CS First Boston downgraded Airtran Holdings (AAI) to hold from buy.
Analyst James Higgins says while Airtran is likely to benefit from customer avoidance of Delta during its negotiations with its pilots, revenue momentum otherwise appears to have peaked, and he sees little long-term benefit from Delta's problems. Meanwhile, he notes operating expenses continue to come in above his estimates, with labor expense, distribution costs and maintenance expense of the most concern to him. He finds it difficult to have a lot of confidence in Airtran's stock valuation, as it appears especially expensive relative to its closest competitor Frontier Airlines. He sees $1.00 2001 EPS and $1.30 2002.