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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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Form 10-Q/A

(Amendment No. 1)



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(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



| | For | the quarterly period ended March 31, 2007
| | --- | -----------------------------------------

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



| | For | the transition period from  to
| | --- | ------------------------------

Commission file No. 1-15991



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LOGO

AirTran Holdings, Inc.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|NEVADA                                                         |  | 58-2189551                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|9955 AirTran Boulevard, Orlando, Florida |  | 32827     
|(Address of principal executive offices) |  | (Zip Code)

Registrants telephone number, including area code: (407) 318-5600



---

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes x No ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer in Rule 12b-2 of the Exchange Act.

Large accelerated filer x         Accelerated filer ̈Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ̈No x

Indicate the number of
shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

Number of shares of Common
Stock outstanding as of the close of business on May 3, 2007: 91,494,851, par value $0.001



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##### Table of Contents

AIRTRAN HOLDINGS, INC.

Form 10-Q

For the Quarter Ended March 31, 2007



|                                                    |  |                                                                                               |  |     
|--------------------------------------------------- |  | --------------------------------------------------------------------------------------------- |  | ----
|                                                    |  |                                                                                               |  | Page
|PART I.                                             |  | FINANCIAL INFORMATION                                                                         |  | 1   
|                                                    |  |                                                                                              
|Item 1.                                             |  | Financial Statements (unaudited)                                                              |  | 1   
|                                                    |  |                                                                                              
|                                                    |  | Condensed Consolidated Statements of Operations  Three months ended March 31, 2007 and 2006  |  | 1   
|                                                    |  |                                                                                              
|                                                    |  | Condensed Consolidated Balance Sheets  March 31, 2007 and December 31, 2006                  |  | 2   
|                                                    |  |                                                                                              
|                                                    |  | Condensed Consolidated Statements of Cash Flows  Three months ended March 31, 2007 and 2006  |  | 4   
|                                                    |  |                                                                                              
|                                                    |  | Condensed Consolidated Statements of Stockholders Equity - Three months ended March 31, 2007 |  | 5   
|                                                    |  |                                                                                              
|                                                    |  | Notes to Condensed Consolidated Financial Statements                                          |  | 6   
|                                                    |  |                                                                                              
|Item 2.                                             |  | Managements Discussion and Analysis of Financial Condition and Results of Operations         |  | 12  
|                                                    |  |                                                                                              
|Item 3.                                             |  | Quantitative and Qualitative Disclosures About Market Risk                                    |  | 18  
|                                                    |  |                                                                                              
|Item 4.                                             |  | Controls and Procedures                                                                       |  | 19  
|                                                    |  |                                                                                              
|PART II.                                            |  | OTHER INFORMATION                                                                             |  | 20  
|                                                    |  |                                                                                              
|Item 6.                                             |  | Exhibits                                                                                      |  | 20  
|                                                    |  |                                                                                              
|Signatures                                          |  |                                                                                               |  |     
|                                                    | 
|Exhibit Listing                                     |  |                                                                                              
|Ex  3l.1 (Exhibit 31.1 CEO Certification)          |  |                                                                                              
|Ex  3l.2 (Exhibit 31.2 CFO Certification)          |  |                                                                                              
|Ex  32.1 (Exhibit 32.1 CEO and CFO Certifications) |  |                                                                                              





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##### Table of Contents

Amendment No. 1 Overview

AirTran Holdings, Inc. is filing this Amendment No. 1 on Form 10-Q/A to our Form 10-Q for the first quarter ended March 31, 2007 to reflect the restatement of our previously issued financial statement and other information to
correct our accounting for passenger revenues. For further discussion of the restatement, see Note 1 to our consolidated financial statements and Item 4 contained herein.

In late July 2007, we identified possible errors in our accounting for a specific type of passenger revenue transaction. Upon completion of our investigation and analysis of these items, on August 7, 2007, our
management concluded that we would amend our previously filed Annual Report on Form 10-K for the year ended December 31, 2006 and our previously filed Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 to correct our
previously reported passenger revenues for the impact of these errors. The Audit Committee of our Board of Directors concurred with managements decision to amend our previously filed reports on August 9, 2007. We do not believe the rollover
impact of the errors is material to our results of operations for any individual interim or annual period. However, because the cumulative effect of the errors is material to our most recently completed fiscal year, we are restating our previously
issued financial statements in accordance with the guidance provided in SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.

The information contained in this Amendment, including financial statements and the notes hereto, amends only Part 1 and Item 6 of Part II of our
originally filed Quarterly Report on Form 10-Q for the first quarter ended March 31, 2007 and no other items in our originally filed Form 10-Q are amended hereby. This Form 10-Q/A does not materially modify or update other disclosures in the
original Form 10-Q, including the nature and character of such disclosure to reflect events occurring after May 8, 2007, the filing date of the original Form 10-Q. Accordingly, this Form 10-Q/A should be read in conjunction with our filings
made with the Securities and Exchange Commission, or the SEC. In addition, currently-dated certifications from our Chief Executive Officer and Chief Financial Officer have been included as exhibits to this amendment.

The following table sets forth the effects of the restatement on certain line items within our previously reported financial statements (in thousands, except per share
data):



|                                                                                |  |                    |           |   |                    |   |                  |  |   |                    |   |  |   |           |  
|------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ------------------ | - | ---------------- |  | - | ------------------ | - |  | - | --------- | -
|                                                                                |  | Three Months Ended |          
|(in 000s, except per share data) Condensed Consolidated Statement of Operations |  | March 31, 2007     |           |   | March 31, 2007     |   | March 31, 2006   |  |   | March 31, 2006     |  
|                                                                                |  | Restated           |           |   | PreviouslyReported |   | Restated         |  |   | PreviouslyReported |  
|Passenger revenues                                                              |  | $                  | 478,554   |   |                    | $ | 479,013          |  | $ | 399,139            |   |  | $ | 399,345   |  
|Operating income (loss)                                                         |  | $                  | 12,939    |   |                    | $ | 13,398           |  | $ | (11,462            | ) |  | $ | (11,256   | )
|Income (loss) before income taxes                                               |  | $                  | 3,738     |   |                    | $ | 4,197            |  | $ | (14,383            | ) |  | $ | (14,177   | )
|Net income (loss)                                                               |  | $                  | 2,158     |   |                    | $ | 2,447            |  | $ | (8,940             | ) |  | $ | (8,810    | )
|Income (loss) per common share:                                                 |  |                    |           |   |                    |   |                  |  |   |                    |   |  |   |           |  
|Basic                                                                           |  | $                  | 0.02      |   |                    | $ | 0.03             |  | $ | (0.10              | ) |  | $ | (0.10     | )
|Diluted                                                                         |  | $                  | 0.02      |   |                    | $ | 0.03             |  | $ | (0.10              | ) |  | $ | (0.10     | )
|                                                                                |  |                    |           |  
|(in 000s, except per share data) Condensed Consolidated Balance Sheet           |  | March 31, 2007     |           |   | March 31, 2007     |   | December 31,2006 |  |   | December 31,2006   |  
|                                                                                |  | Restated           |           |   | PreviouslyReported |   | Restated         |  |   | PreviouslyReported |  
|Deferred income taxes-current                                                   |  | $                  | 9,024     |   |                    | $ | 6,856            |  | $ | 8,854              |   |  | $ | 6,856     |  
|Total assets                                                                    |  | $                  | 1,864,947 |   |                    | $ | 1,862,779        |  | $ | 1,603,582          |   |  | $ | 1,601,584 |  
|Accrued and other liabilities                                                   |  | $                  | 140,492   |   |                    | $ | 134,488          |  | $ | 127,254            |   |  | $ | 121,709   |  
|Accumulated earnings (deficit)                                                  |  | $                  | (2,441    | ) |                    | $ | 1,395            |  | $ | (4,599             | ) |  | $ | (1,053    | )

The restatement also resulted in an increase in accumulated deficit of $2.7 million as of January 1, 2006 and
changes to the condensed consolidated statements of cash flows and stockholders equity in addition to Notes 1, 3 and 7.





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##### Table of Contents

PART I.

FINANCIAL
INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AirTran Holdings, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

(Restated)



|                                         |  |                              |         |   |      |   |         |  
|---------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                         |  | Three Months Ended March 31, |        
|                                         |  | 2007                         |         |   | 2006 |  
|Operating Revenues:                      |  |                              |         |   |      |   |         |  
|Passenger                                |  | $                            | 478,554 |   |      | $ | 399,139 |  
|Cargo                                    |  |                              | 899     |   |      |   | 1,214   |  
|Other                                    |  |                              | 24,613  |   |      |   | 15,483  |  
|                                         |  |                              |         |   |      |   |         |  
|Total operating revenues                 |  |                              | 504,066 |   |      |   | 415,836 |  
|Operating Expenses:                      |  |                              |         |   |      |   |         |  
|Aircraft fuel                            |  |                              | 166,080 |   |      |   | 146,034 |  
|Salaries, wages and benefits             |  |                              | 107,717 |   |      |   | 92,265  |  
|Aircraft rent                            |  |                              | 60,893  |   |      |   | 53,737  |  
|Maintenance, materials and repairs       |  |                              | 33,534  |   |      |   | 33,219  |  
|Distribution                             |  |                              | 18,929  |   |      |   | 15,948  |  
|Landing fees and other rents             |  |                              | 28,912  |   |      |   | 22,653  |  
|Aircraft insurance and security services |  |                              | 5,736   |   |      |   | 5,899   |  
|Marketing and advertising                |  |                              | 11,129  |   |      |   | 11,042  |  
|Depreciation and amortization            |  |                              | 10,241  |   |      |   | 6,074   |  
|Other operating                          |  |                              | 47,956  |   |      |   | 40,427  |  
|                                         |  |                              |         |   |      |   |         |  
|Total operating expenses                 |  |                              | 491,127 |   |      |   | 427,298 |  
|                                         |  |                              |         |   |      |   |         |  
|Operating Income (Loss)                  |  |                              | 12,939  |   |      |   | (11,462 | )
|Other (Income) Expense:                  |  |                              |         |   |      |   |         |  
|Interest income                          |  |                              | (4,977  | ) |      |   | (4,504  | )
|Interest expense                         |  |                              | 16,662  |   |      |   | 10,436  |  
|Capitalized interest                     |  |                              | (2,484  | ) |      |   | (3,011  | )
|                                         |  |                              |         |   |      |   |         |  
|Other (income) expense, net              |  |                              | 9,201   |   |      |   | 2,921   |  
|                                         |  |                              |         |   |      |   |         |  
|Income (Loss) Before Income Taxes        |  |                              | 3,738   |   |      |   | (14,383 | )
|Income tax expense (benefit)             |  |                              | 1,580   |   |      |   | (5,443  | )
|                                         |  |                              |         |   |      |   |         |  
|Net Income (Loss)                        |  | $                            | 2,158   |   |      | $ | (8,940  | )
|                                         |  |                              |         |   |      |   |         |  
|Earnings (Loss) per Common Share         |  |                              |         |   |      |   |         |  
|Basic                                    |  | $                            | 0.02    |   |      | $ | (0.10   | )
|Diluted                                  |  | $                            | 0.02    |   |      | $ | (0.10   | )
|Weighted-average Shares Outstanding      |  |                              |         |   |      |   |         |  
|Basic                                    |  |                              | 91,338  |   |      |   | 87,775  |  
|Diluted                                  |  |                              | 92,881  |   |      |   | 87,775  |  

See accompanying Notes to Condensed Consolidated Financial Statements.



1



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands)

(Restated)



|                                                                                                                                     |  |                |           |   |                   |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                     |  | March 31, 2007 |           |   | December 31, 2006 |  
|                                                                                                                                     |  | (Unaudited)    |           |   |                   |  
|ASSETS                                                                                                                               |  |                |           |   |                   |   |           |  
|Current Assets:                                                                                                                      |  |                |           |   |                   |   |           |  
|Cash and cash equivalents                                                                                                            |  | $              | 178,028   |   |                   | $ | 159,100   |  
|Restricted cash                                                                                                                      |  |                | 28,139    |   |                   |   | 24,815    |  
|Short-term investments                                                                                                               |  |                | 169,025   |   |                   |   | 151,100   |  
|Accounts receivable, less allowance of $1,194 and $1,180 at March 31, 2007 and December 31, 2006, respectively                       |  |                | 51,888    |   |                   |   | 38,613    |  
|Spare parts and supplies, less allowance for obsolescence of $1,874 and $1,749 at March 31, 2007 and December 31, 2006, respectively |  |                | 29,602    |   |                   |   | 17,236    |  
|Deferred income taxes                                                                                                                |  |                | 9,024     |   |                   |   | 8,854     |  
|Fuel derivative contracts                                                                                                            |  |                | 13,293    |   |                   |   |          |  
|Prepaid expenses and other current assets                                                                                            |  |                | 19,459    |   |                   |   | 17,239    |  
|                                                                                                                                     |  |                |           |   |                   |   |           |  
|Total current assets                                                                                                                 |  |                | 498,458   |   |                   |   | 416,957   |  
|Property and Equipment:                                                                                                              |  |                |           |   |                   |   |           |  
|Flight equipment                                                                                                                     |  |                | 1,064,674 |   |                   |   | 885,738   |  
|Less: Accumulated depreciation                                                                                                       |  |                | (68,044   | ) |                   |   | (60,921   | )
|                                                                                                                                     |  |                |           |   |                   |   |           |  
|                                                                                                                                     |  |                | 996,630   |   |                   |   | 824,817   |  
|Purchase deposits for flight equipment                                                                                               |  |                | 112,576   |   |                   |   | 119,895   |  
|Other property and equipment                                                                                                         |  |                | 111,655   |   |                   |   | 113,214   |  
|Less: Accumulated depreciation                                                                                                       |  |                | (33,286   | ) |                   |   | (42,697   | )
|                                                                                                                                     |  |                |           |   |                   |   |           |  
|                                                                                                                                     |  |                | 78,369    |   |                   |   | 70,517    |  
|                                                                                                                                     |  |                |           |   |                   |   |           |  
|Total property and equipment                                                                                                         |  |                | 1,187,575 |   |                   |   | 1,015,229 |  
|Other Assets:                                                                                                                        |  |                |           |   |                   |   |           |  
|Goodwill                                                                                                                             |  |                | 8,350     |   |                   |   | 8,350     |  
|Trademarks and trade names                                                                                                           |  |                | 21,567    |   |                   |   | 21,567    |  
|Debt issuance costs                                                                                                                  |  |                | 14,124    |   |                   |   | 11,929    |  
|Deferred income taxes                                                                                                                |  |                | 923       |   |                   |   | 7,772     |  
|Prepaid aircraft rent                                                                                                                |  |                | 72,461    |   |                   |   | 70,802    |  
|Other assets                                                                                                                         |  |                | 61,489    |   |                   |   | 50,976    |  
|                                                                                                                                     |  |                |           |   |                   |   |           |  
|Total Assets                                                                                                                         |  | $              | 1,864,947 |   |                   | $ | 1,603,582 |  
|                                                                                                                                     |  |                |           |   |                   |   |           |  

(Continued on next page)



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Balance Sheets (Continued)

(In thousands)

(Restated)



|                                             |  |                |           |   |                   |   |           |  
|-------------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | -
|                                             |  | March 31, 2007 |           |   | December 31, 2006 |  
|                                             |  | (Unaudited)    |           |   |                   |  
|LIABILITIES AND STOCKHOLDERS EQUITY         |  |                |           |   |                   |   |           |  
|Current Liabilities:                         |  |                |           |   |                   |   |           |  
|Accounts payable                             |  | $              | 45,420    |   |                   | $ | 35,050    |  
|Accrued and other liabilities                |  |                | 140,492   |   |                   |   | 127,254   |  
|Air traffic liability                        |  |                | 242,315   |   |                   |   | 148,938   |  
|Current portion of capital lease obligations |  |                | 893       |   |                   |   | 876       |  
|Current portion of long-term debt            |  |                | 88,844    |   |                   |   | 85,969    |  
|                                             |  |                |           |   |                   |   |           |  
|Total current liabilities                    |  |                | 517,964   |   |                   |   | 398,087   |  
|Long-term capital lease obligations          |  |                | 12,745    |   |                   |   | 12,979    |  
|Long-term debt                               |  |                | 837,606   |   |                   |   | 711,286   |  
|Other liabilities                            |  |                | 104,021   |   |                   |   | 101,947   |  
|Commitments and Contingencies                |  |                |           |   |                   |   |           |  
|Stockholders Equity:                        |  |                |           |   |                   |   |           |  
|Preferred stock                              |  |                |          |   |                   |   |          |  
|Common stock                                 |  |                | 91        |   |                   |   | 91        |  
|Additional paid-in-capital                   |  |                | 390,878   |   |                   |   | 389,043   |  
|Other comprehensive income (loss)            |  |                | 4,083     |   |                   |   | (5,252    | )
|Accumulated earnings (deficit)               |  |                | (2,441    | ) |                   |   | (4,599    | )
|                                             |  |                |           |   |                   |   |           |  
|Total stockholders equity                   |  |                | 392,611   |   |                   |   | 379,283   |  
|                                             |  |                |           |   |                   |   |           |  
|Total Liabilities and Stockholders Equity   |  | $              | 1,864,947 |   |                   | $ | 1,603,582 |  
|                                             |  |                |           |   |                   |   |           |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

(Restated)



|                                                                                         |  |                              |          |   |      |   |          |  
|---------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                         |  | Three Months Ended March 31, |         
|                                                                                         |  | 2007                         |          |   | 2006 |  
|Operating activities:                                                                    |  |                              |          |   |      |   |          |  
|Net income (loss)                                                                        |  | $                            | 2,158    |   |      | $ | (8,940   | )
|Adjustments to reconcile net income (loss) to net cash provided by operating activities: |  |                              |          |   |      |   |          |  
|Depreciation and amortization                                                            |  |                              | 10,416   |   |      |   | 6,821    |  
|Amortization of deferred gains from sale/leaseback of aircraft                           |  |                              | (1,117   | ) |      |   | (1,096   | )
|Provision for uncollectible accounts                                                     |  |                              | 288      |   |      |   | 155      |  
|Loss on asset disposal                                                                   |  |                              | 1,260    |   |      |   | 1,068    |  
|Deferred income taxes                                                                    |  |                              | 1,580    |   |      |   | (8,690   | )
|Share-based compensation                                                                 |  |                              | 1,204    |   |      |   | 695      |  
|Changes in certain operating assets and liabilities:                                     |  |                              |          |   |      |   |          |  
|Restricted cash                                                                          |  |                              | (3,324   | ) |      |   | (2,420   | )
|Accounts receivable                                                                      |  |                              | (13,563  | ) |      |   | (11,360  | )
|Spare parts, materials and supplies                                                      |  |                              | (12,491  | ) |      |   | (10,743  | )
|Other assets                                                                             |  |                              | (6,445   | ) |      |   | (5,421   | )
|Prepaid aircraft rent                                                                    |  |                              | (1,710   | ) |      |   | (1,766   | )
|Accounts payable, accrued and other liabilities                                          |  |                              | 27,416   |   |      |   | 19,068   |  
|Air traffic liability                                                                    |  |                              | 93,377   |   |      |   | 82,154   |  
|                                                                                         |  |                              |          |   |      |   |          |  
|Net cash provided by operating activities                                                |  |                              | 99,049   |   |      |   | 59,525   |  
|Investing activities:                                                                    |  |                              |          |   |      |   |          |  
|Purchases of property and equipment                                                      |  |                              | (43,767  | ) |      |   | (19,933  | )
|Return (payment) of aircraft purchase deposits, net                                      |  |                              | 7,319    |   |      |   | (19,012  | )
|Purchases of available-for-sale securities                                               |  |                              | (474,625 | ) |      |   | (689,450 | )
|Sales of available-for-sale securities                                                   |  |                              | 456,700  |   |      |   | 482,375  |  
|Other                                                                                    |  |                              | (5,479   | ) |      |   |         |  
|                                                                                         |  |                              |          |   |      |   |          |  
|Net cash used for investing activities                                                   |  |                              | (59,852  | ) |      |   | (246,020 | )
|Financing activities:                                                                    |  |                              |          |   |      |   |          |  
|Issuance of long-term debt                                                               |  |                              | 12,652   |   |      |   | 18,635   |  
|Payments on long-term debt                                                               |  |                              | (30,725  | ) |      |   | (13,624  | )
|Debt issuance costs                                                                      |  |                              | (2,827   | ) |      |   | (1,234   | )
|Excess tax benefits from share-based compensation                                        |  |                              |         |   |      |   | 2,395    |  
|Proceeds from exercise of stock options and employee stock purchase plans                |  |                              | 631      |   |      |   | 7,969    |  
|                                                                                         |  |                              |          |   |      |   |          |  
|Net cash (used for) provided by financing activities                                     |  |                              | (20,269  | ) |      |   | 14,141   |  
|Net change in cash and cash equivalents                                                  |  |                              | 18,928   |   |      |   | (172,354 | )
|Cash and cash equivalents at beginning of period                                         |  |                              | 159,100  |   |      |   | 370,572  |  
|                                                                                         |  |                              |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                               |  | $                            | 178,028  |   |      | $ | 198,218  |  
|                                                                                         |  |                              |          |   |      |   |          |  
|Supplemental Disclosure of Cash Flow Activities:                                         |  |                              |          |   |      |   |          |  
|Non-cash investing and financing activities                                              |  |                              |          |   |      |   |          |  
|Purchase of equipment in exchange for debt                                               |  | $                            | 147,050  |   |      | $ | 86,500   |  
|                                                                                         |  |                              |          |   |      |   |          |  

See accompanying Notes to Condensed Consolidated Financial Statements.



4



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Statements of Stockholders Equity

(In thousands)

(Unaudited)

(Restated)



|                                                                              |  |              |  |                            |    |                                               |   |         |                                |   |        |                            |  |   |        |   |  |   |        
|----------------------------------------------------------------------------- |  | ------------ |  | -------------------------- | -- | --------------------------------------------- | - | ------- | ------------------------------ | - | ------ | -------------------------- |  | - | ------ | - |  | - | -------
|                                                                              |  | Common Stock |  | Additional Paid-in Capital |    | Accumulated Other Comprehensive (Loss) Income |   |         | Accumulated Earnings (Deficit) |   |        | Total Stockholders Equity
|                                                                              |  | Shares       |  | Amount                     |    |                                               |   |        
|Balance at January 1, 2007                                                    |  | 91,160       |  | $                          | 91 |                                               | $ | 389,043 |                                | $ | (5,252 | )                          |  | $ | (4,599 | ) |  | $ | 379,283
|Net income                                                                    |  |             |  |                            |   |                                               |   |        |                                |   |       |                            |  |   | 2,158  |   |  |   | 2,158  
|Unrealized gain on derivative instruments, net of $4.9 million deferred taxes |  |             |  |                            |   |                                               |   |        |                                |   | 8,237  |                            |  |   |       |   |  |   | 8,237  
|Adjustment to post retirement expense, net of $0.2 million deferred taxes     |  |             |  |                            |   |                                               |   |        |                                |   | 1,098  |                            |  |   |       |   |  |   | 1,098  
|                                                                              |  |              |  |                            |    |                                               |   |         |                                |   |        |                            |  |   |        |   |  |   |        
|Total comprehensive income                                                    |  |              |  |                            |    |                                               |   |         |                                |   |        |                            |  |   |        |   |  |   | 11,493 
|Issuance of common stock for exercise of options                              |  | 71           |  |                            |   |                                               |   | 297     |                                |   |       |                            |  |   |       |   |  |   | 297    
|Share-based compensation                                                      |  | 209          |  |                            |   |                                               |   | 1,204   |                                |   |       |                            |  |   |       |   |  |   | 1,204  
|Issuance of common stock under employee stock purchase plan                   |  | 32           |  |                            |   |                                               |   | 334     |                                |   |       |                            |  |   |       |   |  |   | 334    
|                                                                              |  |              |  |                            |    |                                               |   |         |                                |   |        |                            |  |   |        |   |  |   |        
|Balance at March 31, 2007                                                     |  | 91,472       |  | $                          | 91 |                                               | $ | 390,878 |                                | $ | 4,083  |                            |  | $ | (2,441 | ) |  | $ | 392,611
|                                                                              |  |              |  |                            |    |                                               |   |         |                                |   |        |                            |  |   |        |   |  |   |        

See accompanying Notes to Condensed Consolidated Financial Statements.



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AIRTRAN HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1Restatement and Summary of
Significant Accounting Policies

Restatement

We have restated our consolidated financial statements and other financial information contained in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 and our Annual Report on Form 10-K for the year ended
December 31, 2006 to correct our accounting for passenger revenues. The accompanying consolidated financial statements were restated only to reflect the adjustments described below and do not reflect events occurring after May 8, 2007, the
date of the filing of our original Form 10-Q, nor modify or update those disclosures that have been affected by subsequent events. Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the Securities and Exchange
Commission, or the SEC.

In late July 2007, we identified possible errors in our accounting for a specific type of passenger revenue transaction. Upon
completion of our investigation and analysis of these items, on August 7, 2007, our management concluded that we would amend our previously filed Annual Report on Form 10-K for the year ended December 31, 2006 and our previously filed
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 to correct our previously reported passenger revenues for the impact of these errors. The Audit Committee of our Board of Directors concurred with managements decision to
amend our previously filed reports on August 9, 2007. We do not believe the rollover impact of the errors is material to our results of operations for any individual interim or annual period. However, because the cumulative effect of the errors is
material to our most recently completed fiscal year, we are restating our previously issued financial statements in accordance with the guidance provided in SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements.

The following table sets forth the effects of the restatement on
certain line items within our previously reported financial statements (in thousands, except per share data):



|                                                                                |  |                    |           |   |                    |   |                  |  |   |                    |   |  |   |           |  
|------------------------------------------------------------------------------- |  | ------------------ | --------- | - | ------------------ | - | ---------------- |  | - | ------------------ | - |  | - | --------- | -
|                                                                                |  | Three Months Ended |          
|(in 000s, except per share data) Condensed Consolidated Statement of Operations |  | March 31, 2007     |           |   | March 31, 2007     |   | March 31, 2006   |  |   | March 31, 2006     |  
|                                                                                |  | Restated           |           |   | PreviouslyReported |   | Restated         |  |   | PreviouslyReported |  
|Passenger revenues                                                              |  | $                  | 478,554   |   |                    | $ | 479,013          |  | $ | 399,139            |   |  | $ | 399,345   |  
|Operating income (loss)                                                         |  | $                  | 12,939    |   |                    | $ | 13,398           |  | $ | (11,462            | ) |  | $ | (11,256   | )
|Income (loss) before income taxes                                               |  | $                  | 3,738     |   |                    | $ | 4,197            |  | $ | (14,383            | ) |  | $ | (14,177   | )
|Net income (loss)                                                               |  | $                  | 2,158     |   |                    | $ | 2,447            |  | $ | (8,940             | ) |  | $ | (8,810    | )
|Income (loss) per common share:                                                 |  |                    |           |   |                    |   |                  |  |   |                    |   |  |   |           |  
|Basic                                                                           |  | $                  | 0.02      |   |                    | $ | 0.03             |  | $ | (0.10              | ) |  | $ | (0.10     | )
|Diluted                                                                         |  | $                  | 0.02      |   |                    | $ | 0.03             |  | $ | (0.10              | ) |  | $ | (0.10     | )
|                                                                                |  |                    |           |  
|(in 000s, except per share data) Condensed Consolidated Balance Sheet           |  | March 31, 2007     |           |   | March 31, 2007     |   | December 31,2006 |  |   | December 31,2006   |  
|                                                                                |  | Restated           |           |   | PreviouslyReported |   | Restated         |  |   | PreviouslyReported |  
|Deferred income taxes-current                                                   |  | $                  | 9,024     |   |                    | $ | 6,856            |  | $ | 8,854              |   |  | $ | 6,856     |  
|Total assets                                                                    |  | $                  | 1,864,947 |   |                    | $ | 1,862,779        |  | $ | 1,603,582          |   |  | $ | 1,601,584 |  
|Accrued and other liabilities                                                   |  | $                  | 140,492   |   |                    | $ | 134,488          |  | $ | 127,254            |   |  | $ | 121,709   |  
|Accumulated earnings (deficit)                                                  |  | $                  | (2,441    | ) |                    | $ | 1,395            |  | $ | (4,599             | ) |  | $ | (1,053    | )

The restatement also resulted in an increase in accumulated deficit of $2.7 million as of January 1, 2006 and
changes to the condensed consolidated statements of cash flows and stockholders equity in addition to Notes 1, 3 and 7.

Basis of Presentation

Our unaudited Condensed Consolidated Financial Statements include the accounts of AirTran Holdings, Inc. (Holdings or the Company) and our
wholly-owned subsidiaries, including our principal subsidiary, AirTran Airways, Inc. (Airways). All significant intercompany accounts and transactions have been eliminated in consolidation for all periods presented. In the opinion of management, the
accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments, which are of a normal recurring nature, necessary to present fairly the financial position, results of operations, cash flows and stockholders equity
for the periods presented. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the U.S. Securities and Exchange Commission (SEC) for reports on Form 10-Q. These unaudited interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our
Annual Report on Form 10-K for the year ended December 31, 2006.

The preparation of the accompanying unaudited Condensed Consolidated Financial
Statements in conformity with U.S. generally accepted accounting principles requires us to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying Notes. Actual results may
differ from those estimates and such differences may be material to the Condensed Consolidated Financial Statements.

Business

We offer scheduled airline services, using Boeing B717-200 (B717) and Boeing B737-700 (B737) aircraft, to 56 locations across the United States, primarily in short-haul
markets principally in the eastern United States. We offer very competitive fares by concentrating on keeping our unit costs low. A key to our success is the enthusiasm and skills of the AirTran employees.



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The financial and operating results for any interim period are not indicative of those for the entire year. Air travel
tends to be seasonal with the highest level of travel during the winter months to Florida and the summer months to the northeastern and western United States.

The management of our operations is based on a system-wide approach due to the interdependence of our route structure in the various markets we serve. As we offer only one service (i.e., air transportation), management has concluded that we
only have one segment of business.

Reclassification

Certain 2006 amounts in the Condensed Consolidated Statement of Operations have been reclassified from Maintenance, material and repairs to Other operating expense to conform to current presentation. This reclassification had no impact on
operating income (loss). Certain 2006 amounts in the Condensed Consolidated Balance Sheets have been reclassified from Flight equipment to Other property and equipment.

New Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (FASB) ratified the
Emerging Issues Task Force (EITF) consensus on EITF Issue No. 06-3,How Taxes Collected From Customers and Remitted to Governmental Authorities Should Be Presented in the Income Statement (That Is, Gross versus Net Presentation)
(EITF 06-3). The scope of EITF 06-3 includes any tax assessed by a governmental authority that is directly imposed on a revenue-producing transaction between a seller and a customer, and provides that a company may adopt a policy of presenting taxes
either gross within revenue or on a net basis. For any such taxes that are reported on a gross basis, a company should disclose the amounts of those taxes for each period for which an income statement is presented if those amounts are significant.
Because we report revenues net of transportation taxes collected from customers, EITF 06-3 had no impact on our financial statements for any period.

In
June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48,Accounting for Uncertainty in Income TaxesAn interpretation of FASB Statement No. 109 (FIN 48). The Interpretation clarifies the
accounting for uncertainty in income taxes recognized in an enterprises financial statements and prescribes a recognition threshold and measurement attributes of tax positions taken or expected to be taken on a tax return. Under FIN 48, the
impact of an uncertain tax position taken or expected to be taken on an income tax return must be recognized in the financial statements at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.
An uncertain income tax position will not be recognized in the financial statements unless it is more likely than not of being sustained.

We adopted the
provisions of FIN 48 on January 1, 2007. The total amount of unrecognized tax benefits as of the date of adoption was not material. We did not recognize any adjustment for unrecognized tax benefits as a result of the implementation of FIN 48 or
during the quarter ended March 31, 2007.

The entire unrecognized tax benefits at January 1, 2007 would affect the effective tax rate if
recognized. The Company believes there are no tax positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase or decrease during 2007.

The Companys policy for recording interest and penalties associated with an uncertain tax position is to classify interest as interest expense and penalties as
income tax expense. Upon adoption of FIN 48 effective January 1, 2007, the Company did not require an accrual for interest or penalties.

The Company
is subject to taxation in the United States and various state jurisdictions. The Companys tax years for 1996 to 2006 are subject to examination by the tax authorities.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), which defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We have not determined the effect, if any, that the adoption of SFAS
157 will have on our financial position or results of operations.

In February 2007, the FASB issued Statement No. 159,The Fair Value Option for
Financial Assets and Financial Liabilities (SFAS 159). SFAS 159 allows entities the option to measure eligible financial instruments at fair value as of specified dates. Such election, which may be applied on an instrument by instrument basis,
is typically irrevocable once elected. Statement 159 is effective for fiscal years beginning after November 15, 2007, and early application is allowed under certain circumstances. We have not yet determined the impact this interpretation will
have on our financial position.

Note 2Stock-Based Employee Compensation

Restricted stock awards have been granted to certain of our officers, directors and key employees pursuant to our 2002 Long-Term Incentive Plan. Stock awards are grants of shares of our common stock which typically
vest over time and are valued at the fair market value of our publicly traded stock on the date of issuance and the value is being charged on a straight-line basis to expense over the respective vesting period (generally three years). During the
first three months of 2007, we granted awards for approximately 349,000 shares and recorded deferred compensation related to such awards of approximately $4.2 million. During the first three months of 2006, we granted approximately 17,000 stock
awards and recorded deferred compensation related to such awards of approximately $0.3 million.

Approximately $1.2 million and $0.7 million of deferred
compensation was amortized as compensation expense during the first three months of 2007 and 2006, respectively. Awards for approximately 209,000 and 110,000 shares of restricted stock vested during the first three months of 2007 and 2006,
respectively. As of March 31, 2007, the Company has approximately $9.7 million in deferred compensation that will be recognized over the next three years relating to awards for approximately 892,000 restricted shares which were outstanding but
had not vested.



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Note 3Earnings (Loss) Per Common Share

The following table sets forth the computation of basic and diluted earnings per common share:



|                                                   |  |                              |        |                 |   |        |  
|-------------------------------------------------- |  | ---------------------------- | ------ | --------------- | - | ------ | -
|                                                   |  | Three months ended March 31, |       
|(in thousands, except per share amounts)           |  | 2007 (Restated)              |        | 2006 (Restated) |  
|NUMERATOR:                                         |  |                              |        |                 |   |        |  
|Net income (loss) available to common stockholders |  | $                            | 2,158  |                 | $ | (8,940 | )
|                                                   |  |                              |        |                 |   |        |  
|DENOMINATOR:                                       |  |                              |        |                 |   |        |  
|Weighted-average shares outstanding, basic         |  |                              | 91,338 |                 |   | 87,775 |  
|Effect of dilutive securities:                     |  |                              |        |                 |   |        |  
|Stock options                                      |  |                              | 1,019  |                 |   |       |  
|Restricted stock                                   |  |                              | 524    |                 |   |       |  
|                                                   |  |                              |        |                 |   |        |  
|Diluted                                            |  |                              | 92,881 |                 |   | 87,775 |  
|                                                   |  |                              |        |                 |   |        |  
|EARNINGS (LOSS) PER COMMON SHARE:                  |  |                              |        |                 |   |        |  
|Basic                                              |  | $                            | 0.02   |                 | $ | (0.10  | )
|                                                   |  |                              |        |                 |   |        |  
|Diluted                                            |  | $                            | 0.02   |                 | $ | (0.10  | )
|                                                   |  |                              |        |                 |   |        |  

Excluded from the diluted earnings per share calculation for the three-month periods ended March 31, 2007 and
2006 are 11.2 million shares related to our 7% convertible notes that would be issued upon conversion because the effect of including these shares would have been anti-dilutive. Excluded from the three months ended March 31, 2006 earnings
per share calculations were shares related to: restricted stock; stock options; and warrants because these securities were anti-dilutive. In April 2006 all outstanding warrants were exercised.

Note 4Commitments and Contingencies

Aircraft Purchase
Commitments

During the three months ended March 31, 2007, we took delivery of five purchased B737 aircraft. As of March 31, 2007, we had
on order 55 B737 aircraft with delivery dates between 2007 and 2011. The table below illustrates all aircraft scheduled for delivery through 2011:



|                  |  |                              
|----------------- |  | -----------------------------
|                  |  | Firm Aircraft Deliveries B737
|Remainder of 2007 |  | 7                            
|2008              |  | 15                           
|2009              |  | 18                           
|2010              |  | 14                           
|2011              |  | 1                            
|                  |  |                              
|Total             |  | 55                           
|                  |  |                              

The above table includes two B737 aircraft scheduled for delivery in the second quarter 2007 which we have agreed
to sell to an airline which operates outside of the United States.

Aircraft Financing Arrangements

Of the 55 B737 aircraft we have on order, we have secured debt financing for five B737 aircraft scheduled for delivery in 2007 and for five of the aircraft which are
scheduled to be delivered in 2008. Such debt financing funds approximately 85 percent of the total cost of the aircraft. While our intention is to finance the remainder of the aircraft on order through a combination of debt and lease financings, we
have not yet arranged for such financing.

Fuel Purchase Commitments

Efforts to reduce our exposure to increases in the price and availability of aviation fuel include the utilization of fuel purchase contracts involving both fixed-price arrangements and cap arrangements. Fixed-price
arrangements consist of an agreement to purchase defined quantities of aviation fuel from a third party at defined prices. Cap arrangements consist of an agreement to purchase defined quantities of aviation fuel from a third party at a price not to
exceed a defined price, limiting our exposure to upside market risk. Because these agreements are accounted for under the normal sales and use exception included in Statement of Financial Accounting Standards No. 133,Accounting for
Derivative Instruments and Hedging Activities, (SFAS 133), these agreements are not considered derivative financial instruments for financial reporting purposes. As of March 31, 2007, utilizing forward fuel purchase contracts, we had
committed to purchase 63.6 million gallons of aviation fuel at a weighted average price per gallon, excluding taxes and related fees, of $1.81 for the remainder of 2007. This represents 22.5 percent of our anticipated fuel needs for the
remainder of 2007.



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Cash Flow Hedges

During the fourth quarter 2006, we entered into interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis for the next 12 years, thus reducing the impact of interest-rate changes on
future interest expense and cash flows. Under these agreements, we pay fixed rates of 5.085 percent and 4.9875 percent and receive the London InterBank Offered Rate (LIBOR) every three months, expiring in 2018. The primary objective for our use of
interest rate hedges is to reduce the volatility of interest rates. We account for the interest rate hedges as cash flow hedges, as defined by SFAS 133. The fair values of interest rate swap derivatives are included in other assets or liabilities.
As of March 31, 2007, the fair value of the interest rate swaps included in other liabilities is $0.1 million. As of December 31, 2006, the fair value of the interest rate swaps included in other assets is $0.1 million. The effective
portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item as the forecasted transaction in the same period or periods during which the
hedged transaction affects earnings (for example, in interest expense when the hedged transactions are interest cash flows associated with floating-rate debt). During the three months ended March 31, 2007 amounts reclassified into
earnings were not material.

During the three months ended March 31, 2007, we entered into jet-fuel hedges to reduce the impact of fluctuations in
jet-fuel prices on future fuel expense. Under these agreements, which expire October through December 2007, we pay a fixed rate between $1.79 and $2.00 per gallon and receive the monthly average price of Gulf Coast jet-fuel. These contracts hedge
60.4 million gallons of our fuel purchases and represent 21.4 percent of our anticipated jet fuel consumption for the remainder of 2007. The primary objective for our use of fuel hedges is to reduce the volatility of Gulf Coast jet fuel prices.
We account for the fuel hedges as cash flow hedges, as defined by SFAS 133. As of March 31, 2007, the fair value of these fuel swaps was $13.3 million. The effective portion of the gain or loss on the derivative instrument is reported as a
component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (for example, in fuel
expense when the hedged transactions are fuel expense cash flows associated with jet-fuel purchases). During the three months ended March 31, 2007, amounts reclassified into earnings were not material.

Credit Card Arrangements

We have agreements with
organizations that process credit card transactions arising from purchases of air travel by customers of AirTran Airways. Our agreement with the MasterCard/Visa processor expires March 31, 2008. Our other credit card processing agreements
generally have no fixed term but are terminable without cause after 30 days. Each of our agreements with the organizations that process American Express, Discover, and MasterCard/Visa transactions allows, under specified conditions, the credit card
processor to retain cash that such processor otherwise would deliver to the Company (i.e., a holdback). A holdback consisting of cash escrowed by the processor is classified as restricted cash whereas a holdback consisting of a delay of
cash remittance to us is classified as accounts receivable. As of March 31, 2007 we were in compliance with our credit card arrangements and we had holdbacks with only one processor. The holdback with this processor was in amounts that were not
material to our cash balances. A majority of our revenues relate to credit card transactions processed by the MasterCard/Visa processor. Our agreement with the MasterCard/Visa credit card processor contains covenants which permit the processor to
holdback cash remittances to us if: we do not maintain aggregate prescribed levels of unrestricted cash and short-term investments; the processor determines that there has been a material adverse occurrence; or certain other events occur. The amount
which the processor may be entitled to withhold varies over time may be up to the estimated liability for future air travel purchased with Visa and MasterCard cards (which liability was $178.8 million as of March 31, 2007). As of March 31,
2007 we were in compliance with the agreement, no remittances had been withheld and the processor was not entitled to withhold future remittances. We have the right to reduce the amount withheld to the extent that we provide the processor with a
letter of credit and / or a cash deposit.

General Indemnifications

We are party to many routine contracts under which we indemnify third parties for various risks. We have not accrued any liability for any of these indemnities, as the amounts are not determinable or estimable. These
indemnities consist of the following:

Certain of our debt agreements related to aircraft-secured notes payable through 2017 contain language, whereby, we
have agreed to indemnify certain holders of certificates evidencing the debt associated with such notes, as necessary, to compensate them for any costs incurred by or any reduction in receivables due to such certificate holders resulting from
broadly defined regulatory changes that impose or modify any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of or any deposits with or other liabilities of such certificate holders.
Additionally, if it becomes unlawful for such certificate holders to make or maintain the investment or credit evidenced by the certificates, we have agreed to pay such certificate holders an amount necessary to cause the interest rate with respect
to the certificates to be a rate per annum equal to 4.88% over the rate specified by such certificate holders as the cost to them of obtaining funds in dollars in the United States in an amount equal to the pool balance of the certificates. The
maximum potential payment under these indemnities cannot be determined.

Our aircraft lease transaction documents contain customary indemnities concerning
withholding taxes in which we are responsible in some circumstances should withholding taxes be imposed for paying such amounts of additional rent, as is necessary to ensure that the lessor still receives, after taxes, the rent stipulated in the
lease agreements. These provisions apply on leases expiring through 2022. The maximum potential payment under these indemnities cannot be determined.

In
our aircraft financing agreements, we typically indemnify the financing parties, the trustee acting on their behalf and, other related parties against liabilities that arise from the manufacture, design, ownership, financing, use, operation, and
maintenance of the aircraft for tort liability, whether or not these liabilities arise out of or relate to the negligence of these indemnified parties except for their gross negligence or willful misconduct. We believe that we are covered by
insurance (subject to deductibles) for most tort liabilities and related indemnities, as described above with respect to the aircraft we operate. Additionally, if there is a change in the law which results in the imposition of any reserve, capital
adequacy, special deposit, or similar requirement which will increase the cost to the lender, we will pay the lender the additional amount necessary to compensate the lender for the actual cost increase.

We have various leases with respect to real property and various agreements among airlines relating to fuel consortia or fuel farms at airports in which we have agreed
to standard language indemnifying the lessor against environmental liabilities associated with the real property covered under the agreement, even if we are not the party responsible for the environmental damage. In the case of fuel consortia at the
airports, these indemnities are generally joint and several among the airlines. We cannot quantify the maximum potential exposure under these indemnities and we do not currently have liability insurance that protects us against environmental
damages.

Under certain contracts with third parties, we indemnify the third party against legal liability arising out of an action by a third party. The
terms of these contracts vary and the potential exposure under these indemnities cannot be determined. Generally, we have liability insurance protecting us from obligations undertaken under these indemnities.



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##### Table of Contents

Note 5Long-term Debt and Capital Leases

The components of our long-term debt, including capital lease obligations, were (in thousands):



|                                                                                                                |  |                |         |                   |   |        
|--------------------------------------------------------------------------------------------------------------- |  | -------------- | ------- | ----------------- | - | -------
|                                                                                                                |  | March 31, 2007 |         | December 31, 2006
|Floating rate aircraft notes payable through 2019, 6.739% weighted-average interest rate                        |  | $              | 567,365 |                   | $ | 428,680
|Fixed rate aircraft notes payable through 2018, 7.02% weighted-average interest rate                            |  |                | 73,670  |                   |   | 76,070 
|7.00% convertible notes due 2023                                                                                |  |                | 125,000 |                   |   | 125,000
|Aircraft notes payable through 2017, 10.64% weighted-average interest rate                                      |  |                | 97,322  |                   |   | 97,322 
|Floating rate aircraft pre-delivery deposit financings payable through 2008, interest rates from 6.83% to 7.27% |  |                | 63,093  |                   |   | 70,183 
|Capital lease obligations payable through 2015, 10.86% weighted-average interest rate                           |  |                | 13,638  |                   |   | 13,855 
|                                                                                                                |  |                |         |                   |   |        
|Total long-term debt                                                                                            |  |                | 940,088 |                   |   | 811,110
|Less current maturities                                                                                         |  |                | 89,737  |                   |   | 86,845 
|                                                                                                                |  |                |         |                   |   |        
|Long-term debt maturities                                                                                       |  | $              | 850,351 |                   | $ | 724,265
|                                                                                                                |  |                |         |                   |   |        

Aircraft Purchase Financing Facilities

Through March 31, 2007, we have entered into seven separate aircraft purchase financing facilities for purposes of financing the acquisition of B737 aircraft on order with the aircraft manufacturer. Changes to
the aircraft purchase financing facilities during the three months ended March 31, 2007 are discussed below.

We entered into the third permanent
facility (included in floating rate aircraft notes above) in September 2005, pursuant to which we are entitled to borrow up to $354 million for purposes of acquiring 12 B737 aircraft currently scheduled to be delivered to us in 2006 and 2007 and
satisfying our repayment obligations under a related pre-delivery payment financing facility. We took delivery of 12 aircraft in May 2006, June 2006, July 2006, September 2006, October 2006, November 2006, December 2006 and February 2007. In
conjunction with the financing of these aircraft, we issued equipment notes as aircraft were delivered for an aggregate amount of $354 million, which are scheduled to mature through 2019. The notes bear interest at a floating rate per annum above
the three-month US Dollar LIBOR in effect at the commencement of each quarterly period, and payments of principle and interest under the notes are payable quarterly. At March 31, 2007 and December 31, 2006, $345.7 million and $291.3
million were outstanding, respectively. Each note is secured by a first mortgage on the aircraft to which it relates.

On August 31, 2006, we entered
into a fifth permanent facility (included in floating rate aircraft notes above), pursuant to which we intend to finance the acquisition of five additional B737 aircraft. Three of the B737 aircraft are scheduled to be delivered in 2007 with the
remaining two scheduled to be delivered in 2008. We took delivery of one of the five aircraft in March 2007. In conjunction with the financing of the aircraft, we issue equipment notes as the aircraft are delivered. As of March 31, 2007 we had
issued an equipment note for $29.5 million, which are scheduled to mature through 2019. The notes bear interest at a floating rate per annum above the three-month US Dollar LIBOR in effect at the commencement of each quarterly period, and payments
of principle and interest under the notes are payable quarterly. At March 31, 2007, $29.5 million was outstanding. Each note is secured by a first mortgage on the aircraft to which it relates.

On December 8, 2006, we entered into a sixth permanent facility (included in floating rate aircraft notes above), pursuant to which we intend to finance the
acquisition of two additional B737 aircraft. The two B737 aircraft are scheduled to be delivered in 2007. We took delivery of one of the two aircraft in March 2007. In conjunction with the financing of the aircraft, we issue an equipment note as the
aircraft are delivered. As of March 31, 2007 we had issued an equipment note for $29.5 million, which is scheduled to mature through 2019. The note bears interest at a floating rate per annum above the three-month US Dollar LIBOR in effect at
the commencement of each quarterly period, and payments of principle and interest under the note is payable quarterly. At March 31, 2007, $29.5 million was outstanding. Additionally we have an option to enter into financing with the lender for
two additional B737 aircraft with delivery dates in 2008. We have not exercised this option.

On February 12, 2007, we entered into a seventh
permanent facility, pursuant to which we intend to finance the acquisition of six additional B737 aircraft. Three of the B737 aircraft are scheduled to be delivered in 2007 with the remaining three scheduled to be delivered in 2008. We took delivery
of one of the six aircraft in February 2007. In conjunction with the financing of the aircraft, we issue equipment notes as the aircraft are delivered. As of March 31, 2007 we had issued an equipment note for $29.1 million, which are scheduled
to mature through 2019. The note bears interest at a floating rate per annum above the six-month US Dollar LIBOR in effect at the commencement of each quarterly period, and payments of principle and interest under the note is payable quarterly. At
March 31, 2007, $29.1 million was outstanding. Each note is secured by a first mortgage on the aircraft to which it relates.

Letters of Credit

As of March 31, 2007, $13.6 million of restricted cash on the accompanying condensed consolidated balance sheet relates to outstanding letters
of credit, primarily for airport facilities and insurance.



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##### Table of Contents

Note 6Comprehensive Income

Comprehensive income encompasses net income and other comprehensive income, which includes all other non-owner transactions and events that change stockholders equity. Other comprehensive income is
composed of changes in the fair value of our derivative financial instruments that qualified for hedge accounting and the funded status of our post retirement obligations.

The components of Accumulated other comprehensive income (loss), are shown below (in thousands):



|                                         |  |                                                  |       |   |                                   |   |        |                                               |  |   |        |  
|---------------------------------------- |  | ------------------------------------------------ | ----- | - | --------------------------------- | - | ------ | --------------------------------------------- |  | - | ------ | -
|                                         |  | Unrealized gain (loss) on derivative instruments |       |   | Postretirement benefit obligation |   |        | Accumulated other comprehensive income
(loss) | 
|Balance at January 1, 2007               |  | $                                                | 84    |   |                                   | $ | (5,336 | )                                             |  | $ | (5,252 | )
|2007 changes in fair value, net of tax   |  |                                                  | 8,297 |   |                                   |   |       |                                               |  |   | 8,297  |  
|Reclassification to earnings, net of tax |  |                                                  | (60   | ) |                                   |   | 1,098  |                                               |  |   | 1,038  |  
|                                         |  |                                                  |       |   |                                   |   |        |                                               |  |   |        |  
|Balance at March 31, 2007                |  | $                                                | 8,321 |   |                                   | $ | (4,238 | )                                             |  | $ | 4,083  |  
|                                         |  |                                                  |       |   |                                   |   |        |                                               |  |   |        |  

Note 7Income Tax Expense

Our effective income tax rate was 42.3 percent for the three months ended March 31, 2007 compared to 37.8 percent for the three months ended March 31, 2006. Included in our effective tax rate for the three
months ended March 31, 2007 were non-recurring discrete items related to restricted stock vesting that increased our effective tax rate.

Note
8Proposed Acquisition of Midwest Air Group

On January 11, 2007, we commenced an exchange offer for all of the outstanding shares of Midwest
Air Group, Inc. (Midwest), for $13.25 per Midwest share, based on the closing price of our common stock on January 8, 2007. The offer consisted of $6.625 in cash and 0.5884 shares of AirTran common stock for each Midwest share. Because we
believe a combination of the two airlines would strengthen both airlines we are continuing to pursue the acquisition of Midwest. On April 2, 2007, we increased our offer to purchase all of the outstanding shares of Midwest to $15.00 per Midwest
share, based on the closing price of AirTran common stock on March 30, 2007. The offer consists of $9.00 in cash and 0.5842 shares of AirTran common stock for each Midwest share. The total value of the exchange offer is $389.0 million. The
offer, which is being made through a wholly-owned subsidiary of ours, has been extended and is scheduled to expire on May 16, 2007. The offer is subject to specified conditions. We anticipate funding the cash portion of the purchase price with
the proceeds from $225 million in senior secured financing under a proposed credit facility and cash on hand. On April 13, 2007, the board of directors of Midwest announced that it had unanimously recommended that Midwests shareholders
reject our offer to acquire all outstanding shares of Midwest and not tender their shares to us. As of March 31, 2007, other non-current assets include $5.8 million of incremental direct costs associated with the proposed acquisition of
Midwest. Such costs, together with any additional costs deferred subsequent to March 31, 2007, would be immediately expensed if we discontinue our efforts to acquire Midwest.

Note 9Subsequent Event

On May 1, 2007, we completed the sale of two aircraft to a carrier outside the
United States. We recognized a gain of approximately $7.0 million.



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##### Table of Contents

|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (RESTATED)
|------- | ------------------------------------------------------------------------------------------------

FORWARD-LOOKING STATEMENTS

The information contained in this
section: (i) has been derived from our historical financial statements and should be read together with our historical financial statements and related notes included elsewhere in this document, in addition to our Annual Report on Form 10-K/A
for the year ended December 31, 2006 as filed with the U.S. Securities & Exchange Commission; and (ii) is not a comprehensive discussion and analysis of our financial condition and results of operations, but rather updates
disclosures made in such Annual Report. The discussion below contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements involve risks and uncertainties including, but not limited to: consumer demand and acceptance of services offered by us, our ability to achieve and maintain acceptable cost levels, fare levels and actions by
competitors, regulatory matters, general economic conditions, commodity prices, and changing business strategies. Forward-looking statements are subject to a number of factors that could cause actual results to differ materially from our expressed
or implied expectations, including, but not limited to our performance in future periods, our ability to generate working capital from operations, our ability to take delivery of and to finance aircraft, the adequacy of our insurance coverage, and
the cost and availability of aviation fuel. Our forward-looking statements can be identified by the use of terminology such as anticipates, expects, intends, believes, will or the negative
thereof, or variations thereon or comparable terminology. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

OVERVIEW

All of the operations of AirTran Holdings, Inc. (the
Company, AirTran, we or us) are conducted by our wholly owned subsidiary, AirTran Airways, Inc. (AirTran Airways or Airways). Airways is one of the largest low cost scheduled airlines in the United States in terms of departures and seats offered. We
operate scheduled airline service primarily in short-haul markets principally in the eastern United States, with a majority of our flights originating and terminating at our hub in Atlanta, Georgia. As of April 1, 2007, we operated 87 Boeing
717-200 (B717) and 45 Boeing 737-700 (B737) aircraft offering approximately 700 scheduled flights per day to 56 locations in the United States, as well as to Freeport, Grand Bahamas.

During the three months ended March 31, 2007, we continued our track record of operating profitably. We reported operating income of $12.9 million, net income of $2.2 million and diluted earnings per common share
of $0.02. We set new first quarter records for passengers, traffic and capacity and initiated new service to Daytona Beach, Phoenix and Newburgh, N.Y. Additionally, we announced plans for new flights to St. Louis, Charleston, S.C., San Diego, and
Portland, Maine, in the coming months.

During the three months ended March 31, 2007, we also continued our rapid growth by taking delivery of five
B737 aircraft bringing our total fleet to 132 aircraft at period end. Since March 31, 2006, we have taken delivery of two B717 aircraft and 20 B737 aircraft. As a result, our capacity, as measured by available seat miles, increased 20.5 percent
when the twelve month period ended March 31, 2007 is compared to the twelve month period ended March 31, 2006. Our traffic, as measured by revenue passenger miles, increased 19.2 percent, resulting in a 0.7 percentage point decrease in
passenger load factor to 70.1 percent.

Highlights from the first three months ended March 31, 2007 include the following:



| |  |  | Carried in excess of 5 million revenue passengers.
| | - |  | --------------------------------------------------



| |  |  | Took delivery of five new Boeing 737-700 aircraft.
| | - |  | --------------------------------------------------



| |  |  | Initiated new service to Daytona Beach, Phoenix and Newburgh, N.Y.
| | - |  | ------------------------------------------------------------------



| |  |  | Launched over 20 new non-stop routes.
| | - |  | -------------------------------------



| |  |  | Announced that we will begin service to St. Louis, Charleston, S.C., San Diego, and Portland, Maine in 2007.
| | - |  | ------------------------------------------------------------------------------------------------------------

We continue to pursue on our proposal to acquire Midwest Air Group (Midwest) with the aim of developing a stronger presence in the Midwestern United States. On
April 2, 2007, we increased our offer to purchase all of the outstanding shares of Midwest to $15.00 per Midwest share, based on the closing price of AirTran common stock on March 30, 2007. The offer consists of $9.00 in cash and 0.5842
shares of AirTran common stock for each Midwest share. The total value of the exchange offer is $389.0 million. While there can be no assurance that our offer will be accepted, we remain convinced that a combination of AirTran and Midwest Airlines
would bring substantial benefits that would accrue to the shareholders, customers, employees and other stakeholders of both companies.

We will continue to
face several challenges during 2007. Managing costs and increasing revenues in the face of high fuel costs will continue to be a primary focus. If our fuel costs rise, we cannot guarantee that we will be able to raise revenues to match the increased
fuel costs. Our financial and operating results for any prior interim or annual period are not necessarily indicative of those for the entire year. Air travel in our markets tends to be seasonal, with the highest level of travel occurring during the
winter months to Florida and the summer months to the northeastern and western United States. Generally, the second quarter tends to be our strongest revenue quarter.



12



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##### Table of Contents

RESULTS OF OPERATIONS

For the three months ended March 31, 2007 and 2006

The table below sets forth selected financial and operating data for the
three months ended March 31, 2007 and 2006:



|                                                                                   |  |                              |           |   |                                |   |           |   |  |      |      
|---------------------------------------------------------------------------------- |  | ---------------------------- | --------- | - | ------------------------------ | - | --------- | - |  | ---- | -----
|                                                                                   |  | Three Months Ended March 31, |           |   | Percentage Increase (Decrease) |  
|                                                                                   |  | 2007                         |           |   | 2006                           |   |          
|Revenue passengers                                                                 |  |                              | 5,080,108 |   |                                |   | 4,487,485 |   |  | 13.2 |      
|Revenue passenger miles (RPM) (000s)(1)                                            |  |                              | 3,648,119 |   |                                |   | 3,060,268 |   |  | 19.2 |      
|Available seat miles (ASM) (000s)(2)                                               |  |                              | 5,207,132 |   |                                |   | 4,321,744 |   |  | 20.5 |      
|Passenger load factor(3)                                                           |  |                              | 70.1      | % |                                |   | 70.8      | % |  | (0.7 | )pts.
|Break-even load factor(4)                                                          |  |                              | 69.5      | % |                                |   | 73.4      | % |  | (3.9 | )pts.
|Average fare (excluding transportation taxes)(5)                                   |  | $                            | 94.20     |   |                                | $ | 88.94     |   |  | 5.9  |      
|Average yield per RPM(6)                                                           |  |                              | 13.12     | ¢ |                                |   | 13.04     | ¢ |  | 0.6  |      
|Passenger revenue per ASM (RASM)(7)                                                |  |                              | 9.19      | ¢ |                                |   | 9.24      | ¢ |  | (0.5 | )    
|Operating cost per ASM (CASM)(8)                                                   |  |                              | 9.43      | ¢ |                                |   | 9.89      | ¢ |  | (4.7 | )    
|Average stage length (miles)(9)                                                    |  |                              | 681       |   |                                |   | 646       |   |  | 5.4  |      
|Average cost of aircraft fuel per gallon, including fuel taxes and into-plane fees |  | $                            | 2.01      |   |                                | $ | 2.06      |   |  | (2.4 | )    
|Average daily utilization (hours:minutes)(10)                                      |  |                              | 10:54     |   |                                |   | 11:12     |   |  | (2.7 | )    
|Number of operating aircraft in fleet at end of period                             |  |                              | 132       |   |                                |   | 110       |   |  | 20.0 |      



---

|(1) | The number of revenue miles flown by passengers
|--- | -----------------------------------------------

|(2) | The number of seats available for passengers multiplied by the number of miles
each seat is flown
|--- | -------------------------------------------------------------------------------------------------

|(3) | The percentage of aircraft seating capacity that is actually utilized (RPMs
divided by ASMs)
|--- | --------------------------------------------------------------------------------------------

|(4) | Passenger load factor that must be achieved to breakeven at the income before tax
level
|--- | ---------------------------------------------------------------------------------------

|(5) | Passenger revenue divided by total passengers
|--- | ---------------------------------------------

|(6) | Passenger revenue divided by RPMs
|--- | ---------------------------------

|(7) | Passenger revenue divided by ASMs
|--- | ---------------------------------

|(8) | Operating expenses divided by ASMs
|--- | ----------------------------------

|(9) | Total aircraft miles flown divided by departures
|--- | ------------------------------------------------

|(10) | The average amount of time per day that an aircraft flown is operated in revenue
service
|---- | ----------------------------------------------------------------------------------------



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##### Table of Contents

For the three months ended March 31, 2007 and 2006

Summary

We recorded operating income of $12.9 million, net income of
$2.2 million and income per diluted common share of $0.02 for the first quarter of 2007. For the comparative period in 2006, we recorded an operating loss of $11.5 million, net loss of approximately $8.9 million and loss per diluted common share of
$0.10.

Operating Revenues

Our operating revenues for
three months ended March 31, 2007 increased $88.2 million (21.2 percent), primarily due to a 19.9 percent increase in passenger revenues. The increase in passenger revenues was largely due to a 19.2 percent increase in passenger traffic as
measured by revenue passenger miles (RPMs), and an increase in our average yield per RPM of 0.6 percent to 13.12 cents. The increase in yield resulted primarily from a 5.9 percent increase in our average fare to $94.20. This increase in yield, when
combined with our 0.7 percentage point decrease in passenger load factor, resulted in a 0.5 percent decrease in passenger unit revenues as measured by passenger revenue per available seat mile (RASM) to 9.19 cents.

During the three months ended March 31, 2007, we continued our growth by taking delivery of five B737 aircraft bringing our total fleet to 132 aircraft at period
end. Since March 31, 2006, we have taken delivery of two B717 aircraft and 20 B737 aircraft. As a result, our capacity, as measured by available seat miles, increased 20.5 percent. Our traffic, as measured by revenue passenger miles, increased
19.2 percent, resulting in a 0.7 percentage point decrease in passenger load factor to 70.1 percent.

Operating Expenses

Our operating expenses increased by $63.8 million (14.9 percent) on an ASM increase of 20.5 percent. In general, our operating expenses are significantly affected by
changes in our capacity, as measured by ASMs. The following table presents our unit costs, or our operating expenses per ASM, for the three months ended March 31, 2007 and 2006, respectively:



|                                         |  |                              |   |  |  |  |                                |   |  |  |  |       |  
|---------------------------------------- |  | ---------------------------- | - |  |  |  | ------------------------------ | - |  |  |  | ----- | -
|                                         |  | Three Months Ended March 31, |   |  |  |  | Percentage Increase (Decrease) |  
|                                         |  | 2007                         |   |  |  |  | 2006                           |   |  |  | 
|Aircraft fuel                            |  | 3.19                         | ¢ |  |  |  | 3.38                           | ¢ |  |  |  | (5.6  | )
|Salaries, wages and benefits             |  | 2.07                         |   |  |  |  | 2.13                           |   |  |  |  | (2.8  | )
|Aircraft rent                            |  | 1.17                         |   |  |  |  | 1.24                           |   |  |  |  | (5.6  | )
|Maintenance, materials and repairs       |  | 0.64                         |   |  |  |  | 0.77                           |   |  |  |  | (16.9 | )
|Distribution                             |  | 0.36                         |   |  |  |  | 0.37                           |   |  |  |  | (2.7  | )
|Landing fees and other rents             |  | 0.56                         |   |  |  |  | 0.52                           |   |  |  |  | 7.7   |  
|Aircraft insurance and security services |  | 0.11                         |   |  |  |  | 0.14                           |   |  |  |  | (21.4 | )
|Marketing and advertising                |  | 0.21                         |   |  |  |  | 0.26                           |   |  |  |  | (19.2 | )
|Depreciation and amortization            |  | 0.20                         |   |  |  |  | 0.14                           |   |  |  |  | 42.9  |  
|Other operating                          |  | 0.92                         |   |  |  |  | 0.94                           |   |  |  |  | (2.1  | )
|                                         |  |                              |   |  |  |  |                                |   |  |  |  |       |  
|Total CASM                               |  | 9.43                         | ¢ |  |  |  | 9.89                           | ¢ |  |  |  | (4.7  | )
|                                         |  |                              |   |  |  |  |                                |   |  |  |  |       |  

Aircraft fuel decreased 5.6 percent on a cost per ASM basis, primarily due to decreased fuel prices. Our
fuel price per gallon, including all fees and taxes, decreased 2.6 percent from $2.06 for the three months ended March 31, 2006, to $2.01 for the three months ended March 31, 2007. Additionally, average fuel cost per ASM was favorably
impacted by the delivery of B737 aircraft. The B737 aircraft tends to use less fuel per ASM than the B717 aircraft.

Aircraft rent decreased 5.6
percent on a cost per ASM basis. Since March 31, 2006, we have taken delivery of two B717 aircraft and 20 B737 aircraft. As a result, our capacity, as measured by available seat miles, increased 20.5 percent. Of the 22 aircraft we have taken
delivery of since March 31, 2006, only seven of the aircraft were lease financed.

Maintenance, materials and repairs decreased 16.9 percent on
a cost per ASM basis. The reduction is due primarily to a higher number of heavy maintenance and other one-time maintenance events in 2006, as compared to the three months ended 2007. Maintenance costs per block hour were approximately $270 per
block hour compared to $310 per block hour in 2006, representing a 13% decrease in maintenance costs per block hour.

Landing fees and other rents
increased 7.7 percent on an ASM basis. This increase was primarily due to rental rate increases imposed at various airport authorities.

Aircraft
insurance and security services decreased 21.4 percent on an ASM basis. While the addition of 22 new Boeing aircraft to our fleet since March 31, 2006 increased our total insured hull value and related insurance premiums, the decrease on an
ASM basis was primarily due to a reduction in hull and liability insurance rates for our fleet coverage.

Marketing and advertising decreased 19.2
percent on an ASM basis. This unit cost decrease was attributable to the expiration of certain promotional programs as well as the timing of marketing expenses.

Depreciation and amortization increased 42.9 percent on an ASM basis, primarily due to the purchase of 15 B737 aircraft since March 31, 2006 and purchases of spare aircraft parts for our B737 aircraft fleet.

Non-operating Expenses

Other (income) expense, net increased
by $6.3 million. Higher invested cash balances along with higher interest rates increased interest income by $0.5 million. Interest expense increased by $6.2 million primarily due to the effect of aircraft debt financings entered into during 2006
and 2007. Capitalized interest decreased by $0.5 million due to the delivery of 22 aircraft since March 31, 2006. Capitalized interest represents interest on purchase deposits for future aircraft. These amounts are classified as part of the
cost of the aircraft upon delivery.

Income Tax Expense

Our effective income tax rate was 42.3 percent for the three months ended March 31, 2007, compared to 37.8 percent for the three months ended March 31, 2006. Included in our effective tax rate for the three months ended
March 31, 2007 were non-recurring discrete items related to restricted stock vesting that increased our effective tax rate.



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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2007, we had total cash, cash equivalents and short term investments of $347.1 million, which is an increase of $36.9 million compared to December 31, 2006. Short-term investments represent
auction rate securities with reset periods of less than 12 months. As of March 31, 2007, we also had $28.1 million of restricted cash. Our primary sources of cash are from operating activities and primary uses of cash are for investing and
financing activities.

Operating activities during the first quarter of 2007 provided $99.0 million of cash flow compared to $59.5 million during
the same period in 2006. Cash flow from operating activities is related to both the level of our profitability and to changes in working capital and other assets and liabilities. Operating cash inflows are largely attributable to revenues derived
from the transportation of passengers. Operating cash outflows are largely attributable to recurring expenditures for fuel, labor, aircraft rent, aircraft maintenance, marketing and other activities. For the quarter ended March 31, 2007, we
reported net income of $2.2 million compared to a net loss of $8.9 million for the quarter ended March 31, 2006. The increased profitability favorably impacted cash provided by operating activities.

Changes in the components of our working capital also impact cash flow from operating activities. Changes in the air traffic liability balance and the related accounts
receivable balance have had a significant impact on our net cash flow from operating activities. We have a liability to provide future air travel because travelers tend to purchase air transportation in advance of their intended travel date.
Advanced ticket sales, which are recorded in air traffic liability, fluctuate seasonally and also provide cash as the Company grows and consequently receives additional cash for future travel. During the quarter ended March 31, 2007, our air
traffic liability balance increased $83.3 million more than the related accounts receivable balance increased contributing to net cash provided by operating activities. During the quarter ended March 31, 2006, our air traffic liability balance
increased $72.6 million more than the related accounts receivable balance increased, contributing to net cash flow from operating activities. Changes in accounts payable, accrued and other current and non-current liabilities also have had a
significant impact on our cash flow from operating activities. During the quarter ended March 31, 2007, the $27.4 million increase in accounts payable and accrued and other liabilities contributed favorably to net cash provided by operating
activities. Accounts payable and accrued and other liabilities increased during the quarter due to increases in accrued employee wages and benefits, accrued B737 aircraft rent, accrued interest, liabilities to governmental authorities for taxes and
fees that we collected on their behalf and various other liabilities. During the quarter ended March 31, 2006, the $19.1 million increase in accounts payable and accrued and other liabilities contributed favorably to net cash provided by
operating activities.

We used cash to increase other assets by $6.4 million and $5.4 million during the quarters ended March 31, 2007 and 2006,
respectively. Other assets include aircraft maintenance and other deposits, prepaid insurance and prepaid distribution costs.

Investing activities
during the quarter ended March 31, 2007 used $59.9 million in cash compared to the $246.0 million used during the similar period in 2006. Purchases and sales of available for sales securities are classified as investing activities. During the
quarter ended March 31, 2007, purchases of available for sale securities exceeded sales of available for sale securities by $17.9 million. During the quarter ended March 31, 2006, purchases of available for sale securities exceeded sales
of available for sale securities by $207.1 million. Investing activities also include expenditures for aircraft deposits, the purchase of aircraft and other property and equipment and deferred costs related to the proposed Midwest acquisition.

Aircraft purchase contracts typically require that the purchaser make pre-delivery deposits to the manufacturer. These deposits are refunded at the time
of aircraft delivery. We may invest a portion or all of such deposits in the aircraft. During the quarter ended March 31, 2007, we received $31.9 million in previously paid aircraft deposits while paying $24.5 million in new aircraft deposits.
During the quarter ended March 31, 2007, we purchased five B737 aircraft. We expended $27.9 million in cash and incurred $147.0 million of debt related to the acquisition of these aircraft. During the quarter ended March 31, 2006, we
purchased three B737 aircraft. We expended in cash $13.9 million in cash and incurred $87.6 million of debt related to the acquisition of these aircraft.

During the quarter ended March 31, 2007, we expended $15.9 million in cash for the acquisition of other property and equipment. Acquisitions of other property and equipment included purchases of rotable spare parts, additions to
leasehold improvements and the purchase of ground and computer equipment. During the quarter ended March 31, 2006, we expended $6.0 million in cash for the acquisition of other property and equipment.

Financing activities used $20.3 million of cash during the quarter ended March 31, 2007 compared to providing cash of $14.1 million in the similar period in
2006. During the quarter ended March 31, 2007, we received cash from the issuance of debt financing for aircraft pre-delivery deposits of $12.7 million and repaid $19.7 million of pre-delivery deposit debt financing. During the quarter ended
March 31, 2006, we repaid $10.8 million of aircraft purchase debt financing. Also, during the first quarter of 2007, we borrowed $147.0 million in non-cash transactions to finance the purchase of five B737 aircraft. During the first quarter of
2006, we received cash from the issuance of debt financing for aircraft pre-delivery deposits of $18.6 million and repaid $9.9 million of pre-delivery deposit debt financing. During the first quarter of 2006, we borrowed $86.5 million in non-cash
aircraft purchase debt financing transactions while repaying $3.6 million of aircraft purchase debt financing. See Note 5 to Condensed Consolidated Financial Statements for additional information regarding our outstanding debt.

During the quarters ended March 31, 2007 and 2006, we received $0.6 million and $8.0 million, respectively, from the exercise of employee options for the purchase
of common stock.



15



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##### Table of Contents

Proposed Acquisition of Midwest Air Group

On January 11, 2007, we commenced an exchange offer for all of the outstanding shares of Midwest Air Group, Inc. (Midwest), for $13.25 per Midwest share, based on the closing price of our common stock on
January 8, 2007. The offer consisted of $6.625 in cash and 0.5884 shares of AirTran common stock for each Midwest share. Because we believe a combination of the two airlines would strengthen both airlines we are continuing to pursue the
acquisition of Midwest. On April 2, 2007, we increased our offer to purchase all of the outstanding shares of Midwest to $15.00 per Midwest share, based on the closing price of AirTran common stock on March 30, 2007. The offer consists of
$9.00 in cash and 0.5842 shares of AirTran common stock for each Midwest share. The total value of the exchange offer is $389.0 million. The offer, which is being made through a wholly-owned subsidiary, has been extended and is scheduled to expire
on May 16, 2007. The offer is subject to specified conditions. We anticipate funding the cash portion of the purchase price with the proceeds from $225 million in senior secured financing under a proposed credit facility and cash on hand. On
April 13, 2007, the board of directors of Midwest announced that it had unanimously recommended that Midwests shareholders reject our offer to acquire all outstanding shares of Midwest and not tender their shares to us. As of
March 31, 2007, other non-current assets include $5.8 million of incremental direct costs associated with the proposed acquisition of Midwest. Such costs, together with any additional costs deferred subsequent to March 31, 2007 would
be immediately expensed if we discontinue our efforts to acquire Midwest.

Aircraft Acquisitions and Aircraft Purchase Commitments

During the three months ended March 31, 2007, we took delivery of five purchased B737 aircraft. As of March 31, 2007, we had 55 Boeing 737 aircraft on order
scheduled to be delivered in the year indicated below:



|      |  |   
|----- |  | --
|2007  |  | 7 
|2008  |  | 15
|2009  |  | 18
|2010  |  | 14
|2011  |  | 1 
|      |  |   
|Total |  | 55
|      |  |   

The above table includes two B737 aircraft delivered in the second quarter of 2007 which we have sold to an
airline which operates outside of the United States.

Aircraft purchase contracts typically require the purchaser to make pre-delivery deposits to the
manufacturer. We have arranged pre-delivery deposit financing for all of our pre-delivery deposit requirements for aircraft scheduled to be delivered in 2007 and 2008. The pre-delivery deposit financing typically funds between 75 percent and 100
percent of our pre-delivery deposit obligation for any given aircraft. We expect to arrange pre-delivery deposit financing for the remainder of our scheduled aircraft deliveries.

Of the 55 B737 aircraft we have on order, we have secured debt financing for five B737 aircraft scheduled for delivery in 2007 and for five of the aircraft which are scheduled to be delivered in 2008. Such debt
financing funds approximately 85 percent of the total cost of the aircraft. While our intention is to finance the remainder of the aircraft on order via a combination of debt and lease financings, we have not yet arranged for such financing.



16



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##### Table of Contents

Letters of Credit

As
of March 31, 2007, $13.6 million of restricted cash on the accompanying condensed consolidated balance sheet relates to outstanding letters of credit, primarily for airport facilities and insurance.

Other Year 2007 Cash Requirements and Sources of Liquidity

During
2007, in addition to funding the committed aircraft acquisitions discussed above, we will need cash for non-aircraft capital expenditures and debt maturities. It is anticipated that non-aircraft capital expenditures and 2007 debt and capital lease
maturities will be funded with cash flow from operations, other financings, and the use of existing cash resources.

We have various options available to
meet our debt repayments, capital expenditures and operating commitments including internally generated funds and various borrowing or leasing options. Additionally, we have an outstanding shelf registration which we may utilize to raise funds for
aircraft financings or other purposes in the future. However, we have no unused lines of credit available and our owned aircraft and our pre-delivery deposits are pledged as collateral for outstanding debt. There can be no assurance that financing
will be available for all B737 aircraft deliveries or for other capital expenditures not covered by firm financing commitments. Should fuel prices remain high and if we are unable to generate revenues to cover our costs, we may slow our growth,
including through the rescheduling of aircraft deliveries or through the sale, lease or sublease of some of our aircraft.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk
from the information provided in Part II, Item 7A Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006, other than those discussed below.

Interest Rates

We had approximately $630.5 million
and $498.9 million of variable-rate debt as of March 31, 2007 and December 31, 2006, respectively. We have mitigated our exposure on certain variable-rate debt by entering into interest rate swap agreements. These swaps expire in May
2018, June 2018, and July 2018. The notional amount of the outstanding interest rate swaps at March 31, 2007 was $83.8 million. The interest rate swaps effectively result in us paying a fixed rate of interest on a portion of our floating
rate debt securities through the expiration of the swaps. If average interest rates increase by 100 basis points during the remainder of 2007, our projected 2007 interest expense would increase by approximately $4.5 million.

Aviation Fuel

Our results of operations can be significantly
impacted by changes in the price and availability of aircraft fuel. Aircraft fuel expense for the three months ended March 31, 2007 and 2006 represented approximately 33.8 percent and 34.2 percent of our operating expenses, respectively.
Efforts to reduce our exposure to increases in the price and availability of aviation fuel include the utilization of fuel purchase contracts involving both fixed-price arrangements and cap arrangements. Fixed-price arrangements consist of an
agreement to purchase defined quantities of aviation fuel from a third party at defined prices. Cap arrangements consist of an agreement to purchase defined quantities of aviation fuel from a third party at a price not to exceed a defined price,
limiting our exposure to upside market risk. Because these agreements are accounted for under the normal sales and use exception included in SFAS 133, these agreements are not considered derivative financial instruments. As of March 31, 2007,
utilizing forward fuel purchase contracts, we had committed to purchase 63.6 million gallons of aviation fuel at a weighted average price per gallon, excluding taxes and related fees, of $1.81 for the remainder of 2007. This represents 22.5
percent of our anticipated fuel needs for the remainder of 2007.

In addition to the fuel purchase contracts discussed above, we have entered into jet fuel
hedges. Pursuant to these jet fuel hedges we will receive cash if jet fuel market price exceeds the specified amount and we will pay cash if the jet fuel market price is less than the specified amount. During the three months ended March 31,
2007, we entered into jet-fuel hedges to reduce the impact of fluctuation in jet-fuel prices on future fuel expense. Under these agreements, which expire October through December 2007, we pay a fixed rate between $1.79 and $2.00 per gallon and
receive the monthly average price of Gulf Coast jet-fuel. These contracts hedge 60.4 million gallons of our fuel purchases and represents 21.4 percent of our anticipated jet fuel consumption for the remainder of 2007. The primary objective for
our use of fuel hedges is to reduce the volatility of Gulf Coast jet fuel prices. We account for the fuel hedges as cash flow hedges, as defined by SFAS 133. As of March 31, 2007, the fair value of these fuel swaps was $13.3 million. The
effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods
during which the hedged transaction affects earnings (for example, in fuel expense when the hedged transactions are fuel expense cash flows associated with jet-fuel purchases). During the three months ended March 31, 2007, the
amounts reclassified into earnings were immaterial.



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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Restatement.In late July 2007, we identified possible errors in our accounting for a specific type of passenger revenue transaction. Upon completion of our
investigation and analysis of these items, on August 7, 2007, our management concluded that we would amend our previously filed Annual Report on Form 10-K for the year ended December 31, 2006 and our previously filed Quarterly Report on Form
10-Q for the quarter ended March 31, 2007 to correct our previously reported passenger revenues for the impact of these errors. The Audit Committee of our Board of Directors concurred with managements decision to amend our previously
filed reports on August 9, 2007. We do not believe the rollover impact of the errors is material to our results of operations for any individual interim or annual period. However, because the cumulative effect of the errors is material to our most
recently completed fiscal year, we are restating our previously issued financial statements in accordance with the guidance provided in SEC Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements. Additionally, management concluded that our failure to identify the errors in our accounting for a specific type of passenger revenue transaction constituted a material weakness in
our internal control over financial reporting. A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. Solely as a result of this material weakness, our management has revised its earlier assessment and concluded that our internal control over financial reporting was not effective as of December 31,
2006, based on the criteria in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. This material weakness caused us to amend our 2006 Form 10-K and Form 10-Q for the
quarter ended March 31, 2007, in order to restate our consolidated financial statements as of December 31, 2006 and 2005 and for each of the three years in the period ended December 31, 2006 and for the quarter ended March 31,
2007.

Disclosure Controls and Procedures.We maintain controls and procedures designed to ensure that we are able to collect the information we are
required to disclose in the reports we file with the SEC, and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. In connection with the restatement, our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, reevaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934 as amended (the Exchange
Act)). Based on this reevaluation our Chief Executive Officer and Chief Financial Officer have concluded that, as a result of the material weakness in our internal control over financial reporting described above, our disclosure controls and
procedures were not effective as of the end of the period covered by this report on Form 10-Q/A.

Remediation of Material Weakness in Internal
Control. We have performed an extensive review of the transactions impacted by the material weakness described above in an effort to ensure that this amendment reflects all necessary adjustments. We believe that this review, the investigation
and analysis of the errors described above, and the changes in the related revenue accounting processes we have implemented as a result of this restatement will remediate the material weakness and are designed so that similar transactions will be
accounted for in accordance with generally accepted accounting principles in our future filings.

Changes in Internal Control. There were no changes
to our internal control over financial reporting during the quarter ended March 31, 2007 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II.

OTHER INFORMATION



|        |  |         
|------- |  | --------
|Item 6. |  | Exhibits



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                     |  |  |  |  |  |                                     |  |                                                                                                                         
|-------------------- |  |  |  |  |  | ----------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------
|                     |  |  |  |  |  | AirTran Holdings, Inc. (Registrant)
|                     |  |  | 
|Date: August 9, 2007 |  |  |  |  |  | /s/ Stanley J. Gadek               
|                     |  |  |  |  |  |                                     |  | Stanley J. Gadek Senior Vice President Finance,
and Chief Financial Officer (Principal Accounting and Financial Officer)



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EXHIBIT INDEX



|            |  |   |  |                                                              
|----------- |  | - |  | -------------------------------------------------------------
|Exhibit No. |  |   |  | Description                                                  
|31.1        |  |  |  | CEO certification pursuant to Rule 13(a)-14                  
|31.2        |  |  |  | CFO certification pursuant to Rule 13(a)-14                  
|32.1        |  |  |  | CEO and CFO certifications pursuant to 18 U.S.C. Section 1350



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