Taken together, all these economic factors are making the turn-around of the losses AirTran is experiencing extremely difficult. The reductions in employees will not fix the more systemic and more strategic issues the company faces; it will however buy them time to get their fundamental business reorganized and downsized to a point where they can operate profitably given the severe constraints on their business today. It is a very tough time to run an airline today as is shown in the article. The greatest challenge internally is to keep the existing employees motivated and focused on working productively while 480 job cuts were announced for September of this year. Everyone is literally wondering if they will be let go, and in this type of environment, not much work is going to get down. The article states that "the announcement comes less than a week after AirTran said it would seek an average 10% pay cut across its 8,900-employee workforce." Morale has got to be quite low in the company right now as a result. The article further states that "They will be timed to coincide with overall service cuts that AirTran plans to make beginning in early September, when it will reduce its flying schedule by at least 5%." This strategy of reducing routes and correspondingly reducing headcount with pilots by 12%, reducing flight...

These are all interim steps that don't cause too much pain for the company yet they are short-term and just delay the inevitable.
My recommendation is that AirTran needs to do is take more drastic action on its routes and discontinue the bottom 30% of them and cut the staff in proportion to this. The message from the environmental and economic factors is clear, and that is having an oil-dependent business model does not scale in this current economic environment. That may sound drastic, yet the business model itself needs to change in order for the company and the industry to survive. Taking the maintenance, repair and overhaul (MRO) functions and completely in-sourcing them and getting rid of contractors on this will also save significant costs. While MRO is not mentioned in this article it is common knowledge that is, along with fuel, is a major cost component of operating an airline. AirTran must fundamentally redefine their business model and scope if they are to survive given the significantly…