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OK, AirTran made .11 cents per share, vs the estimate of .03 per share and they have more than $500 million in unrestriced cash on hand, according to an AP story.

They are 40% hedged for 2010, with benefits from hedging kicking in at about $60 per barrel of oil, which is now at about $74 per barrel.

I can see no logical reason why AirTran's stock price should be so low (in the 5's) given it's great financial performance in 2009 and it's strong potential for another great year in 2010. After all, any kind of significant improvement in the economy could propel already strong earnings up sharply. (Yes, I know that oil prices would rise in an economic rebound, but AAI is doing a good job of hedging.) Standard & Poor's is right when they say that AirTran is significatly undervalued when compared to it's peers.
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I agree with you in that AirTran stock should be seeing growth. They look to be in a good position to take advantage of any uptick in air travel. A couple of reasons that the stock may not be increasing quickly:

1. Allegiant Airlines has moved some of their flights from a secondary airport near Orlando to Orlando Airport. This puts them in direct competition with AirTran on several of their routes. Allegiant does a great job in flying less-than-daily flights to markets and has lower costs than AirTran. Allegiant has also purchased about 13 aircraft which is a huge percentage gain in their capacity. If they put this capacity in Orlando, this could affect AirTran profits.

2. Southwest is a huge competitor in Orlando and JetBlue looks like they are starting to focus on Orlando also. All this competition in one of their major hubs with Milwaukee (another small hub) competition growing with Frontier Airlines, is probably tempering long term outlook.

3. If Delta Airlines is successful in their integration of Northwest, they may start competing more aggressively with AirTran in Atlanta.

It would be nice to see AirTran stock take off, but there are many factors that may affect them.

Author does not own AirTran but is constantly looking at it as an investment.
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They are an airline in an industry that is programmed to fail.

Who thinks that no matter how well they did last quarter, Wall Street will not expect them to do it again next quarter...
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Thanks for the information about competitors. I know little about Allegiant, other than that they don't fly daily on many routes. Of course, too many airlines competing on the same routes is just one of the many constant concerns associated with owning shares of airlines.

AirTran management (I think it was Bob Fornaro) said that the day of double digit growth for airlines is over for now. So, I am not dreaming of earnings for 2010 of more than about .70 or so per share. This excludes any gains or losses from hedging. Still, if they can earn .70 or a bit better and bring down their debt level some more, I think that the stock could be in the 7's. That said, it won't be quick or easy.

I do own shares already and I plan to gut it out for at least another year unless some major change occurs which would change the outlook to a severely negative one.
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Allegiant is doing good on serving smaller markets into cities like Las Vegas and Orlando on only a couple times a week. They actually had a good quarter and will probably be one of the airlines that can grow double digits for several years (easier when you are a smaller airline).

AirTran has put a hold on their growth for now so their stock may take awhile to make good gains. Hopefully the economy will start coming back and they can take advantage of their low costs and the stock will go up.

Good luck
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