New ValuJet Struggles for Footing
By MIKE SCHNEIDER, AP - 06:04 PM ET 07/14/99
ORLANDO, Fla. (AP) - The discount airline formerly known as ValuJet has a new
name, a new logo and a new headquarters. But AirTran has struggled to gain solid
financial footing three years after ValuJet Flight 592 plunged into the Everglades,
killing all 110 people on board.
Last year, the airline lost nearly $41 million and blamed its unprofitability on
predatory pricing by competitors. It faced labor problems from its flight attendants and
temporarily laid off dozens of workers.
But there are signs things are improving.
A day after state prosecutors charged ValuJet's maintenance contractor with
murder and manslaughter for its role in the May 1996 crash, AirTran reported Wednesday its
first profitable quarter since the crash.
AirTran said second-quarter income rose 74 percent from the previous year.
AirTran reported second-quarter profits of $15 million, or 22 cents per share.
The airline had profits of $8.6 million, or 13 cents per share during the same
quarter last year. Sales increased to $140 million from $124 million during the quarter.
Its stock price also is on an upswing at just under $7 after falling to $2.14
last year.
Salomon Smith Barney analyst Brian Harris attributed AirTran's turnaround to its
competitive prices for business class passengers. ``It's a significant sign of
improvement,'' Harris said of the latest earnings.
In 1997, more than a year after the crash, ValuJet shed its name, critter
cartoon logo and Atlanta headquarters when it took over the smaller, Orlando-based
AirTran.
But the pall of the tragedy still hovers over the airline.
State prosecutors Tuesday charged SabreTech Inc. with murder and manslaughter
for illegally packaging oxygen canisters blamed for sparking a fire that caused the
ValuJet DC-9 to crash.
A federal grand jury also indicted three SabreTech employees on charges of
conspiracy, making false statements and mislabeling and mishandling hazardous material.
SabreTech said prosecutors ignored findings by the National Transportation
Safety Board, which spread the blame among SabreTech, ValuJet and the Federal Aviation
Administration for lax oversight.
AirTran said it was cooperating with state and federal investigators.
``We are fully confident that the government will bring to justice those it
believes are responsible,'' AirTran chairman and CEO Joe Leonard said in a statement.
At a time when air travel is booming and other airlines' profits are soaring,
AirTran has struggled. It furloughed dozens of workers in October but brought them back in
December. Flight attendants threatened to walk out before a new contract was reached last
year. The airline, with 280 daily departures to 31 cities, flew most of last year at
only about 60 percent capacity.
AirTran officials are optimistic about the future. The airline plans to start
introducing 50 new Boeing 717s into its fleet in September. The new planes will offer more
overhead bin space, better temperature control and greater fuel efficiency.
