Oil’s Flight Grounds AirTran

Although AirTran hastened to assure investors that the quarter’s loss was just a bump caused by rising fuel prices, the company’s decision to issues shares and stall expansion plans indicates there’s more than a little turbulence ahead for the airline.

Despite efforts to assure investors that AirTran wasn’t set to land in bankruptcy like recent Chapter 11 filers ATA, Aloha Airlines and Champion Air, shares plummeted 20.8%, or 95 cents, to close at $3.61 Tuesday.

Soaring oil prices pushed AirTran into the red in the first quarter, grounding expansion plans and propelling the company to issue $65 million in convertible senior notes and 14.3 million shares of its common stock on Tuesday. The notes are due in 2015 and include a 30-day option for underwriters to buy an additional $9.8 million to cover any over-allotments. AirTran’s share offering allows underwriters to buy an additional 2.1 million shares to cover over-allotments.

Forbes