AirTran Holdings (AAI)

Year to Date 2008 Cash Flows

Operating activities during the first nine months of 2008 used $105.3 million of net cash compared to providing $171.9 million during the analogous period in 2007. 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, 2008, we reported a net loss of $155.4 million compared to net income of $54.9 million for the nine months ended September 30, 2007. The loss negatively impacted net cash used for 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 we grow and consequently receive additional cash for future travel. This source of cash will decline or change to a use to the extent we slow or reverse our growth or the amounts held back by our credit card processors increase. During the nine months ended September 30, 2008 and 2007, our air traffic liability balance increased $97.6 million and $93.9 million, respectively, contributing to net cash flow from operating activities. During the nine months ended September 30, 2008 restricted cash increased by $54.5 million primarily due to cash remittances held back by credit card processors and cash collateral deposits remitted by us to counterparties to certain derivative financial instrument arrangements. 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, 2008, the $11.5 million increase in accounts payable and accrued and other liabilities contributed to net cash flow from operating activities. Accounts payable and accrued and other liabilities increased during the period primarily due to 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, 2007, the $44.3 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 $8.9 million and $39.8 million during the nine months ended September 30, 2008 and 2007, respectively. Other assets include prepaid aircraft maintenance and other deposits, prepaid insurance and prepaid distribution costs. Additionally, a $19.5 million increase in prepaid and stored fuel required the use of cash during the nine months ended September 30, 2008. During the nine months ended September 30, 2007, a $12.6 million increase in prepaid and stored fuel decreased net cash provided by operating activities.

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Investing activities during the nine months ended September 30, 2008 provided $187.7 million in net cash compared to the $124.9 million used during the similar period in 2007. Investing activities include sales and purchases of available for sale securities, expenditures for aircraft deposits, the purchase of aircraft and other property and equipment, and 2007 deferred costs related to the attempted acquisition of Midwest.

All of our investments are classified as available for sale securities. During the nine months ended September 30, 2008, sales of available for sale securities exceeded purchases of available for sale securities. As of September 30, 2008, our investments included $28.4 million in an enhanced cash investment fund and $29.5 million in a money market fund. The managers of each of these funds have limited immediate redemptions and we have classified $9.8 million of our investments in the funds as long-term as of September 30, 2008.

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 refunded deposits in the aircraft. During the nine months ended September 30, 2008, we paid $51.0 million in new aircraft deposits and received $103.1 million in previously paid deposits. Included in the amount we received in previously paid deposits was $57.8 million related to an agreement to defer delivery of B737 aircraft. During the nine months ended September 30, 2008, we purchased eight B737 aircraft, of which two were sold immediately upon delivery and two were sold subsequent to delivery. We expended $113.6 million in cash and incurred $178.6 million of debt related to the acquisition of the eight purchased aircraft. During the nine months ended September 30, 2007, we purchased twelve B737 aircraft, of which two were sold immediately upon delivery. 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, 2008, we received $199.5 million related to the sale of five B737 aircraft. The cash benefit realized, net of related debt payments and return of aircraft pre-delivery deposits, was $25.6 million. Additionally we received $6.7 million in deposits related to the sale of five B737 aircraft with sales dates in the fourth quarter of 2008.

During the nine months ended September 30, 2008, we expended $17.2 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 purchases of ground and computer equipment. During the nine months ended September 30, 2007, we expended $18.7 million in cash for the acquisition of other property and equipment.

Financing activities used $29.1 million of net cash during the nine months ended September 30, 2008 compared to using cash of $42.1 million in the similar period in 2007. During the nine months ended September 30, 2008, we received cash from the issuance of debt financing for aircraft pre-delivery deposits of $32.7 million and repaid $87.4 million of pre-delivery deposit debt financing. During the nine months ended September 30, 2008, we repaid $128.8 million of aircraft purchase debt financing, of which prepayments of $83.8 million were a result of three aircraft sales during the nine months ended September 30, 2008. Also, during the first nine months of 2008, we borrowed $178.6 million in non-cash transactions to finance the purchase of six B737 aircraft. During the first nine months of 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 pre-delivery deposit debt financing. Also, during the first nine months of 2007, we borrowed $293.7 million in non-cash transactions to finance the purchase of eight B737 aircraft. See Note 5 to Condensed Consolidated Financial Statements for additional information regarding our outstanding debt.

During the second quarter 2008, we completed two other financings. The proceeds were used to improve our overall liquidity and for general corporate purposes. On April 30, 2008, we completed a public offering of $74.8 million in convertible senior notes due in 2015. Such notes bear interest at 5.5% payable semi-annually, in arrears, on April 15 and October 15. The 5.5% notes are senior unsecured obligations of Holdings and rank equally with all existing and future senior unsecured obligations of Holdings. We placed approximately $12.3 million of the proceeds of the offering in an escrow account with the trustee. Funds in the escrow account are

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invested in government securities and will be used to make the first six scheduled semi-annual interest payments on the notes, and these payments are secured by a pledge of the assets in escrow. On May 1, 2008, we completed a public offering of 24.7 million shares of our common stock at a price of $3.20 per share, receiving net proceeds of approximately $74.7 million, after deducting discounts and commissions paid to the underwriters and other expenses incurred with the offering.

In August 2008, we entered into an amendment to our agreement with a co-branded credit card issuer to sell a specified number of pre-award frequent flyer credits. In September 2008, we received $10.0 million related to an initial early purchase of credits and, during the three months ended December 31, 2008, we will receive up to an additional $10.0 million related to a second early purchase of frequent flyer credits, subject to meeting various covenants.

During the nine months ended September 30, 2008 and 2007, we received $1.3 million and $1.8 million, respectively, from the issuance of common stock related to the exercise of options and employee stock purchase plan.