AirTran eyeing US Airways/Delta assets

AirTran Airways would be interested in acquiring assets from Delta Air Lines or US Airways if those carriers need to make sales to alleviate anticompetitive concerns in order to facilitate a potential merger, President and COO Bob Fornaro said yesterday.

Speaking at the Calyon Securities Airline Conference in New York, which was available via webcast, Fornaro noted that AirTran has a strong presence in markets where DL and US rank among the top two or three carriers and likely would need to reduce their presence to appease antitrust regulators. As of next month, for example, AirTran will operate 215 daily departures from DL's base hub at Atlanta Hartsfield. "If we felt we could buy something that would add value, we would do it," he said. "We could help create a solution" to facilitate the proposed US takeover of DL.

He predicted that US regulators "will be receptive" to a US/DL merger. "I think [the merger] has a chance because it could strengthen the industry and [prevent] airlines from coming back to [the US government] in a few years with hat in hand."

Fornaro said East Coast shuttle operations may be less appealing to AirTran because much of the revenue on those flights comes from prearranged corporate deals. "The shuttle is really a question mark," he explained. "We could operate those routes very profitably but I'm not sure we could take advantage of all the corporate sales. Our interest [in shuttle operations] would probably be low."

He said expansion through consolidation may be US carriers' best bet because buying new planes will not be easy. "My assessment is that for at least the next two years, [the aircraft market] is going to be very tight and if you want to get a plane, you'll have to pay a premium for it. And it's hard to pay a premium for aircraft and make money in a competitive market like the domestic US."

Speaking at the same conference, Southwest Airlines President Colleen Barrett said the LCC wants to buy more aircraft even though it has 37 737-700s on order for delivery next year. "We're still out there looking for aircraft at the right price," she said. While most US carriers have minimized capacity growth this year, a confident SWA will up ASMs by 10% this quarter.

Barrett said US's $8 billion takeover offer for DL is "serious and substantial and is something the creditors are going to have to take a look at." CEO Gary Kelly recently said SWA is interested in aircraft, airport gates and slots at East Coast airports that may become available as a result of a US/DL merger (ATWOnline, Nov. 22).