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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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FORM 10-Q



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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 September 30, 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



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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 October 29, 2007: 91,703,204 par value $0.001



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##### Table of Contents

Table of Contents

AIRTRAN HOLDINGS, INC.

Form 10-Q

For the Quarter Ended September 30, 2007

INDEX



|                                                    |  |                                                                                                           |  |     
|--------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|                                                    |  |                                                                                                           |  | Page
|PART I.                                             |  | FINANCIAL INFORMATION                                                                                     |  |     
|Item 1.                                             |  | Financial Statements (unaudited)                                                                          |  |     
|                                                    |  | Condensed Consolidated Statements of Operations - Three and nine months ended September 30, 2007 and 2006 |  | 1   
|                                                    |  | Condensed Consolidated Balance Sheets - September 30, 2007 and December 31, 2006                          |  | 2   
|                                                    |  | Condensed Consolidated Statements of Cash Flows - Nine months ended September 30, 2007 and 2006           |  | 4   
|                                                    |  | Condensed Consolidated Statement of Stockholders Equity  Nine months ended September 30, 2007           |  | 5   
|                                                    |  | Notes to Condensed Consolidated Financial Statements                                                      |  | 6   
|Item 2.                                             |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                     |  | 11  
|Item 3.                                             |  | Quantitative and Qualitative Disclosures About Market Risk                                                |  | 18  
|Item 4.                                             |  | Controls and Procedures                                                                                   |  | 19  
|                                                    |  |                                                                                                          
|PART II.                                            |  | OTHER INFORMATION                                                                                         |  | 20  
|Item 1.                                             |  | Legal Proceedings                                                                                         |  | 20  
|Item 1A.                                            |  | Risk Factors                                                                                              |  | 20  
|Item 2.                                             |  | Unregistered Sales of Equity Securities and Use of Proceeds                                               |  | 20  
|Item 3.                                             |  | Defaults Upon Senior Securities                                                                           |  | 20  
|Item 4.                                             |  | Submission of Matters to a Vote of Security Holders                                                       |  | 20  
|Item 5.                                             |  | Other Information                                                                                         |  | 20  
|Item 6.                                             |  | Exhibits                                                                                                  |  | 20  
|Signatures                                          |  | 21                                                                                                       
|                                                    | 
|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

AirTran Holdings, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)



|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|---------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------ | - | ------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                         |  | Three months endedSeptember 30, |         |   | Nine months endedSeptember 30, |  
|                                         |  | 2007                            |         |   | 2006                           |   |         | 2007 |  |   | 2006      |  
|Operating Revenues:                      |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Passenger                                |  | $                               | 580,558 |   |                                | $ | 466,766 |      |  | $ | 1,644,987 |   |  | $ | 1,375,064 |  
|Cargo                                    |  |                                 | 1,075   |   |                                |   | 864     |      |  |   | 3,133     |   |  |   | 2,943     |  
|Other                                    |  |                                 | 26,922  |   |                                |   | 19,227  |      |  |   | 78,027    |   |  |   | 52,561    |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Total operating revenues                 |  |                                 | 608,555 |   |                                |   | 486,857 |      |  |   | 1,726,147 |   |  |   | 1,430,568 |  
|Operating Expenses:                      |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Aircraft fuel                            |  |                                 | 214,867 |   |                                |   | 190,716 |      |  |   | 582,535   |   |  |   | 511,866   |  
|Salaries, wages and benefits             |  |                                 | 118,733 |   |                                |   | 98,862  |      |  |   | 337,422   |   |  |   | 287,635   |  
|Aircraft rent                            |  |                                 | 60,582  |   |                                |   | 59,429  |      |  |   | 182,142   |   |  |   | 170,081   |  
|Maintenance, materials and repairs       |  |                                 | 40,009  |   |                                |   | 29,105  |      |  |   | 111,733   |   |  |   | 97,339    |  
|Distribution                             |  |                                 | 23,020  |   |                                |   | 18,065  |      |  |   | 65,823    |   |  |   | 53,749    |  
|Landing fees and other rents             |  |                                 | 31,382  |   |                                |   | 27,660  |      |  |   | 90,562    |   |  |   | 76,693    |  
|Aircraft insurance and security services |  |                                 | 6,228   |   |                                |   | 6,596   |      |  |   | 17,859    |   |  |   | 18,881    |  
|Marketing and advertising                |  |                                 | 10,238  |   |                                |   | 12,527  |      |  |   | 31,518    |   |  |   | 35,529    |  
|Depreciation                             |  |                                 | 13,084  |   |                                |   | 7,360   |      |  |   | 34,872    |   |  |   | 19,642    |  
|Other operating                          |  |                                 | 51,946  |   |                                |   | 40,528  |      |  |   | 148,648   |   |  |   | 120,393   |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Total operating expenses                 |  |                                 | 570,089 |   |                                |   | 490,848 |      |  |   | 1,603,114 |   |  |   | 1,391,808 |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Operating Income (Loss)                  |  |                                 | 38,466  |   |                                |   | (3,991  | )    |  |   | 123,033   |   |  |   | 38,760    |  
|Other (Income) Expense:                  |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Interest income                          |  |                                 | (5,517  | ) |                                |   | (6,369  | )    |  |   | (16,015   | ) |  |   | (16,422   | )
|Interest expense                         |  |                                 | 20,099  |   |                                |   | 13,459  |      |  |   | 55,082    |   |  |   | 35,796    |  
|Capitalized interest                     |  |                                 | (2,247  | ) |                                |   | (3,503  | )    |  |   | (7,092    | ) |  |   | (9,798    | )
|Gain on sale of aircraft                 |  |                                 |        |   |                                |   |        |      |  |   | (6,234    | ) |  |   |          |  
|Midwest exchange offer expenses          |  |                                 | 10,650  |   |                                |   |        |      |  |   | 10,650    |   |  |   |          |  
|Other                                    |  |                                 | (1,596  | ) |                                |   |        |      |  |   | (1,440    | ) |  |   |          |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Other (income) expense, net              |  |                                 | 21,389  |   |                                |   | 3,587   |      |  |   | 34,951    |   |  |   | 9,576     |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Income (Loss) Before Income Taxes        |  |                                 | 17,077  |   |                                |   | (7,578  | )    |  |   | 88,082    |   |  |   | 29,184    |  
|Income tax expense (benefit)             |  |                                 | 6,440   |   |                                |   | (3,010  | )    |  |   | 33,228    |   |  |   | 10,915    |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Net Income (Loss)                        |  | $                               | 10,637  |   |                                | $ | (4,568  | )    |  | $ | 54,854    |   |  | $ | 18,269    |  
|                                         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Earnings (Loss) per Common Share         |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Basic                                    |  | $                               | 0.12    |   |                                | $ | (0.05   | )    |  | $ | 0.60      |   |  | $ | 0.20      |  
|Diluted                                  |  | $                               | 0.11    |   |                                | $ | (0.05   | )    |  | $ | 0.57      |   |  | $ | 0.20      |  
|Weighted-average Shares Outstanding      |  |                                 |         |   |                                |   |         |      |  |   |           |   |  |   |           |  
|Basic                                    |  |                                 | 91,642  |   |                                |   | 90,923  |      |  |   | 91,502    |   |  |   | 90,305    |  
|Diluted                                  |  |                                 | 93,114  |   |                                |   | 90,923  |      |  |   | 104,282   |   |  |   | 92,377    |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Balance Sheets

(In thousands)



|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|---------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                         |  | September 30,2007 |           |   | December 31,2006 |  
|                                                                                                                                         |  | (Unaudited)       |           |   |                  |  
|ASSETS                                                                                                                                   |  |                   |           |   |                  |   |           |  
|Current Assets:                                                                                                                          |  |                   |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                |  | $                 | 163,938   |   |                  | $ | 159,100   |  
|Restricted cash                                                                                                                          |  |                   | 28,307    |   |                  |   | 24,815    |  
|Short-term investments                                                                                                                   |  |                   | 192,625   |   |                  |   | 151,100   |  
|Accounts receivable, less allowance of $1,047 and $1,180 at September 30, 2007 and December 31, 2006, respectively                       |  |                   | 68,311    |   |                  |   | 38,613    |  
|Spare parts and supplies, less allowance for obsolescence of $2,139 and $1,749 at September 30, 2007 and December 31, 2006,
respectively |  |                   | 31,701    |   |                  |   | 9,554     |  
|Deferred income taxes                                                                                                                    |  |                   | 9,221     |   |                  |   | 8,854     |  
|Fuel derivative contracts                                                                                                                |  |                   | 9,763     |   |                  |   |          |  
|Prepaid expenses and other current assets                                                                                                |  |                   | 45,141    |   |                  |   | 24,921    |  
|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|Total current assets                                                                                                                     |  |                   | 549,007   |   |                  |   | 416,957   |  
|Property and Equipment:                                                                                                                  |  |                   |           |   |                  |   |           |  
|Flight equipment                                                                                                                         |  |                   | 1,249,435 |   |                  |   | 885,738   |  
|Less: Accumulated depreciation                                                                                                           |  |                   | (85,543   | ) |                  |   | (60,921   | )
|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|                                                                                                                                         |  |                   | 1,163,892 |   |                  |   | 824,817   |  
|Purchase deposits for flight equipment                                                                                                   |  |                   | 115,706   |   |                  |   | 119,895   |  
|Other property and equipment                                                                                                             |  |                   | 117,594   |   |                  |   | 113,214   |  
|Less: Accumulated depreciation                                                                                                           |  |                   | (39,907   | ) |                  |   | (42,697   | )
|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|                                                                                                                                         |  |                   | 77,687    |   |                  |   | 70,517    |  
|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|Total property and equipment                                                                                                             |  |                   | 1,357,285 |   |                  |   | 1,015,229 |  
|Other Assets:                                                                                                                            |  |                   |           |   |                  |   |           |  
|Goodwill                                                                                                                                 |  |                   | 8,350     |   |                  |   | 8,350     |  
|Trademarks and trade names                                                                                                               |  |                   | 21,567    |   |                  |   | 21,567    |  
|Debt issuance costs                                                                                                                      |  |                   | 15,741    |   |                  |   | 11,929    |  
|Deferred income taxes                                                                                                                    |  |                   |          |   |                  |   | 7,772     |  
|Prepaid aircraft rent                                                                                                                    |  |                   | 79,805    |   |                  |   | 70,802    |  
|Other assets                                                                                                                             |  |                   | 63,801    |   |                  |   | 50,976    |  
|                                                                                                                                         |  |                   |           |   |                  |   |           |  
|Total Assets                                                                                                                             |  | $                 | 2,095,556 |   |                  | $ | 1,603,582 |  
|                                                                                                                                         |  |                   |           |   |                  |   |           |  

(Continued on next page)



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Balance Sheets (Continued)

(In thousands)



|                                             |  |                   |           |                  |   |           |  
|-------------------------------------------- |  | ----------------- | --------- | ---------------- | - | --------- | -
|                                             |  | September 30,2007 |           | December 31,2006 |  
|                                             |  | (Unaudited)       |           |                  |  
|LIABILITIES AND STOCKHOLDERS EQUITY         |  |                   |           |                  |   |           |  
|Current Liabilities:                         |  |                   |           |                  |   |           |  
|Accounts payable                             |  | $                 | 49,878    |                  | $ | 35,050    |  
|Accrued and other liabilities                |  |                   | 149,474   |                  |   | 127,254   |  
|Air traffic liability                        |  |                   | 242,865   |                  |   | 148,938   |  
|Current portion of capital lease obligations |  |                   | 1,032     |                  |   | 876       |  
|Current portion of long-term debt            |  |                   | 104,943   |                  |   | 85,969    |  
|                                             |  |                   |           |                  |   |           |  
|Total current liabilities                    |  |                   | 548,192   |                  |   | 398,087   |  
|Long-term capital lease obligations          |  |                   | 12,188    |                  |   | 12,979    |  
|Long-term debt                               |  |                   | 956,806   |                  |   | 711,286   |  
|Other liabilities                            |  |                   | 103,013   |                  |   | 101,947   |  
|Deferred income taxes                        |  |                   | 29,242    |                  |   |          |  
|Commitments and Contingencies                |  |                   |           |                  |   |           |  
|Stockholders Equity:                        |  |                   |           |                  |   |           |  
|Common stock                                 |  |                   | 91        |                  |   | 91        |  
|Additional paid-in-capital                   |  |                   | 394,534   |                  |   | 389,043   |  
|Other comprehensive income (loss)            |  |                   | 1,235     |                  |   | (5,252    | )
|Accumulated earnings (deficit)               |  |                   | 50,255    |                  |   | (4,599    | )
|                                             |  |                   |           |                  |   |           |  
|Total stockholders equity                   |  |                   | 446,115   |                  |   | 379,283   |  
|                                             |  |                   |           |                  |   |           |  
|Total Liabilities and Stockholders Equity   |  | $                 | 2,095,556 |                  | $ | 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)



|                                                                                  |  |                                 |            |   |      |   |            |  
|--------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                                                  |  | Nine Months Ended September 30, |           
|                                                                                  |  | 2007                            |            |   | 2006 |  
|Operating activities:                                                             |  |                                 |            |   |      |   |            |  
|Net Income                                                                        |  | $                               | 54,854     |   |      | $ | 18,269     |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                 |            |   |      |   |            |  
|Depreciation and amortization                                                     |  |                                 | 36,359     |   |      |   | 21,717     |  
|Amortization of deferred gains from sale/leaseback of aircraft                    |  |                                 | (3,357     | ) |      |   | (3,289     | )
|Midwest exchange offer expenses                                                   |  |                                 | 10,650     |   |      |   |           |  
|Provisions for uncollectible accounts                                             |  |                                 | 1,149      |   |      |   | 1,122      |  
|(Gain) loss on asset disposals                                                    |  |                                 | (3,506     | ) |      |   | 1,153      |  
|Deferred income tax expense                                                       |  |                                 | 33,228     |   |      |   | 10,915     |  
|Stock-based compensation                                                          |  |                                 | 3,706      |   |      |   | 3,284      |  
|Changes in certain assets and liabilities:                                        |  |                                 |            |   |      |   |            |  
|Restricted cash                                                                   |  |                                 | (3,492     | ) |      |   | (3,891     | )
|Accounts receivable                                                               |  |                                 | (30,847    | ) |      |   | (14,797    | )
|Spare parts, materials and supplies                                               |  |                                 | (22,537    | ) |      |   | (7,797     | )
|Other assets                                                                      |  |                                 | (33,547    | ) |      |   | (42,911    | )
|Prepaid aircraft rent                                                             |  |                                 | (9,053     | ) |      |   | (5,106     | )
|Accounts payable, accrued and other liabilities                                   |  |                                 | 44,323     |   |      |   | 36,459     |  
|Air traffic liability                                                             |  |                                 | 93,927     |   |      |   | 59,458     |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash provided by operating activities                                         |  |                                 | 171,857    |   |      |   | 74,586     |  
|Investing activities:                                                             |  |                                 |            |   |      |   |            |  
|Purchases of property and equipment                                               |  |                                 | (158,315   | ) |      |   | (65,610    | )
|Purchases of available-for-sale securities                                        |  |                                 | (1,587,925 | ) |      |   | (2,030,940 | )
|Return (payment) of aircraft purchase deposits, net                               |  |                                 | 12,418     |   |      |   | (30,640    | )
|Sales of available-for-sale securities                                            |  |                                 | 1,546,400  |   |      |   | 1,835,065  |  
|Proceeds from sale of aircraft                                                    |  |                                 | 72,879     |   |      |   |           |  
|Midwest exchange offer expenses                                                   |  |                                 | (10,348    | ) |      |   |           |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash used for investing activities                                            |  |                                 | (124,891   | ) |      |   | (292,125   | )
|Financing activities:                                                             |  |                                 |            |   |      |   |            |  
|Issuance of long-term debt                                                        |  |                                 | 46,720     |   |      |   | 56,244     |  
|Payments on long-term debt                                                        |  |                                 | (84,740    | ) |      |   | (44,545    | )
|Debt issuance costs                                                               |  |                                 | (5,893     | ) |      |   | (3,308     | )
|Proceeds from exercise of stock options and employee stock purchase plan          |  |                                 | 1,785      |   |      |   | 11,487     |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Net cash (used for) provided by financing activities                              |  |                                 | (42,128    | ) |      |   | 19,878     |  
|Net change in cash and cash equivalents                                           |  |                                 | 4,838      |   |      |   | (197,661   | )
|Cash and cash equivalents at beginning of period                                  |  |                                 | 159,100    |   |      |   | 370,572    |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Cash and cash equivalents at end of period                                        |  | $                               | 163,938    |   |      | $ | 172,911    |  
|                                                                                  |  |                                 |            |   |      |   |            |  
|Supplemental Disclosure of Cash Flow Activities:                                  |  |                                 |            |   |      |   |            |  
|Non-cash investing and financing activities                                       |  |                                 |            |   |      |   |            |  
|Purchase of equipment in exchange for debt                                        |  | $                               | 293,650    |   |      | $ | 203,600    |  

See accompanying Notes to Condensed Consolidated Financial Statements.



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##### Table of Contents

AirTran Holdings, Inc.

Condensed Consolidated Statement of Stockholders Equity

(In thousands)

(Unaudited)



|                                                                                             |  |              |  |                          |    |                                            |   |         |                              |   |        |                          |  |   |        |   |  |   |        
|-------------------------------------------------------------------------------------------- |  | ------------ |  | ------------------------ | -- | ------------------------------------------ | - | ------- | ---------------------------- | - | ------ | ------------------------ |  | - | ------ | - |  | - | -------
|                                                                                             |  | Common
Stock |  | AdditionalPaid-inCapital |    | AccumulatedOtherComprehensive(Loss) Income |   |         | AccumulatedEarnings(Deficit) |   |        | TotalStockholdersEquity
|                                                                                             |  | Shares       |  | Amount                   |    |                                            |   |        
|Balance at January 1, 2007                                                                   |  | 91,160       |  | $                        | 91 |                                            | $ | 389,043 |                              | $ | (5,252 | )                        |  | $ | (4,599 | ) |  | $ | 379,283
|Net income                                                                                   |  |             |  |                          |   |                                            |   |        |                              |   |       |                          |  |   | 54,854 |   |  |   | 54,854 
|Unrealized gain on derivative instruments, net of income taxes of $3.1 million               |  |             |  |                          |   |                                            |   |        |                              |   | 5,242  |                          |  |   |       |   |  |   | 5,242  
|Reclassification of post retirement expense to earnings, net of income taxes of $0.6 million |  |             |  |                          |   |                                            |   |        |                              |   | 1,245  |                          |  |   |       |   |  |   | 1,245  
|                                                                                             |  |              |  |                          |    |                                            |   |         |                              |   |        |                          |  |   |        |   |  |   |        
|Total comprehensive income                                                                   |  |              |  |                          |    |                                            |   |         |                              |   |        |                          |  |   |        |   |  |   | 61,341 
|Issuance of common stock for exercise of options                                             |  | 159          |  |                          |   |                                            |   | 754     |                              |   |       |                          |  |   |       |   |  |   | 754    
|Share-based compensation                                                                     |  | 274          |  |                          |   |                                            |   | 3,706   |                              |   |       |                          |  |   |       |   |  |   | 3,706  
|Issuance of common stock under employee stock purchase plan                                  |  | 96           |  |                          |   |                                            |   | 1,031   |                              |   |       |                          |  |   |       |   |  |   | 1,031  
|                                                                                             |  |              |  |                          |    |                                            |   |         |                              |   |        |                          |  |   |        |   |  |   |        
|Balance at September 30, 2007                                                                |  | 91,689       |  | $                        | 91 |                                            | $ | 394,534 |                              | $ | 1,235  |                          |  | $ | 50,255 |   |  | $ | 446,115
|                                                                                             |  |              |  |                          |    |                                            |   |         |                              |   |        |                          |  |   |        |   |  |   |        

See accompanying Notes to Condensed Consolidated Financial Statements.



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AIRTRAN HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1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, except as otherwise disclosed, 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/A 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 55 locations,
primarily in short-haul markets in the eastern United States.

Our 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.

We manage our operations on a system-wide basis 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 and Restatement

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

As previously disclosed, in August 2007 we amended our Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form
10-Q for the quarter ended March 31, 2007 to correct the misallocation of certain amounts between passenger revenues and certain transportation-related taxes with respect to passenger upgrade revenue transactions, the result of which
amendments was to decrease passenger revenues and increase accrued liabilities in the applicable periods. The misallocations had resulted in overstatements of passenger revenues of less than 0.1 percent of our passenger revenues during each
applicable period. Although we concluded the rollover impact of the errors was not material to our results of operations for any individual interim or annual period, we concluded that restatement of our previously issued financial
statements was required 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 Statementsbecause
the cumulative effect of the errors was material to the year ended December 31, 2006.

New Accounting Pronouncements

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 income
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 as of January 1, 2007. The impact of adopting FIN 48 was not material as of the date of adoption or in subsequent periods.

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 will adopt SFAS 157 effective January 1, 2008. 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 of Financial Accounting Standards
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. SFAS 159 is effective for fiscal years beginning after November 15, 2007, and early application is allowed under certain circumstances. We will adopt SFAS 159
effective January 1, 2008. We have not yet determined whether we will elect to measure items within the scope of SFAS 159 at fair value and, as a result, we have not assessed the potential impact, if any, that the adoption of SFAS 159 will have
on our financial position or results of operations.



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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. Restricted 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 charged to expense on a straight-line basis over the respective vesting period (generally three years). During the first nine
months of 2007 and 2006, we granted restricted stock awards for approximately 412,000 shares and 470,000 shares, respectively, and approximately 274,000 and 253,000 shares, respectively, of restricted stock vested.

Compensation expense for our restricted stock grants was $1.2 million and $3.7 million during the three and nine months ended September 30, 2007, respectively, and
$1.2 million and $3.3 million during the three and nine months ended September 30, 2006, respectively. As of September 30, 2007, we have $7.9 million in total unrecognized future compensation expense that will be recognized over the next
three years relating to awards for approximately 896,000 restricted shares which were outstanding at such date but which had not yet vested. Unvested restricted shares are not included in reported common shares outstanding amounts.

As of September 30, 2007, options to purchase 3.2 million shares of common stock, at exercise prices between $2.78 and $13.80 per share were outstanding. All
outstanding options to purchase common shares were exercisable as of September 30, 2007.

Note 3Earnings Per Common Share

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



|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|--------------------------------------------------------------------- |  | -------------------------------- | ------ | ---- | ------------------------------- | ------ | ---- |  | ---- | ------- |  | - | ------
|                                                                      |  | Three months ended September 30, |        |      | Nine months ended September 30,
|(in thousands, except per share amounts)                              |  | 2007                             |        | 2006 |                                 |        | 2007 |  | 2006
|NUMERATOR:                                                            |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Net income (loss) available to common stockholders                    |  | $                                | 10,637 |      | $                               | (4,568 | )    |  | $    | 54,854  |  | $ | 18,269
|Plus income effect of assumed conversion-interest on convertible debt |  |                                  |       |      |                                 |       |      |  |      | 4,108   |  |   |      
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Income (loss) after assumed conversion, diluted                       |  | $                                | 10,637 |      | $                               | (4,568 | )    |  | $    | 58,962  |  | $ | 18,269
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|DENOMINATOR:                                                          |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Weighted-average shares outstanding, basic                            |  |                                  | 91,642 |      |                                 | 90,923 |      |  |      | 91,502  |  |   | 90,305
|Effect of dilutive securities:                                        |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Stock options                                                         |  |                                  | 903    |      |                                 |       |      |  |      | 985     |  |   | 1,318 
|Convertible debt                                                      |  |                                  |       |      |                                 |       |      |  |      | 11,241  |  |   |      
|Stock warrants                                                        |  |                                  |       |      |                                 |       |      |  |      |        |  |   | 260   
|Restricted stock                                                      |  |                                  | 569    |      |                                 |       |      |  |      | 554     |  |   | 494   
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Diluted shares                                                        |  |                                  | 93,114 |      |                                 | 90,923 |      |  |      | 104,282 |  |   | 92,377
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|EARNINGS (LOSS) PER COMMON SHARE:                                     |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Basic                                                                 |  | $                                | 0.12   |      | $                               | (0.05  | )    |  | $    | 0.60    |  | $ | 0.20  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       
|Diluted                                                               |  | $                                | 0.11   |      | $                               | (0.05  | )    |  | $    | 0.57    |  | $ | 0.20  
|                                                                      |  |                                  |        |      |                                 |        |      |  |      |         |  |   |       

Note 4Commitments and Contingencies

Aircraft Purchase Commitments

During the nine months ended September 30, 2007, we took delivery of ten
purchased B737 aircraft, excluding two aircraft as discussed below. As of September 30, 2007, we had on order 63 B737 aircraft with delivery dates between 2008 and 2012. The table below summarizes all aircraft scheduled for delivery:



|      |  |                             
|----- |  | ----------------------------
|      |  | Firm Aircraft DeliveriesB737
|2008  |  | 10                          
|2009  |  | 14                          
|2010  |  | 14                          
|2011  |  | 13                          
|2012  |  | 12                          
|      |  |                             
|Total |  | 63                          
|      |  |                             



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In May 2007, we took delivery of and subsequently sold two aircraft for cash proceeds of $77.9 million, of which $5.0
million was received prior to 2007. We recognized a gain of $6.2 million related to the sale of these two aircraft. Unless otherwise expressly indicated, all aircraft delivery totals are net of these two deliveries.

In June 2007, we entered into an amendment to an agreement with an aircraft manufacturer to purchase an additional 15 B737 aircraft. The newly-ordered aircraft are
scheduled to be delivered during 2011 and 2012. Also, pursuant to that same amendment, we agreed to reschedule the delivery positions for six B737 aircraft on firm order. The aircraft originally scheduled to be delivered during the second half of
2008 and first half of 2009 are now scheduled to be delivered during 2011. In October 2007 we rescheduled the delivery dates for three B737 aircraft on firm order. The new orders and revised delivery dates are reflected in the table above.

Aircraft purchase contracts typically require the purchaser to make pre-delivery deposits to the manufacturer. We have arranged pre-delivery deposit
financing for a portion of our pre-delivery deposit requirements for aircraft scheduled to be delivered in 2008, 2009, and some in 2010. The pre-delivery deposit financing typically funds between 75 percent and 80 percent of our pre-delivery deposit
obligation for any given aircraft.

Our aircraft purchase commitments for the remainder of 2007 and for the next five years, in aggregate, are (in
thousands): 2007 -$4,100; 2008$391,300; 2009$508,000; 2010$518,600; 2011$462,300; and 2012$401,300. These amounts include payment commitments, including payment of pre-delivery deposits, for aircraft on firm order.
Payment commitments include the forecasted impact of contractual price escalations. The aircraft purchase commitment totals do not reflect the effects of prearranged aircraft financings.

Aircraft Financing Arrangements

Of the 63 B737 aircraft we have on order, we have secured debt financing for
nine B737 aircraft scheduled for delivery 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 decreases in the availability of aviation fuel include the utilization of fuel pricing arrangements in
purchase contracts with fuel suppliers covering a portion of our anticipated fuel requirements. The fuel pricing arrangements consist of both fixed price and collar arrangements. Because these contracts are accounted for under the normal purchase
exception included in Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging Activities (SFAS 133), these contracts are not considered derivative financial instruments for financial
reporting purposes. As of September 30, 2007, utilizing such contracts, we had committed to purchase 21.2 million gallons of aviation fuel at an estimated weighted average price per gallon, excluding taxes and related fees, of $2.20 during
the remainder of 2007. This represents 22.9 percent of our anticipated fuel needs for the remainder of 2007. As of September 30, 2007, we had no fuel pricing arrangements with fuel suppliers for 2008. For a discussion of jet-fuel derivative
financial instruments, see Note 6.

Credit Card Arrangements

We have agreements with organizations that process credit card transactions arising from purchases of air travel by our customers. 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 us (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 September 30, 2007 we were in compliance with our credit card arrangements and we had holdbacks with only one processor. The holdback with this
processor was 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 and may be as high as the estimated liability for future air travel purchased with Visa and MasterCard cards (which liability was $192.7 million as of
September 30, 2007). As of September 30, 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. Historically, we have not incurred significant costs related to such indemnifications. 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.



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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.

Taxes

We remit a variety of
taxes and fees to various governmental authorities including: income taxes; transportation fees and taxes collected from our customers; property taxes; sales and use taxes; and fuel taxes. The taxes and fees remitted by us are subject to review and
audit by the applicable governmental authorities which could result in liability for additional assessments. Contingencies for taxes which are not based on income are accounted for in accordance with Statement of Financial Accounting Standards
No. 5, Accounting for Contingencies. Uncertain income tax positions taken on income tax returns are accounted for in accordance with FIN 48, effective January 1, 2007. Although management believes that the positions taken on
previously filed tax returns are reasonable, we nevertheless have recorded accrued liabilities in recognition that various taxing authorities may challenge certain of the positions we have taken, which may also potentially result in additional
liabilities for taxes and interest in excess of accrued liabilities. These accrued liabilities are reviewed periodically and are adjusted as events occur that affect the estimates, such as: the availability of new information; the lapsing of
applicable statutes of limitations; the conclusion of tax audits; the measurement of additional estimated liability based on current calculations; the identification of new tax contingencies; or the rendering of relevant court decisions.

Note 5Long-term Debt

The components of long-term debt were
(in thousands):



|                                                                                                                  |  |                   |           |                  |   |        
|----------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | ---------------- | - | -------
|                                                                                                                  |  | September 30,2007 |           | December 31,2006
|Floating rate aircraft notes payable through 2019, 6.82% weighted-average interest rate                           |  | $                 | 697,645   |                  | $ | 428,680
|Fixed rate aircraft notes payable through 2019, 7.02% weighted-average interest rate                              |  |                   | 69,979    |                  |   | 76,070 
|7.00% convertible notes due 2023                                                                                  |  |                   | 125,000   |                  |   | 125,000
|Aircraft notes payable through 2017, 10.56% weighted-average interest rate                                        |  |                   | 95,747    |                  |   | 97,322 
|Floating rate aircraft pre-delivery deposit financings payable through 2010, 7.49% weighted-average interest rate |  |                   | 73,378    |                  |   | 70,183 
|                                                                                                                  |  |                   |           |                  |   |        
|Total long-term debt                                                                                              |  |                   | 1,061,749 |                  |   | 797,255
|Less current maturities                                                                                           |  |                   | 104,943   |                  |   | 85,969 
|                                                                                                                  |  |                   |           |                  |   |        
|Long-term debt maturities                                                                                         |  | $                 | 956,806   |                  | $ | 711,286
|                                                                                                                  |  |                   |           |                  |   |        

Aircraft Purchase Financing Facilities

Through September 30, 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. During
the nine months ended September 30, 2007, we issued equipment notes in an aggregate amount of $295 million (included in floating rate aircraft notes above) under these facilities as ten aircraft were delivered. The equipment notes are scheduled
to mature through 2019, bear interest at a floating rate per annum above either the three- or six-month US Dollar LIBOR in effect at the commencement of each three- or six-month period, and require payments of principal and interest either quarterly
or semi-annually. Each note is secured by a first mortgage on the aircraft to which it relates. As of September 30, 2007, financing for nine aircraft scheduled for delivery during 2008 is committed under these facilities.

Floating Rate Aircraft Pre-delivery Deposit Financing

In June
2007, we entered into a fifth pre-delivery deposit facility for purposes of financing our obligations to make pre-delivery payments on 18 B737 aircraft on order with an aircraft manufacturer. The facilities entitle us to draw amounts up to
approximately $82 million to fund a portion of our obligations to make pre-delivery payments on the 18 B737 aircraft which have delivery dates scheduled through 2010. Drawings made under the facilities bear interest at a floating rate per annum
above one-month US Dollar LIBOR. As of September 30, 2007, $61.3 million was available under these facilities.

Letters of Credit

As of September 30, 2007, $13.8 million of restricted cash on the accompanying condensed consolidated balance sheet relates to outstanding
letters of credit, primarily for airport facilities and insurance.

Note 6Derivative Financial Instruments

During the nine months ended September 30, 2007, we entered into various jet-fuel derivative financial instruments with financial institutions to reduce the impact
of fluctuations in jet-fuel prices on future fuel expense. Our primary objective of entering into derivative instruments is to reduce the impact on our operating results of the volatility of jet-fuel prices. We do not hold or issue derivative
financial instruments for trading purposes. As of September 30, 2007, we had entered into both fuel swap arrangements and option arrangements.

Under
the fuel swap arrangements, 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. As of September 30, 2007, these contracts hedge
22.7 million gallons of our fuel purchases and represent 24.6 percent of our anticipated jet fuel consumption for the remainder of 2007. We account for the fuel swap arrangements as cash flow hedges, as defined by SFAS 133. The effective
portion of the unrealized gain or loss on the cash flow hedges is reported as a component of other comprehensive income and reclassified into earnings as an adjustment to fuel expense in the period or periods during which the hedged transaction
affects earnings. The ineffective portion of the unrealized gain or loss on the cash flow hedges is reported currently in earnings. During the three months ended September 30, 2007, the amount reclassified into earnings was $9.5 million or $6.0
million, net of tax, reducing fuel expense. Hedge ineffectiveness during the nine months ended September 30, 2007 was not material.

We have entered
into option agreements which, as of September 30, 2007, represent 2.2 percent of our anticipated requirements for the remainder of 2007 and 3.9 percent of our anticipated 2008 jet fuel requirements. Through September 30, 2007, the option
agreements did not qualify as hedges under SFAS 133 because we did not have the required documentation in place during that period. As a result, the increase in the fair value of the option agreements of $1.6 million and $1.4 million during the
three and nine months ended September 30, 2007, respectively, consisting of unrealized gains, was recorded as a component of other non-operating income. We expect to complete the documentation required under SFAS 133 on a portion of these
options during the fourth quarter and will prospectively account for these arrangements as cash flow hedges.



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During the fourth quarter of 2006 and the third quarter of 2007, 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, which expire in 2018, we pay
fixed rates between 4.92 percent and 5.085 percent and receive the London InterBank Offered Rate (LIBOR) every three months. The primary objective for our use of interest rate hedges is to reduce the impact on our operating results of 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. The fair value of the interest rate swaps included
in other assets is $0.1 million as of September 30, 2007 and December 31, 2006, respectively. 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 as an adjustment to interest expense in the period or periods during which the hedged transaction affects earnings. During the three and nine months ended September 30, 2007 amounts reclassified into earnings were not material.

Note 7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 certain of
our derivative financial instruments and the funded status of our post retirement obligations.

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



|                                         |  |                                               |        |   |                                 |   |        |                                             |  |   |        |  
|---------------------------------------- |  | --------------------------------------------- | ------ | - | ------------------------------- | - | ------ | ------------------------------------------- |  | - | ------ | -
|                                         |  | Unrealizedgain (loss) onderivativeinstruments |        |   | Postretirementbenefitobligation |   |        | Accumulated othercomprehensiveincome (loss) | 
|Balance at January 1, 2007               |  | $                                             | 84     |   |                                 | $ | (5,336 | )                                           |  | $ | (5,252 | )
|2007 changes in fair value, net of tax   |  |                                               | 11,226 |   |                                 |   |       |                                             |  |   | 11,226 |  
|Reclassification to earnings, net of tax |  |                                               | (5,984 | ) |                                 |   | 1,245  |                                             |  |   | (4,739 | )
|                                         |  |                                               |        |   |                                 |   |        |                                             |  |   |        |  
|Balance at September 30, 2007            |  | $                                             | 5,326  |   |                                 | $ | (4,091 | )                                           |  | $ | 1,235  |  
|                                         |  |                                               |        |   |                                 |   |        |                                             |  |   |        |  

Note 8Withdrawal of Offer to Acquire Midwest Air Group

On August 12, 2007, we announced that our exchange offer for all of the outstanding shares of Midwest Air Group, Inc. (Midwest) had terminated and on August 17,
2007, we announced that we had terminated all our efforts to acquire Midwest in a negotiated transaction. As of September 30, 2007, costs associated with the proposed acquisition, including the exchange offer, were approximately $10.7 million,
and consisted primarily of fees for attorneys, accountants, investment bankers, travel and other related charges. All costs related to the proposed acquisition were charged to Other (income) expense during the three months ended September 30,
2007.



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##### Table of Contents

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

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 and fare levels, 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 except as may be required by law.

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 October 1, 2007, we operated 87 Boeing
717-200 (B717) and 50 Boeing 737-700 (B737) aircraft offering 762 scheduled flights per day to 55 locations across the United States. We offer very competitive fares by concentrating on keeping our unit costs low. A key to our success is the
enthusiasm and skill of the AirTran employees.

During the three months ended September 30, 2007, we continued our track record of operating
profitably. We reported operating income of $38.5 million, net income of $10.6 million and diluted earnings per common share of $0.11. Our net income was negatively impacted by a non-operating charge of $10.7 million to expense the costs we incurred
in connection with our exchange offer for all of the outstanding shares of Midwest Air Group, Inc. (Midwest), which we withdrew during the third quarter. We set new third quarter records for passengers, traffic and capacity.

During the nine months ended September 30, 2007, we continued our growth by taking delivery of ten B737 aircraft bringing our total fleet to 137 aircraft at period
end. Since September 30, 2006, we have taken delivery of 16 B737 aircraft. As a result, our capacity, as measured by available seat miles, increased by 20.9 percent compared to the third quarter of 2006. Revenue passenger seat miles increased
by 32.3 percent, resulting in a record load factor of 80.1 percent, an increase of 6.9 percentage points from the prior year third quarter.

Highlights
from the first nine months ended September 30, 2007 included the following:



| |  |  | Carried in excess of 17.8 million revenue passengers.
| | - |  | -----------------------------------------------------



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



| |  |  | Initiated new service to Daytona Beach, Phoenix, Newburgh, N.Y., San Diego, St. Louis, Charleston, and Portland, Maine.
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | Launched over 37 new non-stop routes.
| | - |  | -------------------------------------

We will face
several challenges through the remainder of the year and into 2008. 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.

Based on our current outlook, we expect capacity as measured by ASMs to increase by approximately 15 percent for the fourth quarter 2007 and by 19 percent for
the year ended December 31, 2007 compared to the analogous previous periods. Also, we currently expect unit revenue as measured by RASM to increase between eight and nine percent during the fourth quarter of 2007 compared to the fourth quarter
of 2006. Non-fuel unit operating cost per ASM is expected to be relatively flat to up one percent in the fourth quarter of 2007 compared to the fourth quarter of 2006. Non-fuel unit operating cost per ASM is expected to decrease between two and four
percent for the year ended December 31, 2007. Our capacity is expected to grow by approximately 10.5 percent in 2008. Additionally, we expect our 2008 non-fuel unit operating costs to be flat to down 1% compared to 2007.



11



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##### Table of Contents

RESULTS OF OPERATIONS

For the three and nine months ended September 30, 2007 and 2006

The table below sets forth selected financial and operating
data for the three months and nine months ended September 30, 2007 and 2006:



|                                                                                   |  |                                 |            |   |                             |   |            |   |  |      |       
|---------------------------------------------------------------------------------- |  | ------------------------------- | ---------- | - | --------------------------- | - | ---------- | - |  | ---- | ------
|                                                                                   |  | Three Months EndedSeptember 30, |            |   | Percent Increase (Decrease) |  
|                                                                                   |  | 2007                            |            |   | 2006                        |   |           
|Revenue passengers                                                                 |  |                                 | 6,442,786  |   |                             |   | 5,137,151  |   |  | 25.4 |       
|Revenue passenger miles (RPM) (000s)(1)                                            |  |                                 | 4,808,682  |   |                             |   | 3,635,238  |   |  | 32.3 |       
|Available seat miles (ASM) (000s)(2)                                               |  |                                 | 6,005,231  |   |                             |   | 4,965,224  |   |  | 20.9 |       
|Passenger load factor(3)                                                           |  |                                 | 80.1       | % |                             |   | 73.2       | % |  | 6.9  | pts.  
|Break-even load factor(4)                                                          |  |                                 | 77.7       | % |                             |   | 74.4       | % |  | 3.3  | pts.  
|Average fare (excluding transportation taxes)(5)                                   |  | $                               | 90.11      |   |                             | $ | 90.86      |   |  | (0.8 | )     
|Average yield per RPM(6)                                                           |  |                                 | 12.07      | ¢ |                             |   | 12.84      | ¢ |  | (6.0 | )     
|Passenger revenue per ASM (RASM)(7)                                                |  |                                 | 9.67       | ¢ |                             |   | 9.40       | ¢ |  | 2.9  |       
|Operating cost per ASM (CASM)(8)                                                   |  |                                 | 9.49       | ¢ |                             |   | 9.89       | ¢ |  | (4.0 | )     
|Average stage length (miles)(9)                                                    |  |                                 | 710        |   |                             |   | 659        |   |  | 7.7  |       
|Average cost of aircraft fuel per gallon, including fuel taxes and into-plane fees |  | $                               | 2.25       |   |                             | $ | 2.33       |   |  | (3.4 | )     
|Average daily utilization (hours: minutes)(10)                                     |  |                                 | 11:12      |   |                             |   | 11:06      |   |  | 0.9  |       
|Number of operating aircraft in fleet at end of period                             |  |                                 | 137        |   |                             |   | 121        |   |  |      |       
|                                                                                   |  |                                
|                                                                                   |  | Nine months ended September 30, |            |   | PercentIncrease (Decrease)  |  
|                                                                                   |  | 2007                            |            |   | 2006                        |   |           
|Revenue passengers                                                                 |  |                                 | 17,845,917 |   |                             |   | 15,033,987 |   |  | 18.7 |       
|Revenue passenger miles (RPM) (000s)(1)                                            |  |                                 | 12,984,173 |   |                             |   | 10,398,268 |   |  | 24.9 |       
|Available seat miles (ASM) (000s)(2)                                               |  |                                 | 16,960,337 |   |                             |   | 14,026,038 |   |  | 20.9 |       
|Passenger load factor(3)                                                           |  |                                 | 76.6       | % |                             |   | 74.1       | % |  | 2.5  | pts.  
|Break-even load factor(4)                                                          |  |                                 | 72.5       | % |                             |   | 72.6       | % |  | (0.1 | ) pts.
|Average fare (excluding transportation taxes)(5)                                   |  | $                               | 92.18      |   |                             | $ | 91.46      |   |  | 0.8  |       
|Average yield per RPM(6)                                                           |  |                                 | 12.67      | ¢ |                             |   | 13.22      | ¢ |  | (4.2 | )     
|Passenger revenue per ASM (RASM)(7)                                                |  |                                 | 9.70       | ¢ |                             |   | 9.80       | ¢ |  | (1.0 | )     
|Operating cost per ASM (CASM)(8)                                                   |  |                                 | 9.45       | ¢ |                             |   | 9.92       | ¢ |  | (4.7 | )     
|Average stage length (miles)(9)                                                    |  |                                 | 694        |   |                             |   | 653        |   |  | 6.3  |       
|Average cost of aircraft fuel per gallon, including fuel taxes and into-plane fees |  | $                               | 2.16       |   |                             | $ | 2.23       |   |  | (3.1 | )     
|Average daily utilization (hours: minutes)(10)                                     |  |                                 | 11:06      |   |                             |   | 11:12      |   |  | (0.9 | )     

---

|(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 on a pre-tax basis.
|--- | ----------------------------------------------------------------------------

|(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 is operated in revenue service
|---- | ----------------------------------------------------------------------------------



12



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##### Table of Contents

For the three months ended September 30, 2007 and 2006

Summary

We recorded operating income of $38.5 million, net income of
$10.6 million and income per diluted common share of $0.11 for the third quarter of 2007. Our net income was negatively impacted by a non-operating charge of $10.7 million to expense the costs we incurred in connection with our exchange offer for
all of the outstanding shares of Midwest Air Group, Inc. (Midwest), which we withdrew during the third quarter. For the comparative period in 2006, we recorded an operating loss of $4.0 million, net loss of $4.6 million and loss per diluted common
share of $0.05.

Operating Revenues

Our operating
revenues for the three months ended September 30, 2007 increased $121.7 million (25.0 percent), primarily due to a 24.4 percent increase in passenger revenues. The increase in passenger revenues was largely due to a 32.3 percent increase in
passenger traffic as measured by revenue passenger miles (RPMs), offset by a decrease in our average yield per RPM of 6.0 percent to 12.07 cents. The decrease in yield resulted primarily from a 0.8 percent decrease in our average fare to $90.11
combined with a 5.4 percent increase in passenger average length of haul. This decrease in yield, however, was more than offset by a 6.9 percentage point increase in passenger load factor, resulting in a 2.9 percent increase in passenger unit
revenues as measured by passenger revenue per available seat mile (RASM) to 9.67 cents.

During the three months ended September 30, 2007, we
continued our growth by taking delivery of two B737 aircraft bringing our total fleet to 137 aircraft at period end. Since September 30, 2006, we have taken delivery of 16 B737 aircraft. As a result, our capacity, as measured by available seat
miles (ASMs), increased 20.9 percent. Our traffic, as measured by RPMs, increased 32.3 percent, resulting in a 6.9 percentage point increase in passenger load factor to 80.1 percent.

Operating Expenses

Our operating expenses increased by $79.2 million (16.1 percent) on an ASM increase of 20.9
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, as measured by operating expenses per ASM, for the three months ended
September 30, 2007 and 2006, respectively:



|                                         |  |                                 |   |  |                  |   |  |            |  
|---------------------------------------- |  | ------------------------------- | - |  | ---------------- | - |  | ---------- | -
|                                         |  | Three Months EndedSeptember 30, |   |  | Percent Increase |  
|                                         |  | 2007                            |   |  | 2006             |   |  | (Decrease) |  
|Aircraft fuel                            |  | 3.58                            | ¢ |  | 3.84             | ¢ |  | (6.8       | )
|Salaries, wages and benefits             |  | 1.98                            |   |  | 1.99             |   |  | (0.5       | )
|Aircraft rent                            |  | 1.01                            |   |  | 1.20             |   |  | (15.8      | )
|Maintenance, materials and repairs       |  | 0.67                            |   |  | 0.59             |   |  | 13.6       |  
|Distribution                             |  | 0.38                            |   |  | 0.36             |   |  | 5.6        |  
|Landing fees and other rents             |  | 0.52                            |   |  | 0.56             |   |  | (7.1       | )
|Aircraft insurance and security services |  | 0.10                            |   |  | 0.13             |   |  | (23.1      | )
|Marketing and advertising                |  | 0.17                            |   |  | 0.25             |   |  | (32.0      | )
|Depreciation                             |  | 0.22                            |   |  | 0.15             |   |  | 46.7       |  
|Other operating                          |  | 0.87                            |   |  | 0.82             |   |  | 6.1        |  
|                                         |  |                                 |   |  |                  |   |  |            |  
|Total CASM                               |  | 9.50                            | ¢ |  | 9.89             | ¢ |  | (3.9       | )
|                                         |  |                                 |   |  |                  |   |  |            |  

Aircraft fuel decreased 6.8 percent on a cost per ASM basis. Our fuel price per gallon, including taxes and
into-plane fees, decreased 3.4 percent from $2.33 during the third quarter of 2006 to $2.25 during the third quarter of 2007. Additionally, average fuel cost per ASM was favorably impacted by the 7.7% increase in our average length of our flights,
as aircraft use less fuel per ASM on longer flights, and the addition of B737 aircraft to our fleet, which increased our average aircraft size and further contributed to lower fuel costs per ASM. Larger aircraft generally use less fuel per ASM than
do smaller aircraft.

Aircraft rent decreased 15.8 percent on a cost per ASM basis. Since September 30, 2006, we have taken delivery of 16 B737
aircraft. As a result, our capacity, as measured by ASMs, increased 20.9 percent. However, of the 16 aircraft we have taken delivery of since September 30, 2006, none were leased. As a result, aircraft rent expense increased only 1.9 percent
period over period, despite the increase in ASMs.

Maintenance, materials and repairs increased 13.6 percent on a cost per ASM basis. The increase
is due primarily to a higher number of heavy maintenance and other one-time maintenance events in the third quarter of 2007, including multiple checks, as compared to the three months ended September 30, 2006. Maintenance costs per block hour
were approximately $288 compared to $241 in 2006, representing a 19.5 percent increase in maintenance costs per block hour.

Distributionincreased
5.6 percent on a cost per ASM basis. The increase is due primarily to higher credit card fees paid to various credit card companies.

Landing fees and
other rents decreased 7.1 percent on a cost per ASM basis. Although there were rental rate increases implemented by various airport authorities, the total increase in expenses of 13.5 percent was offset by an ASM increase of 20.9 percent.



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##### Table of Contents

Aircraft insurance and security services decreased 23.1 percent on a cost per ASM basis. While the addition of 16
new Boeing aircraft to our fleet since September 30, 2006, increased our total insured hull value and related insurance premiums, the decrease on a cost per ASM basis was due to a reduction in hull and liability insurance rates for our fleet
coverage.

Marketing and advertising decreased 32.0 percent on a cost per 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 46.7 percent on a cost per ASM
basis, primarily due to the purchase of 16 B737 aircraft since September 30, 2006 and purchases of spare aircraft parts for our B737 aircraft fleet.

Other operating increased 6.1 percent on a cost per ASM basis, primarily due to higher ground handling and contracted services costs.

Non-operating Expenses

Other (income) expense, net increased by $17.8 million due to higher interest costs and expenses associated
with our Midwest exchange offer. Interest expense increased by $6.6 million primarily due to the effect of aircraft debt financings entered into during 2006 and 2007. Capitalized interest decreased by $1.3 million due to the delivery of 16 purchased
aircraft since September 30, 2006. Capitalized interest represents interest on purchase deposits for future aircraft. These amounts are recorded as part of the cost of the aircraft upon delivery. Other income increased by $1.6 million due to
unrealized gains on our fuel option agreements.

On August 12, 2007, we announced that our exchange offer for all of the outstanding shares of Midwest
had terminated and on August 17, 2007, we announced that we had terminated all our efforts to acquire Midwest in a negotiated transaction. As of September 30, 2007, costs associated with the proposed acquisition, including the exchange
offer, were $10.7 million, and consisted primarily of fees for attorneys, accountants, investment bankers, travel and other related charges. All costs related to the proposed acquisition were charged to Other (income) expense during the three months
ended September 30, 2007.

In August 2007, the FASB issued for comment an exposure draft of a proposed FASB Staff Position APB 14-a that would change
the accounting for certain convertible debt instruments, including our 7.0% Convertible Notes due 2023. Under the proposed new rules, for convertible debt instruments that may be settled entirely or partially in cash upon conversion, an entity
should separately account for the liability and equity components of the instrument in a manner that reflects the issuers economic interest cost. The effect of the proposed new rules for the convertible notes is that the equity component would
be included in the paid-in-capital section of stockholders equity on our balance sheet and the value of the equity component would be treated as an original issue discount for purposes of accounting for the debt component of the convertible
notes. Higher interest expense would result by recognizing the accretion of the discounted carrying value of the convertible notes to their face amount as interest expense over the term of convertible notes using an effective interest rate method of
amortization. We believe the FASB plans to issue final guidance in late 2007. This proposed FSP is expected to be effective for our fiscal year beginning January 1, 2008, would not permit early application and would be applied retrospectively
to all periods presented.

For the nine months ended September 30, 2007 and 2006

Summary

We recorded operating income of $123 million, net income of
$54.9 million and diluted earnings per common share of $0.57 for the nine months ended September 30, 2007. Our net income was negatively impacted by a non-operating charge of $10.7 million to expense the costs we incurred in connection with our
exchange offer for all of the outstanding shares of Midwest, which we withdrew during the third quarter. For the comparative period in 2006, we recorded operating income of $38.8 million, net income of $18.3 million and diluted earnings per common
share of $0.20.

Operating Revenues

Our operating
revenues for the nine months ended September 30, 2007 increased $295.6 million (20.7 percent), primarily due to a 19.6 percent increase in passenger revenues. The increase in passenger revenues was largely due to a 24.9 percent increase in
passenger traffic as measured by RPMs, offset by a decrease in our average yield per RPM of 4.2 percent to 12.67 cents. The decrease in yield resulted primarily from a 5.2 percent increase in passenger average length of haul offset by a 0.8 percent
increase in our average fare to $92.18. This decrease in yield, when combined with our 2.5 percentage point increase in passenger load factor, resulted in a 1.0 percent decrease in passenger unit revenues as measured by RASM to 9.70 cents.

During the nine months ended September 30, 2007, we continued our growth by taking delivery of ten B737 aircraft bringing our total fleet to 137
aircraft at period end. Since September 30, 2006, we have taken delivery of 16 B737 aircraft. As a result, our capacity, as measured by ASMs, increased 20.9 percent. Our traffic, as measured by RPMs, increased 24.9 percent.



14



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##### Table of Contents

Operating Expenses

Our operating expenses for the nine months ended September 30, 2007 increased $211.3 million (15.2 percent) on ASM growth of 20.9 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, as measured by operating expenses per ASM, for the nine months ended September 30, 2007 and 2006, respectively:



|                                         |  |                                |   |  |                 |   |  |            |  
|---------------------------------------- |  | ------------------------------ | - |  | --------------- | - |  | ---------- | -
|                                         |  | Nine Months EndedSeptember 30, |   |  | PercentIncrease |  
|                                         |  | 2007                           |   |  | 2006            |   |  | (Decrease) |  
|Aircraft fuel                            |  | 3.43                           | ¢ |  | 3.65            | ¢ |  | (6.0       | )
|Salaries, wages and benefits             |  | 1.99                           |   |  | 2.05            |   |  | (2.9       | )
|Aircraft rent                            |  | 1.07                           |   |  | 1.21            |   |  | (11.6      | )
|Maintenance, materials and repairs       |  | 0.66                           |   |  | 0.69            |   |  | (4.3       | )
|Distribution                             |  | 0.39                           |   |  | 0.38            |   |  | 2.6        |  
|Landing fees and other rents             |  | 0.53                           |   |  | 0.55            |   |  | (3.6       | )
|Aircraft insurance and security services |  | 0.11                           |   |  | 0.13            |   |  | (15.4      | )
|Marketing and advertising                |  | 0.19                           |   |  | 0.25            |   |  | (24.0      | )
|Depreciation                             |  | 0.21                           |   |  | 0.14            |   |  | 50.0       |  
|Other operating                          |  | 0.88                           |   |  | 0.86            |   |  | 2.3        |  
|                                         |  |                                |   |  |                 |   |  |            |  
|Total CASM                               |  | 9.46                           | ¢ |  | 9.91            | ¢ |  | (4.5       | )
|                                         |  |                                |   |  |                 |   |  |            |  

Aircraft fuel decreased 6.0 percent on a cost per ASM basis. Our fuel price per gallon, including taxes and
into-plane fees, decreased 3.1 percent from $2.23 during the nine months ended September 30, 2006 to $2.16 during the nine months ended September 30, 2007. Additionally, average fuel cost per ASM was favorably impacted by the 6.3% increase
in our average length of our flights, as aircraft use less fuel per ASM on longer flights, and the addition of ten B737 aircraft to our fleet, which increased our average aircraft size and further contributed to lower fuel costs per ASM. Larger
aircraft generally use less fuel per ASM than do smaller aircraft.

Aircraft rent decreased 11.6 percent on a cost per ASM basis. Since
September 30, 2006, we have taken delivery of 16 B737 aircraft. As a result, our capacity, as measured by available seat miles, increased 20.9 percent. However, of the 30 aircraft we have taken delivery of since January 1, 2006, only seven
were leased. As a result, aircraft rent expense increased only 7.1 percent period over period, despite the 20.9 percent increase in ASMs.

Aircraft
insurance and security services decreased 15.4 percent on a cost per ASM basis. While the addition of 16 new Boeing aircraft to our fleet since September 30, 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 24.0 percent on a cost per 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 50.0 percent on a cost per ASM basis, primarily due to the purchase of 16 B737 aircraft since September 30, 2006 and purchases of spare aircraft parts for our B737
aircraft fleet.

Non-operating (Income) Expense

Other (income) expense, net increased by $25.4 million due to higher interest costs and expenses associated with our Midwest exchange offer. Interest expense increased by $19.3 million primarily due to the effect of aircraft debt
financings entered into during 2006 and 2007. Capitalized interest decreased by $2.7 million due to the delivery of 16 aircraft since September 30, 2006. Capitalized interest represents interest on purchase deposits for future aircraft. These
amounts are recorded as part of the cost of the aircraft upon delivery. Other income increased by $1.4 million due to unrealized gains on our fuel option agreements. Additionally, we sold two aircraft during the second quarter of 2007 resulting in a
gain of $6.2 million.

On August 12, 2007, we announced that our exchange offer for all of the outstanding shares of Midwest had terminated and on
August 17, 2007, we announced that we had terminated all our efforts to acquire Midwest in a negotiated transaction. As of September 30, 2007, costs associated with the proposed acquisition, including the exchange offer, were approximately
$10.7 million, and consisted primarily of fees for attorneys, accountants, investment bankers, travel and other related charges. All costs related to the proposed acquisition were charged to Other (income) expense during the three months ended
September 30, 2007.



15



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##### Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2007, we had total cash, cash equivalents and short term investments of $356.6 million, which is an increase of $46.4 million compared to December 31, 2006. Short-term investments represent
auction rate securities with interest reset periods of less than 12 months. As of September 30, 2007, we also had $28.3 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 nine months of 2007 provided $171.9 million of cash flow compared to
$74.6 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 nine months ended
September 30, 2007, we reported net income of $54.9 million compared to net income of $18.3 million for the nine months ended September 30, 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 nine months ended
September 30, 2007, our air traffic liability balance increased $75.6 million more than the related accounts receivable balance increased contributing to net cash provided by operating activities. During the nine months ended September 30,
2006, our air traffic liability balance increased $70 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 nine months ended September 30, 2007, the $44.3 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 period 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 nine months ended September 30, 2006, the $36.5 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 $33.5 million and $42.9 million during the
nine months ended September 30, 2007 and 2006, respectively. Other assets include aircraft maintenance and other deposits, prepaid insurance and prepaid distribution costs. Additionally cash was used to increase spare parts, materials and
supplies by $22.5 million and $7.8 million for the nine months ended September 30, 2007 and 2006, respectively primarily due to increases in our prepaid fuel inventory.

Investing activities during the nine months ended September 30, 2007 used $124.9 million in cash compared to the $292.1 million used during the same period in 2006. Purchases and sales of available for
sales securities are classified as investing activities. During the nine months ended September 30, 2007, purchases of available for sale securities exceeded sales of available for sale securities by $41.5 million. During the nine months ended
September 30, 2006, purchases of available for sale securities exceeded sales of available for sale securities by $195.9 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 acquisition of Midwest, including the exchange offer.

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 nine months ended September 30,
2007, we received $79.3 million in previously paid aircraft deposits while paying $66.9 million in new aircraft deposits. During the nine months ended September 30, 2007, we purchased 12 B737 aircraft, of which two were sold. We expended $139.6
million in cash and incurred $293.7 million of debt related to the acquisition of these aircraft. During the nine months ended September 30, 2006, we purchased seven B737 aircraft. We expended $36.9 million in cash and incurred $203.6 million
of debt related to the acquisition of these aircraft.

In May 2007, the Company purchased and subsequently sold two B737 aircraft. The costs of the two
aircraft are included in total property and equipment purchases. Cash received for the two aircraft was $77.9 million, of which $5.0 million was received in 2006.

During the nine months ended September 30, 2007, we expended $18.7 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.

Financing activities used $42.1 million of cash during the nine months
ended September 30, 2007 compared to providing cash of $19.9 million in the similar period in 2006. During the nine months ended September 30, 2007, we received cash from the issuance of debt financing for aircraft pre-delivery deposits of
$46.7 million and repaid $84.7 million of our outstanding debt financing. During the nine months ended September 30, 2006, we repaid $44.5 million of our outstanding debt financing. Also, during the first nine months of 2007, we borrowed $293.7
million in non-cash transactions to finance the purchase of ten B737 aircraft. During the first nine months of 2006, we received cash from the issuance of debt financing for aircraft pre-delivery deposits of $56.2 million. During the first nine
months of 2006, we borrowed $203.6 million in non-cash aircraft purchase debt financing transactions. See Note 5 to Condensed Consolidated Financial Statements for additional information regarding our outstanding debt.

During the nine months ended September 30, 2007 and 2006, we received $1.8 million and $11.5 million, respectively, from the exercise of employee options for the
purchase of common stock.



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Aircraft Acquisitions and Aircraft Purchase Commitments

During the nine months ended September 30, 2007, we took delivery of ten purchased B737 aircraft, excluding two aircraft as discussed below. As of September 30,
2007, we had on order 63 B737 aircraft with delivery dates between 2008 and 2012. The table below summarizes all aircraft scheduled for delivery:



|      |  |                             
|----- |  | ----------------------------
|      |  | Firm Aircraft DeliveriesB737
|2008  |  | 10                          
|2009  |  | 14                          
|2010  |  | 14                          
|2011  |  | 13                          
|2012  |  | 12                          
|      |  |                             
|Total |  | 63                          
|      |  |                             

In May 2007, we took delivery of and subsequently sold two aircraft for cash proceeds of $77.9 million, of which
$5.0 million was received prior to 2007. We recognized a gain of $6.2 million related to the sale of these two aircraft. Unless otherwise expressly indicated, all aircraft delivery totals are net of these two deliveries.

In June 2007, we entered into an amendment to an agreement with an aircraft manufacturer to purchase an additional 15 B737 aircraft. The newly-ordered aircraft are
scheduled to be delivered during 2011 and 2012. Also, pursuant to that same amendment, we agreed to reschedule the delivery positions for six B737 aircraft on firm order. The aircraft originally scheduled to be delivered during the second half of
2008 and first half of 2009 are now scheduled to be delivered during 2011. In October we rescheduled the delivery dates for three B737 aircraft on firm order. The new orders and revised delivery dates are reflected in the table above.

Aircraft purchase contracts typically require the purchaser to make pre-delivery deposits to the manufacturer. We have arranged pre-delivery deposit financing for a
portion of our pre-delivery deposit requirements for aircraft scheduled to be delivered in 2007, 2009, and some in 2010. The pre-delivery deposit financing typically funds between 75 percent and 100 percent of our pre-delivery deposit obligation for
any given aircraft.

Our aircraft purchase commitments for the remainder of 2007 and for the next five years, in aggregate, are (in thousands):
2007 -$4,100; 2008$391,300; 2009$508,000; 2010$518,600; 2011$462,300; and 2012$401,300. These amounts include payment commitments, including payment of pre-delivery deposits, for aircraft on firm order. Payment
commitments include the forecasted impact of contractual price escalations. The aircraft purchase commitment totals do not reflect the effects of prearranged aircraft financings.

Aircraft Financing Arrangements

Of the 63 B737 aircraft we have on order, we have secured debt financing for
nine B737 aircraft scheduled for delivery 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.

Letters of Credit

As of September 30, 2007, $13.8 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 the remainder of 2007, 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 financing 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.

Subsequent Events

On October 31, 2007, effective November 1, 2007, the Board of Directors elected Robert Fornaro to succeed Joe Leonard as Chief Executive Officer of the Company. Mr.
Leonard continues as Chairman of the Board and director of the Company.



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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/A for the fiscal year ended
December 31, 2006, other than those discussed below.

Interest Rates

We had $771.0 million and $498.9 million of variable-rate debt as of September 30, 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 September 30, 2007 was $137 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 $1.6 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 September 30, 2007 and 2006 represented 37.7 percent and 38.9 percent
of our operating expenses, respectively. Aircraft fuel expense for the nine months ended September 30, 2007 and 2006 represented 36.3 percent and 36.8 percent of our operating expenses, respectively. Efforts to reduce our exposure to increases
in the price and decreases in the availability of aviation fuel include the utilization of fuel pricing arrangements in purchase contracts with fuel suppliers covering a portion of our anticipated fuel requirements. The fuel pricing arrangements
consist of both fixed price and collar arrangements. Because these contracts are accounted for under the normal purchase exception included in Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and
Hedging Activities, (SFAS 133), these contracts are not considered derivative financial instruments for financial reporting purposes. As of September 30, 2007, utilizing such contracts, we had committed to purchase 21.2 million gallons
of aviation fuel at an estimated weighted average price per gallon, excluding taxes and related fees, of $2.20 during the remainder of 2007. This represents 22.9 percent of our anticipated fuel needs for the remainder of 2007. As of
September 30, 2007, we had no fuel pricing arrangements with fuel suppliers for 2008.

In addition to the fuel purchase contracts discussed above, we
have entered into jet fuel derivative financial instruments with financial institutions to reduce the impact of fluctuations in jet fuel prices on future fuel expense. Our primary objective of entering into derivative instruments is to reduce the
impact on our operating results of the volatility of Gulf Coast jet fuel prices. We do not hold or issue derivative financial instruments for trading purposes. As of September 30, 2007, the fair market value of our fuel derivatives was $9.8
million and was comprised of both fuel swap arrangements and option arrangements. As of September 30, 2007, these contracts hedge 24.7 million gallons of our fuel purchases and represent 26.7 percent of our anticipated jet fuel consumption
for the remainder of 2007 and 3.9 percent of our anticipated 2008 jet fuel requirement.

For every dollar increase per barrel in crude oil or refining
costs, our fuel expense for the remainder of 2007 and 2008, before the impact of our fixed-price fuel purchase contracts and derivative financial instruments, would increase $2.4 million and $10.4 million, respectively, based on current and
projected operations.



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|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

We maintain disclosure 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 Securities and Exchange Commission (SEC), as well as to process, summarize and disclose this information within the
time periods specified in the rules of the SEC. As of September 30, 2007, we carried out an evaluation, under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our
disclosure controls and procedures pursuant to Exchange Act Rule 13a-15e. As a result of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of
September 30, 2007 and are designed to provide management with the appropriate information to allow timely decisions regarding required disclosure.

Remediation of Material Weaknesses

As discussed in our Form 10-K/A for the year ended December 31, 2006, we identified a
material weakness that existed as of December 31, 2006 related to our accounting for passenger upgrade revenue transactions. This material weakness caused us to amend our Form 10-K for the year ended December 31, 2006 and Form 10-Q for the
quarter ended March 31, 2007, in order to restate our consolidated financial statements as of December 31, 2005 and 2006 and for each of the three years in the period ended December 31, 2006 and for the quarter ended March 31,
2007. We performed an extensive review of the transactions impacted by the material weakness described above in an effort to ensure that our amended filings reflected 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 the restatement remediated 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 Controls

The changes implemented in the three-months ended September 30, 2007 as a result of remediation of the material weakness as noted above were the only changes in our
internal control over financial reporting (as defined in Rules 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.



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PART II.

OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

From time to time, we are engaged in litigation
arising in the ordinary course of business. We do not believe that any such pending litigation, individually or collectively, will have a material adverse effect on our results of operations or financial condition.



|Item 1A. | Risk Factors
|-------- | ------------

Information regarding risk factors appears in
MD&A  Forward-Looking Statements, in Part I  Item 2 of this Form 10-Q and in Risk Factors in Part I  Item 1A of our Annual Report on Form 10-K/A for the fiscal year ended December 31,
2006. While we believe there have been no material changes from the risk factors previously disclosed in such Annual Report, you should carefully consider, in addition to the other information set forth in this report, the risk factors discussed in
our Annual Report which could materially affect our business, financial condition or future results. Such risk factors are expressly incorporated herein by reference. The risks described in our Annual Report are not the only risks facing our
Company. In addition to risks and uncertainties inherent in forward looking statements contained in this Report on Form 10-Q, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially
adversely affect our business, financial condition and/or operating results.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

None



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

None



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

None



|Item 5. | Other Information
|------- | -----------------

None



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

The following exhibits are filed with this report:



|    |  |             |  |                                                              
|--- |  | ----------- |  | -------------------------------------------------------------
|(a) |  | Exhibit No. |  | Description                                                  
|    |  | 31.1 -      |  | Rule 13(a)-14 Certification of Chief Executive Officer       
|    |  |            
|    |  | 31.2 -      |  | Rule 13(a)-14 Certification of Chief Financial Officer       
|    |  |            
|    |  | 32.1 -      |  | CEO and CFO certifications pursuant to 18 U.S.C. Section 1350



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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: November 5, 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