are able to both cut
operating costs and increase their pricing power.
"What we're doing is adjusting capacity to match what demand is likely to be
in a higher fuel cost environment," Kevin Healy, senior vice president of
marketing and planning, said in an interview.
Healy declined to say how much AirTran expects to pay for the planes, which
were part of a massive 100-aircraft order the carrier placed in 2003.
AirTran currently operates 54 Boeing 737-700 and 87 similar Boeing 717-200
aircraft. The carrier's 737s are configured to carry 137 passengers in two
classes.
The airline has some of the lowest non-fuel costs in the industry. But in a
recent presentation for investors, the carrier estimated it will spend $1.31
billion on fuel this year, or 63 percent more than it spent last year.
AirTran shares fell 4 cents to close at $3.
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