o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
The Company incurred the following items in 2012: | Segment | Pre-tax amount | Period |
Loss on sale of E190s | Republic | $11.2 million | 3Q-12 |
Gain on sale of slots | Republic | ($8.3) million | 3Q-12 |
Professional and legal fees related restructuring | Republic | $4.3 million | 4Q-12 |
Restructuring and fleet transition expenses | Frontier | $15.5 million | 4Q-12 |
Frequent flyer adjustment to passenger revenue | Frontier | ($9.8) million | 4Q-12 |
The Company incurred the following items in 2011: | Segment | Pre-tax amount | Period |
Fleet transition expenses | Republic | $9.1 million | 4Q-11 |
Impairment of fleet asset values | Republic | $191.1 million | 4Q-11 |
Fleet transition expenses | Frontier | $32.3 million | 4Q-11 |
Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||
2012 | 2011 | Change | 2012 | 2011 | Change | ||||||||||||
OPERATING REVENUES | |||||||||||||||||
Fixed-fee service | $ | 273.4 | $ | 270.1 | 1.2 | % | $ | 1,102.1 | $ | 1,079.0 | 2.1 | % | |||||
Passenger service | 366.4 | 402.8 | (9.0 | )% | 1,556.8 | 1,694.5 | (8.1 | )% | |||||||||
Charter and other | 32.3 | 24.9 | 29.7 | % | 152.0 | 91.0 | 67.0 | % | |||||||||
Total operating revenues | 672.1 | 697.8 | (3.7 | )% | 2,810.9 | 2,864.5 | (1.9 | )% | |||||||||
OPERATING EXPENSES | |||||||||||||||||
Wages and benefits | 141.8 | 134.7 | 5.3 | % | 562.3 | 560.6 | 0.3 | % | |||||||||
Aircraft fuel | 150.0 | 187.7 | (20.1 | )% | 693.7 | 821.1 | (15.5 | )% | |||||||||
Landing fees and airport rents | 40.1 | 41.7 | (3.8 | )% | 169.7 | 167.7 | 1.2 | % | |||||||||
Aircraft and engine rent | 57.1 | 57.7 | (1.0 | )% | 243.2 | 251.5 | (3.3 | )% | |||||||||
Maintenance and repair | 70.9 | 68.4 | 3.7 | % | 296.3 | 297.2 | (0.3 | )% | |||||||||
Insurance and taxes | 7.4 | 9.7 | (23.7 | )% | 38.1 | 42.1 | (9.5 | )% | |||||||||
Depreciation and amortization | 47.3 | 48.6 | (2.7 | )% | 190.6 | 200.2 | (4.8 | )% | |||||||||
Promotion and sales | 23.8 | 27.9 | (14.7 | )% | 110.5 | 133.6 | (17.3 | )% | |||||||||
Other impairment charges | — | 191.1 | (100.0 | )% | — | 191.1 | (100.0 | )% | |||||||||
Other | 81.6 | 96.4 | (15.4 | )% | 293.6 | 305.0 | (3.7 | )% | |||||||||
Total operating expenses | 620.0 | 863.9 | (28.2 | )% | 2,598.0 | 2,970.1 | (12.5 | )% | |||||||||
OPERATING INCOME (LOSS) | 52.1 | (166.1 | ) | 131.4 | % | 212.9 | (105.6 | ) | 301.6 | % | |||||||
OTHER INCOME (EXPENSE) | |||||||||||||||||
Interest expense | (30.8 | ) | (33.1 | ) | 6.9 | % | (127.0 | ) | (137.3 | ) | 7.5 | % | |||||
Other - net | 0.1 | 0.1 | — | % | 0.3 | 0.5 | (40.0 | )% | |||||||||
Total other expense | (30.7 | ) | (33.0 | ) | 7.0 | % | (126.7 | ) | (136.8 | ) | 7.4 | % | |||||
INCOME (LOSS) BEFORE INCOME TAXES | 21.4 | (199.1 | ) | 110.7 | % | 86.2 | (242.4 | ) | 135.6 | % | |||||||
INCOME TAX EXPENSE (BENEFIT) | 8.8 | (75.6 | ) | 111.6 | % | 34.9 | (90.6 | ) | 138.5 | % | |||||||
NET INCOME (LOSS) | $ | 12.6 | $ | (123.5 | ) | 110.2 | % | $ | 51.3 | $ | (151.8 | ) | 133.8 | % | |||
PER SHARE, BASIC | $ | 0.26 | $ | (2.55 | ) | 110.2 | % | $ | 1.06 | $ | (3.14 | ) | 133.8 | % | |||
PER SHARE, DILUTED | $ | 0.25 | $ | (2.55 | ) | 109.8 | % | $ | 1.02 | $ | (3.14 | ) | 132.5 | % | |||
Weighted average common shares | |||||||||||||||||
Basic | 48.5 | 48.4 | 48.5 | 48.2 | |||||||||||||
Diluted | 52.7 | 48.4 | 51.4 | 48.2 | |||||||||||||
December 31, | December 31, | ||||||
2012 | 2011 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 247.2 | $ | 219.3 | |||
Restricted cash | 147.1 | 151.4 | |||||
Receivables, net of allowance for doubtful accounts of $2.9 and $0.6, respectively | 79.5 | 89.0 | |||||
Inventories, net | 86.5 | 101.8 | |||||
Prepaid expenses and other current assets | 44.4 | 64.2 | |||||
Assets held for sale | — | 33.0 | |||||
Deferred income taxes | 31.3 | 35.3 | |||||
Total current assets | 636.0 | 694.0 | |||||
Aircraft and other equipment, net | 2,546.7 | 2,808.7 | |||||
Maintenance deposits | 170.0 | 146.0 | |||||
Other intangible assets, net | 65.0 | 86.5 | |||||
Other assets | 237.5 | 166.5 | |||||
Total assets | $ | 3,655.2 | $ | 3,901.7 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Current portion of long-term debt | $ | 276.2 | $ | 284.6 | |||
Accounts payable | 29.8 | 43.9 | |||||
Air traffic liability | 146.6 | 179.5 | |||||
Deferred frequent flyer revenue | 54.8 | 68.2 | |||||
Accrued liabilities | 238.8 | 258.8 | |||||
Total current liabilities | 746.2 | 835.0 | |||||
Long-term debt, less current portion | 1,843.3 | 2,074.5 | |||||
Deferred frequent flyer revenue, less current portion | 57.8 | 68.1 | |||||
Deferred credits and other non-current liabilities | 109.8 | 110.4 | |||||
Deferred income taxes | 384.6 | 353.2 | |||||
Total liabilities | 3,141.7 | 3,441.2 | |||||
Commitments and Contingencies | |||||||
Stockholders' Equity: | |||||||
Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | — | — | |||||
Common stock, $.001 par value; one vote per share; 150,000,000 shares authorized; 58,529,449 and 58,097,574 shares issued and 48,558,312 and 48,412,516 shares outstanding, respectively | — | — | |||||
Additional paid-in-capital | 412.1 | 409.4 | |||||
Treasury stock, 9,333,266 shares at cost | (181.8 | ) | (181.8 | ) | |||
Accumulated other comprehensive loss | (5.0 | ) | (4.0 | ) | |||
Accumulated earnings | 288.2 | 236.9 | |||||
Total stockholders' equity | 513.5 | 460.5 | |||||
Total liabilities and stockholders' equity | $ | 3,655.2 | $ | 3,901.7 |
Years ended December 31, | |||||||
2012 | 2011 | ||||||
NET CASH FROM OPERATING ACTIVITIES | $ | 255.6 | $ | 131.5 | |||
INVESTING ACTIVITIES: | |||||||
Purchase of aircraft and other equipment | (35.7 | ) | (105.9 | ) | |||
Proceeds from sale of aircraft, slots and other assets | 84.3 | 142.3 | |||||
Aircraft deposits, net | (8.0 | ) | (10.4 | ) | |||
Other, net | (3.4 | ) | (2.4 | ) | |||
NET CASH FROM INVESTING ACTIVITIES | $ | 37.2 | $ | 23.6 | |||
FINANCING ACTIVITIES: | |||||||
Payments on debt | (216.1 | ) | (208.5 | ) | |||
Proceeds from debt issuance | 3.7 | 70.7 | |||||
Payments on early extinguishment of debt | (52.0 | ) | (88.0 | ) | |||
Other, net | (0.5 | ) | (1.2 | ) | |||
NET CASH FROM FINANCING ACTIVITIES | $ | (264.9 | ) | $ | (227 | ) | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | $ | 27.9 | $ | (71.9 | ) | ||
CASH AND CASH EQUIVALENTS, Beginning of period | $ | 219.3 | $ | 291.2 | |||
CASH AND CASH EQUIVALENTS, End of period | $ | 247.2 | $ | 219.3 |
Three Months Ended December 31, | ||||||||
Operating Highlights – Republic1 | 2012 | 2011 | Change | |||||
Total revenues (millions) | $ | 327.4 | $ | 359.3 | (8.9 | )% | ||
Total fuel expense (millions)2 | $ | 21.8 | $ | 60.3 | (63.8 | )% | ||
Operating aircraft at period end: | ||||||||
37-50 seats3 | 71 | 73 | (2.7 | )% | ||||
69-99 seats4 | 155 | 148 | 4.7 | % | ||||
Block hours | 176,079 | 174,062 | 1.2 | % | ||||
Departures | 102,662 | 102,338 | 0.3 | % | ||||
Passengers carried | 5,163,017 | 4,912,182 | 5.1 | % | ||||
Revenue passenger miles (millions) | 2,560 | 2,474 | 3.5 | % | ||||
Available seat miles (millions) | 3,294 | 3,358 | (1.9 | )% | ||||
Passenger load factor | 77.7 | % | 73.7 | % | 4.0 pts | |||
Total cost per available seat mile, including interest expense and excluding items (cents)6 | 9.21 | 10.01 | (8.0 | )% | ||||
Cost per available seat mile, including interest and excluding fuel expense and excluding items (cents)6 | 8.55 | 8.21 | 4.1 | % | ||||
Gallons consumed | 6,272,203 | 18,936,470 | (66.9 | )% | ||||
Average cost per gallon | $ | 3.48 | $ | 3.19 | 9.1 | % | ||
Average daily utilization of each scheduled aircraft (hours) | 9.3 | 9.7 | (4.1 | )% | ||||
Average stage length | 482 | 490 | (1.6 | )% | ||||
Average seat density | 67 | 67 | — | % | ||||
Operating Highlights – Frontier1 | ||||||||
Total revenues (millions)7 | $ | 334.9 | $ | 338.5 | (1.1 | )% | ||
Total fuel expense (millions) | $ | 128.2 | $ | 127.4 | 0.6 | % | ||
Operating aircraft at period end: | ||||||||
120 seats | 2 | 4 | (50.0 | )% | ||||
136-138 seats | 37 | 41 | (9.8 | )% | ||||
162-168 seats | 16 | 15 | 6.7 | % | ||||
Passengers carried | 2,596,521 | 2,731,199 | (4.9 | )% | ||||
Revenue passenger miles (millions) | 2,505 | 2,588 | (3.2 | )% | ||||
Available seat miles (millions) | 2,818 | 2,934 | (4.0 | )% | ||||
Passenger load factor | 88.9 | % | 88.2 | % | 0.7 pts | |||
Total revenue per available seat mile (cents)7 | 11.88 | 11.54 | 2.9 | % | ||||
Operating cost per available seat mile (cents)5,8 | 11.58 | 11.15 | 3.9 | % | ||||
Fuel cost per available seat mile (cents)5 | 4.55 | 4.34 | 4.8 | % | ||||
Cost per available seat mile, excluding fuel expense (cents)8 | 7.03 | 6.80 | 3.4 | % | ||||
Gallons consumed | 37,478,548 | 39,745,972 | (5.7 | )% | ||||
Average cost per gallon5 | $ | 3.42 | $ | 3.21 | 6.5 | % | ||
Block hours | 50,662 | 54,242 | (6.6 | )% | ||||
Departures | 20,587 | 22,102 | (6.9 | )% | ||||
Average daily utilization of each scheduled aircraft (hours) | 10.5 | 10.5 | — | % | ||||
Average stage length | 946 | 935 | 1.2 | % | ||||
Average seat density | 145 | 142 | 2.1 | % |
1 See business segment presentation discussion for information regarding our change in segments. | |||||
2 Includes $23.3 million for the three months ended December 31, 2011, which was passed-through under our fixed-fee agreements with our partners. | |||||
3 Includes one aircraft and eleven aircraft as of December 31, 2012 and 2011, respectively, that were unassigned. | |||||
4 Includes three aircraft as of December 31, 2011 that were unassigned. | |||||
5 Includes mark-to-market fuel hedge expense of $0.5 million and benefit of $3.5 million for the three months ended December 31, 2012 and 2011, respectively. | |||||
6 Excludes $4.3 million and $200.2 million items for the three months ended December 31, 2012 and 2011, respectively. | |||||
7 Excludes $9.8 million of items for the three months ended December 31, 2012. | |||||
8 Excludes $15.5 million and $32.3 million of items for the three months ended December 31, 2012 and 2011, respectively. |
Years Ended December 31, | ||||||||
Operating Highlights – Republic1 | 2012 | 2011 | Change | |||||
Total revenues (millions) | $ | 1,377.4 | $ | 1,534 | (10.2 | )% | ||
Total fuel expense (millions)2 | $ | 161.4 | $ | 303.3 | (46.8 | )% | ||
Operating aircraft at period end: | ||||||||
37-50 seats3 | 71 | 73 | (2.7 | )% | ||||
69-99 seats4 | 155 | 148 | 4.7 | % | ||||
Block hours | 701,040 | 731,440 | (4.2 | )% | ||||
Departures | 409,058 | 429,564 | (4.8 | )% | ||||
Passengers carried | 20,112,289 | 20,773,219 | (3.2 | )% | ||||
Revenue passenger miles (millions) | 10,120 | 10,691 | (5.3 | )% | ||||
Available seat miles (millions) | 13,437 | 14,449 | (7.0 | )% | ||||
Passenger load factor | 75.3 | % | 74.0 | % | 1.3 pts | |||
Total cost per available seat mile, including interest expense and excluding items (cents)6 | 9.73 | 10.25 | (5.1 | )% | ||||
Cost per available seat mile, including interest and excluding fuel expense and excluding items (cents)6 | 8.53 | 8.15 | 4.7 | % | ||||
Gallons consumed | 48,842,044 | 91,890,705 | (46.8 | )% | ||||
Average cost per gallon | $ | 3.30 | $ | 3.30 | — | % | ||
Average daily utilization of each scheduled aircraft (hours) | 9.8 | 9.9 | (1.0 | )% | ||||
Average stage length | 469 | 498 | (5.8 | )% | ||||
Average seat density | 67 | 68 | (1.5 | )% | ||||
Operating Highlights – Frontier1 | ||||||||
Total revenues (millions)7 | $ | 1,423.7 | $ | 1,330.5 | 7.0 | % | ||
Total fuel expense (millions) | $ | 532.3 | $ | 517.8 | 2.8 | % | ||
Operating aircraft at period end: | ||||||||
120 seats | 2 | 4 | (50.0 | )% | ||||
136-138 seats | 37 | 41 | (9.8 | )% | ||||
162-168 seats | 16 | 15 | 6.7 | % | ||||
Passengers carried | 10,700,669 | 10,583,331 | 1.1 | % | ||||
Revenue passenger miles (millions) | 10,579 | 10,271 | 3.0 | % | ||||
Available seat miles (millions) | 11,908 | 11,779 | 1.1 | % | ||||
Passenger load factor | 88.8 | % | 87.2 | % | 1.6 pts | |||
Total revenue per available seat mile (cents)7 | 11.96 | 11.3 | 5.8 | % | ||||
Operating cost per available seat mile (cents)5,8 | 11.66 | 11.77 | (0.9 | )% | ||||
Fuel cost per available seat mile (cents)5 | 4.47 | 4.40 | 1.6 | % | ||||
Cost per available seat mile, excluding fuel expense (cents)8 | 7.19 | 7.38 | (2.6 | )% | ||||
Gallons consumed | 158,361,595 | 159,145,671 | (0.5 | )% | ||||
Average cost per gallon5 | $ | 3.36 | $ | 3.25 | 3.4 | % | ||
Block hours | 214,494 | 219,359 | (2.2 | )% | ||||
Departures | 85,328 | 87,938 | (3.0 | )% | ||||
Average daily utilization of each scheduled aircraft (hours) | 11.0 | 11.2 | (1.8 | )% | ||||
Average stage length | 976 | 957 | 2.0 | % | ||||
Average seat density | 143 | 140 | 2.1 | % |
1 See business segment presentation discussion for information regarding our change in segments. | ||||
2 Includes $48.2 million and $102.5 million for the year ended December 31, 2012 and 2011, respectively, which was passed-through under our fixed-fee agreements with our partners. | ||||
3 Includes one aircraft and eleven aircraft as of December 31, 2012 and 2011, respectively, that were unassigned. | ||||
4 Includes three aircraft as of December 31, 2011 that were unassigned. | ||||
5 Includes mark-to-market fuel hedge expense of $2.2 million and benefit of $(3.8) million for the year ended December 31, 2012 and 2011, respectively. | ||||
6 Excludes $7.2 million and $200.2 million items for the year ended December 31, 2012 and 2011, respectively. | ||||
7 Excludes $9.8 million of items for the year ended December 31, 2012. | ||||
8 Excludes $15.5 million and $32.3 million of items for the year ended December 31, 2012 and 2011, respectively. |
Three months ended Dec. 31, 2012 | |||||||||||||||||
Pre-tax by Segment | After-tax | Diluted Earnings | |||||||||||||||
($ in millions) | Republic | Frontier | Consolidated | Consolidated | Per share | ||||||||||||
GAAP income | $ | 19.8 | $ | 1.6 | $ | 21.4 | $ | 12.6 | $ | 0.25 | |||||||
Adjustments: | |||||||||||||||||
Restructuring and fleet transition expenses | 4.3 | 15.5 | 19.8 | 11.7 | 0.21 | ||||||||||||
Frequent flyer adjustment1 | (9.8 | ) | (9.8 | ) | (5.8 | ) | (0.11 | ) | |||||||||
Ex-item income | $ | 24.1 | $ | 7.3 | $ | 31.4 | $ | 18.5 | $ | 0.35 | |||||||
1 Additional revenue related to the change in expiration of mileage earned under its frequent flyer program from 24 to 18 months | |||||||||||||||||
Year ended Dec. 31, 2012 | |||||||||||||||||
Pre-tax by Segment | After-tax | Diluted Earnings | |||||||||||||||
($ in millions) | Republic | Frontier | Consolidated | Consolidated | Per share | ||||||||||||
GAAP income | $ | 62.3 | $ | 23.9 | $ | 86.2 | $ | 51.3 | $ | 1.02 | |||||||
Adjustments: | |||||||||||||||||
Restructuring and fleet transition expenses | 4.3 | 15.5 | 19.8 | 11.8 | 0.21 | ||||||||||||
Loss, net on sale of assets | 2.9 | 2.9 | 1.7 | 0.03 | |||||||||||||
Frequent flyer adjustment1 | (9.8 | ) | (9.8 | ) | (5.8 | ) | (0.11 | ) | |||||||||
Ex-item income | $ | 69.5 | $ | 29.6 | $ | 99.1 | $ | 59.0 | $ | 1.15 | |||||||
1 Additional revenue related to the change in expiration of mileage earned under its frequent flyer program from 24 to 18 months |
Three months ended Dec. 31, 2011 | |||||||||||||||||
Pre-tax by Segment | After-tax | Diluted Earnings | |||||||||||||||
($ in millions) | Republic | Frontier | Consolidated | Consolidated | Per share | ||||||||||||
GAAP income | $ | (176.9 | ) | $ | (22.2 | ) | $ | (199.1 | ) | $ | (123.5 | ) | $ | (2.55 | ) | ||
Adjustments: | |||||||||||||||||
Restructuring and fleet transition expenses | 9.1 | 32.3 | 41.4 | 25.7 | 0.51 | ||||||||||||
Non-recurring impairment | 191.1 | — | 191.1 | 118.6 | 2.46 | ||||||||||||
Ex-item income | $ | 23.3 | $ | 10.1 | $ | 33.4 | $ | 20.7 | $ | 0.41 | |||||||
Year ended Dec. 31, 2012 | |||||||||||||||||
Pre-tax by Segment | After-tax | Diluted Earnings | |||||||||||||||
($ in millions) | Republic | Frontier | Consolidated | Consolidated | Per share | ||||||||||||
GAAP income | $ | (147.1 | ) | $ | (95.3 | ) | $ | (242.4 | ) | $ | (151.8 | ) | $ | (3.14 | ) | ||
Adjustments: | |||||||||||||||||
Restructuring and fleet transition expenses | 9.1 | 32.3 | 41.4 | 25.9 | 0.54 | ||||||||||||
Non-recurring impairment | 191.1 | — | 191.1 | 119.7 | 2.48 | ||||||||||||
Ex-item income | $ | 53.1 | $ | (63.0 | ) | $ | (9.9 | ) | $ | (6.2 | ) | $ | (0.13 | ) | |||
Three months ended Dec. 31, 2012 | Twelve months ended Dec. 31, 2012 | ||||||||||||||
($ in millions) | Frontier | TRASM (cents) | Frontier | TRASM (cents) | |||||||||||
GAAP revenue | $ | 344.7 | $ | 12.23 | $ | 1,433.5 | $ | 12.04 | |||||||
Adjustments: | |||||||||||||||
Frequent flyer adjustment1 | (9.8 | ) | (0.35 | ) | (9.8 | ) | (0.08 | ) | |||||||
Ex-item revenue | $ | 334.9 | $ | 11.88 | $ | 1,423.7 | $ | 11.96 | |||||||
1 Additional revenue related to the change in expiration of mileage earned under its frequent flyer program from 24 to 18 months | |||||||||||||||
Three months ended Dec. 31, 2012 | Twelve months ended Dec. 31, 2012 | ||||||||||||||
($ in millions) | Frontier | CASM (cents) | Frontier | CASM (cents) | |||||||||||
GAAP operating expenses | $ | 341.7 | $ | 12.13 | $ | 1,404.1 | $ | 11.79 | |||||||
Adjustments: | |||||||||||||||
Restructuring and fleet transition expenses | (15.5 | ) | (0.55 | ) | (15.5 | ) | (0.13 | ) | |||||||
Ex-item operating expenses | $ | 326.2 | $ | 11.58 | $ | 1,388.6 | $ | 11.66 | |||||||
Three months ended Dec. 31, 2011 | Twelve months ended Dec. 31, 2011 | ||||||||||||||
($ in millions) | Frontier | CASM (cents) | Frontier | CASM (cents) | |||||||||||
GAAP operating expenses | $ | 359.3 | $ | 12.25 | $ | 1,419.2 | $ | 12.05 | |||||||
Adjustments: | |||||||||||||||
Restructuring and fleet transition expenses | (32.3 | ) | (1.1 | ) | (32.3 | ) | (0.28 | ) | |||||||
Ex-item operating expenses | $ | 327.0 | $ | 11.15 | $ | 1,386.9 | $ | 11.77 |