DAVID FIELD / WASHINGTON DC & GUY NORRIS / LOS ANGELES
Carrier's $4 billion deal for up to 110 Boeing aircraft confirms US low-fares sector's confidence in future growth
AirTran Airways' massive order last week for up to 110 Boeing 737s and 717s again demonstrates the ascendancy of the US low-fares sector. The $4 billion deal includes 50 firm orders for the 737-700, plus 50 options, as well as 10 firm orders for Boeing 717-200s.
AirTran's order follows JetBlue's recent $9.8 billion buying spree with Airbus and Embraer, as the low-cost carriers become almost the sole source of US growth for the airframers, just as the sector is the sole source of profitability for the US industry. Within the low-fares arena, only Southwest, the longest-running moneymaker, is the exception, having limited its capacity growth.
With annual growth running at about 25%, AirTran chief executive Joe Leonard has told analysts that the airline is "the most confident we've ever been - and there's not much our competitors can do about it as long as we keep our cost structure the way it is".
Lehman Brothers analyst Gary Chase says he is confident AirTran will handle the integration of new types to its fleet and if it does, it will be poised "for ultimate attainment of category-killer status" among low-fare carriers.
AirTran will take 28 Boeing 737s directly from the manufacturer and a further 22 through operating leases - probably all from GE Capital Aviation Services. Deliveries will start in June. The 737's extra range and capacity, compared with that of its 717/McDonnell Douglas DC-9 fleet, will be used to extend AirTran's network from its Atlanta hub to western US cities such as Denver, Las Vegas and Los Angeles. AirTran recently launched routes to the western USA using A320s wet-leased from Ryan International Airlines.
The 717 deal includes the conversion of six options into firm orders for delivery from early next year, plus four more options. It is also believed to include the lease of four more secondhand 717s from Boeing Capital. The airline will have 73 717s in service by the end of 2003.
The decision to opt for the 737 and the 717-200 model is likely to spell the end for studies into a longer-range 717 variant, for which AirTran was the major promoter.
Source: Flight International
