More low-cost airlines could go under

"I think there are other marginal carriers that could succumb," Calyon Securities analyst Ray Neidl said.

In a recent report, Neidl noted that most major carriers have amassed hefty stockpiles of cash that should help them weather what is expected to be a rocky year for the industry.

But he cited concerns about low-cost carriers AirTran Holdings Inc. and Frontier Airlines Holdings Inc., saying their cash holdings are likely to fall well below 10 percent of expected revenue by the end of the year. Since the Sept. 11, 2001, attacks, a 20 percent cushion "became a more realistic target level for cash," he wrote.

"Most of the public companies can make it through the year, but if anyone's at risk, it's the low-cost carriers," Neidl said.

In an interview Tuesday, AirTran President and Chief Operating Officer Bob Fornaro drew a sharp contrast between the Orlando, Fla.-based carrier and the airlines that went out of business last week. He said first-quarter revenue rose 6 to 7 percent, and that advance bookings through the third quarter are better than at the same time last year.

"These were very, very weak airlines," Fornaro said, adding the carrier was "absolutely not" expecting to file for bankruptcy. "We're strong in the marketplace, we're well positioned, and we have the lowest cost structure in the industry."

Frontier spokesman Joe Hodas said the Denver-based carrier has "no concerns about bankruptcy," is operating as usual, and is working to bolster its cash position.

Avondale Partners airline analyst Bob McAdoo, meanwhile, predicted in a research note Monday that upstart Virgin America — which is privately held and therefore releases less operating information than publicly owned carriers — could be the next casualty.

McAdoo cited preliminary filings with the Department of Transportation that suggest the carrier is rapidly losing money, and flew planes that were considerably emptier than some of its competitors through the end of last year.

"We caution that these estimates are based on limited (Transportation Department) filings and may be overly pessimistic," he wrote. "However, given the ownership structure of Virgin America ... we see parallels between Virgin and the three failed airlines."

Virgin America spokeswoman Abby Lunardini, reached as the carrier prepared to launch a new route between Los Angeles and Seattle, dismissed concerns about the company's health and said the Burlingame, Calif.-based carrier's occupancy levels had improved considerably in recent weeks.

"Our business model is strong and we're continuing to grow aggressively," she said.

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