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Fuskie asks, "Now guess which one has a greater impact on AirTran's stock price?"

Excellent point.

Very often whole industries are dragged down because one player had a bad day. I follow the rails and it's the same thing there. We have two companies running like tops and two companies in the pits. Guess which way the whole lot of them have been heading. Until just recently, mainly south.

I keep a benchmark spreadsheet for evaluating rail stocks and I thought it would be instructive to adapt it to AAI. You can download the free rail spreadsheet and make your own mods if you like. It's at .

A measure I use a lot is the operating ratio: the percentage of revenues consumed by what it costs to run the trains. A good operation is under 80. For FY 2003 AAI had revenues of $918 mm and operating expenses of $832 mm for and OR of 90.6 (the benchmarks SS will give it to you). In the airline industry, that's not too shabby given the paucity or profitable flyers out there.

That revenue level was a 25% improvement yoy yet the operating expense went up only 18%, another good sign. There were healthy double-digit gains in ASMs, revenue passengers, and revenue passenger-miles, meaning more people flying longer distances. Longer distances mean better operating margins. The number of AC increased 12.9% to 70 from 62 while revenues per AC went up 11% and the average fare per passenger was up 3%.

Below the line, net income was up $90 mm to $101 mm from $11 mm a year ago. True, the $38 mm government grant helped, yet the even without it the net would have been up by a factor of five.

I bought AAI at about $16 however judicious covered call buying has gotten my cost basis down to $13. My present position is with July 15s. If I get called away, I make $2. If not, I sell another set of 15s a few months out, pocket the premium and enjoy the ride.

It's a neat little company that's breaking a lot of rules. I really hope I don't get called away, if you wan to know the truth.


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