EX-99.1 2 fa2853ex991.htm

Exhibit 99.1

Frontier Airlines Reports Fiscal Year 2005 Results

          DENVER, May 26 /PRNewswire-FirstCall/ -- Frontier Airlines, Inc. (Nasdaq: FRNT) today reported a net loss of $23.4 million, or $0.66 per diluted common share, for its fiscal year ended March 31, 2005.  This compares to net income of $12.6 million, or $0.36 per diluted common share for the previous fiscal year.  The Company’s fiscal year 2005 net loss included the following items before the effect of income taxes: a write down of $5.1 million of the carrying value of Boeing rotable spare parts which was offset by an unrealized gain on fuel hedges of $2.8 million.  These items, net of income taxes, increased the Company’s net loss by $0.04 per diluted share. Included in the Company’s net income for the prior fiscal year ended March 31, 2004 were the following items before the effect of profit sharing and income taxes: $15.0 million of compensation received under the Appropriations Act offset by the write-off of deferred loan costs of $9.8 million associated with the prepayment of all of the government guaranteed loan; a charge for Boeing aircraft and facility lease exit costs of $5.4 million; a loss of $1.8 million on the sale of one Airbus aircraft in a sale-leaseback transaction and from the sale of a spare engine; a write down of $3.6 million of the carrying value of spare engines and rotable parts that support the Boeing 737-300 aircraft; and $1.2 million of flight crew training expenses related to the start-up of our new Frontier JetExpress regional jet relationship with Horizon.  These items, net of income taxes and profit sharing, reduced net income by $0.12 per diluted share.

          For the airline’s fiscal fourth quarter ended March 31, 2005, the airline reported a net loss of $3.7 million, or $0.10 per diluted common share, compared to a net loss of $5.8 million, or $0.16 per diluted common share, for the same period last year.  The fiscal fourth quarter 2005 results, on a pre-tax basis, includes a $2.4 million unrealized fuel derivative gain and a $0.4 million gain from the sale of spare parts and inventory.  These items, net of income taxes, reduced the Company’s net loss by $.05 per diluted share.

          Chief Executive Officer’s Comments
          Frontier President and CEO Jeff Potter said, “While we are disappointed with the losses in our fourth fiscal quarter, we are encouraged by some positive trends which have surfaced this quarter.  For the quarter, our mainline cost per available seat mile (CASM), excluding fuel, declined by 1.5 percent on a year-over-year basis, our fourth consecutive quarter of year-over-year CASM decline.  In addition, we made great progress with our mainline revenue per available seat mile (RASM) which increased 4.8 percent this quarter, reversing last quarter’s decline.  The strength in RASM, a trend we believe will continue into the foreseeable future, was fueled by two consecutive months of load factor increases -- a direct reflection of the consumer response to our product and our customer service.

          “With mainline costs excluding fuel declining, and unit revenues increasing, we are certainly pleased with some of the underlying fundamentals at the close of our fiscal year 2005.  However, there are two critical industry factors for which we do not anticipate a near-term solution -- low fares due to overcapacity and historically high fuel costs.  Those two issues, which correlate directly to the losses we sustained in fiscal year 2005, continue to temper our enthusiasm of the significant strides we make as an airline.


          “We approach fiscal year 2006 with cautious optimism and we are hopeful that our plan based on current market conditions, in conjunction with the tireless efforts of our exceptional employees and the continued growth of our load factors, will return us to profitability in the new fiscal year.”

          Fourth Quarter Operating Highlights
          Mainline passenger revenue increased 22.0 percent as mainline revenue passenger miles (RPMs) grew at a rate of 22.0 percent during the fiscal fourth quarter, while mainline capacity growth as measured by mainline available seat miles (ASMs) increased 16.0 percent from the same quarter last year.  As a result, the airline’s mainline load factor was 73.6 percent for its fiscal fourth quarter of 2005, 3.5 load factor points greater than the airline’s mainline load factor of 70.1 percent during the same quarter last year.  The airline’s mainline breakeven load factor, excluding special items, for the fiscal fourth quarter 2005 increased 5.3 load factor points from 70.8 percent to 76.1 percent.

          During the fiscal fourth quarter 2005, the airline’s mainline passenger revenue per available seat mile (RASM) increased 4.8 percent to 8.46 cents from the same quarter last year.  The increase in mainline RASM was due to the combination of a 0.4 percent mainline yield per RPM decrease on a year-over-year basis and the 3.5 point load factor increase.  Mainline average length of haul increased 5.1 percent on a year-over-year basis.

          Mainline fuel cost per gallon during the quarter, excluding an unrealized derivative gain of $2.4 million (.07 cents per gallon on fuel hedge derivatives), but including taxes and delivery charges, increased 30.8 percent to $1.53 compared to $1.17 for the same period last year.  Mainline CASM, excluding fuel decreased 1.5 percent to 6.68 cents from the same period last year, when CASM excluding fuel was 6.78 cents.

          Senior Vice President and Chief Financial Officer Paul Tate discussed the airline’s year-over-year unit cost comparatives stating, “Our fiscal fourth quarter generated continued improvement in our mainline CASM excluding fuel, despite $1.5 million in costs directly associated with the February 2005 conversion to Sabre for our reservations and customer service technology platform.  Mainline CASM excluding fuel was also adversely affected by over $900,000 in Boeing aircraft return costs.”

          The airline’s current unrestricted cash (including short-term investments), and working capital position as of March 31, 2005 was $174.8 million and $41.7 million, respectively.  This compares to the company’s unrestricted cash (including short-term investments) and working capital position for the same period last year of $190.6 million and $88.1 million, respectively.

          The airline’s fleet in service on March 31, 2005 consisted of 14 owned Airbus A319 and A318 aircraft, 30 leased Airbus A319 and A318 aircraft and three leased Boeing 737 aircraft.  Given the current yield environment combined with on-going high fuel prices, the company elected to accelerate its transition to an all Airbus fleet by approximately four months to April 11, 2005.  As a result, the company discontinued operation of its last three Boeing aircraft between two and 14 months prior to the original lease return dates.  During the fiscal first quarter 2006, the Company expects to incur a $3.1 million (pretax) charge for the early retirement of these three Boeing aircraft.


          Year End Operating and Financial Highlights
          The airline’s mainline passenger revenues during its fiscal year 2005 increased 18.9 percent to $731.8 million from $615.4 million for the prior fiscal year.  The airline’s mainline capacity, as measured by ASMs, increased 27.4 percent during fiscal year 2005.  During fiscal year 2005, the airline’s mainline break-even load factor, excluding special items, increased 6.8 points to 74.8 percent.  The airline’s average fare during its fiscal year 2005 decreased 1.9 percent to $102 from $104 from the prior fiscal year.  The airline’s mainline passenger RASM for fiscal year 2005 decreased 6.9 percent to 7.97 cents from 8.56 cents for fiscal year 2004.

          Mainline CASM for the fiscal year 2005 increased to 8.42 cents from 8.41 cents for fiscal year 2004.  Mainline CASM excluding the airline’s fuel costs decreased 7.4 percent to 6.39 cents during fiscal year 2005, compared to 6.89 cents during fiscal year 2004.  During fiscal year 2005, the average cost per gallon of fuel excluding an unrealized derivative gain of $2.8 million was $1.43, a 37.5 percent increase from the last fiscal year.  Daily aircraft utilization for fiscal year 2005 averaged 11.1 hours, an increase of 6.7 percent from fiscal year 2004.

          Business developments during the quarter included:

 

*

Announced partnership with Caribou Coffee to enhance inflight beverage service as part of continued upgrades to the Frontier product.

 

 

 

 

*

Frontier received its sixth consecutive Diamond Award, the FAAs highest honor for maintenance and safety.

 

 

 

 

*

Took delivery of three new Airbus A319 aircraft.

 

 

 

 

*

Launched new non-stop service between Cancun and St. Louis

 

 

 

 

*

Announced new service to Detroit, Tulsa, Akron/Canton (Cleveland area) and San Antonio to begin in May and June.

 

 

 

 

*

Launched very successful marketing initiative to promote Frontier’s EarlyReturns program.

 

 

 

 

*

Signed a pre-purchase seat agreement with Apple Vacations for flights between Denver and four vacation destinations in Mexico: Cancun, Puerto Vallarta, Mazatlan, and Cabo San Lucas to begin as early as June 2005.

          Outlook
          Given the continuing lack of relief from extremely high fuel prices in the current quarter, and an April snow storm in Denver that caused the cancellation of almost a full day of service, the Company expects to post a loss for the first quarter of fiscal 2006 in the range of its fourth quarter fiscal 2005 loss, excluding special items.

          Potter concluded, “I want to thank each of our employees for their tireless efforts over the past year, during some of the most challenging conditions our industry and our company have seen.  We pushed our growth this past year to extraordinary limits and our employees responded by meeting the demand with outstanding customer service and a smile for each of our customers. Our increasing load factors are a direct result of their continued dedication to great customer service and to making Frontier a better airline with each interaction.”


          Senior leadership will host a conference call to discuss Frontier’s quarterly and annual results on May 27, 2005 at 9:00 a.m. Mountain Daylight Time.  The call is available via the World Wide Web on the airline’s Web site at www.frontierairlines.com or using the following URL: http://www.vcall.com/CEPage.asp?ID=92158.

          Currently in its 11th year of operations, Denver-based Frontier Airlines is the second largest jet service carrier at Denver International Airport employing approximately 4,550 aviation professionals.  At an average age of less than two years, Frontier’s fleet of 46 aircraft became one of the youngest fleets in the industry upon completion of a transition to “all-Airbus” in April of 2005.  Frontier, in conjunction with Frontier JetExpress operated by Horizon Air, operates routes linking our Denver hub to 45 destinations in 25 states spanning the nation from coast-to-coast and to five cities in Mexico.  Frontier’s maintenance and engineering department has received the Federal Aviation Administration’s highest award, the Diamond Certificate of Excellence, in recognition of 100 percent of its maintenance and engineering employees completing advanced aircraft maintenance training programs, for six consecutive years.  In July 2004 Frontier ranked as one of the “Top 10 Domestic Airlines” as determined by readers of Travel & Leisure magazine.  Frontier provides capacity information and other operating statistics on its Web site, which may be viewed at www.frontierairlines.com.

          Legal Notice Regarding Forward-Looking Statements
          Statements contained in this press release that are not historical facts may be considered forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from these forward looking statements. Many of these risks and uncertainties cannot be predicted with accuracy and some might not even be anticipated.  Some of the factors that could significantly impact the forward-looking statements in this press release include, but are not limited to: further downward pressure on airfares due to competition, overcapacity, demand or other factors; continuing high fuel costs and the inability to recover these higher fuel costs in airfares; unanticipated decreases in the volume of passenger traffic due to terrorist acts or additional incidents that could cause the public to question the safety and/or efficiency of air travel; the inability to secure adequate gate facilities at Denver International Airport and at other airports where Frontier operates; weather, maintenance or other operational disruptions; air traffic control-related difficulties; the impact of labor issues; actions of the federal and local governments; changes in the government’s policy regarding relief or assistance to the airline industry; the stability of the U.S. economy and the economic environment of the airline industry; and other factors detailed in the Company’s public filings with the Securities and Exchange Commission.  Any forward-looking statement is qualified by reference to these risks and factors.  These risks and factors are not exclusive, and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. Additional information regarding these and other factors may be contained in the Company’s SEC filings, including without limitation, the Company’s Form 10-K for its fiscal year ended March 31, 2004.  The Company’s filings are available from the Securities and Exchange Commission or may be obtained through the Company’s website, www.frontierairlines.com.


FRONTIER AIRLINES, INC.
SELECTED BALANCE SHEET DATA
(unaudited)

 

 

March 31,

 

 

 

 

 

 

2005

 

2004

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

Cash, cash equivalents, and short-term investments

 

$

174,795

 

$

190,609

 

Current assets

 

 

275,550

 

 

269,733

 

Total assets

 

 

792,011

 

 

769,706

 

Current liabilities

 

 

233,850

 

 

181,659

 

Long-term debt

 

 

282,792

 

 

280,001

 

Total liabilities

 

 

554,090

 

 

511,764

 

Stockholders’ equity

 

 

237,920

 

 

257,942

 

Working capital

 

 

41,700

 

 

88,074

 

FRONTIER AIRLINES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2005 AND 2004
(unaudited)

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

 

 

 

 

March 31,
2005

 

March 31,
2004

 

March 31,
2005

 

March 31,
2004

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

Passenger

 

$

191,850,462

 

$

157,259,435

 

$

731,821,890

 

$

615,389,565

 

Passenger - regional partner

 

 

21,650,116

 

 

11,191,338

 

 

84,268,560

 

 

11,191,338

 

Cargo

 

 

1,095,713

 

 

1,982,727

 

 

4,957,731

 

 

8,077,106

 

Other

 

 

3,947,835

 

 

1,698,605

 

 

12,591,260

 

 

9,021,133

 

Total revenues

 

 

218,544,126

 

 

172,132,105

 

 

833,639,441

 

 

643,679,142

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Flight operations

 

 

35,933,047

 

 

29,837,566

 

 

132,022,593

 

 

105,255,438

 

Aircraft fuel expense

 

 

47,278,731

 

 

32,874,455

 

 

185,821,202

 

 

108,862,582

 

Aircraft lease expense

 

 

23,118,007

 

 

17,701,998

 

 

87,095,717

 

 

70,061,270

 

Aircraft and traffic servicing

 

 

34,261,116

 

 

30,676,751

 

 

129,469,952

 

 

110,377,894

 

Maintenance

 

 

19,097,242

 

 

18,070,518

 

 

76,678,749

 

 

70,443,627

 

Promotion and sales

 

 

18,634,207

 

 

17,009,572

 

 

76,461,549

 

 

65,322,259

 

General and administrative expenses

 

 

13,195,114

 

 

8,469,400

 

 

48,350,563

 

 

36,750,152

 

Operating expenses - regional partner

 

 

23,606,729

 

 

14,634,258

 

 

92,480,847

 

 

14,634,258

 

Aircraft lease and facility exit costs

 

 

—  

 

 

—  

 

 

—  

 

 

5,371,799

 

(Gains) losses on sales of assets, net

 

 

(400,054

)

 

(99,153

)

 

84,610

 

 

1,837,550

 

Impairment and other related charges

 

 

(136,399

)

 

3,611,060

 

 

5,123,224

 

 

3,560,151

 

Depreciation

 

 

6,714,328

 

 

6,366,756

 

 

26,497,930

 

 

23,719,743

 

Total operating expenses

 

 

221,302,068

 

 

179,153,181

 

 

860,086,936

 

 

616,196,723

 

Operating income

 

 

(2,757,942

)

 

(7,021,076

)

 

(26,447,495

)

 

27,482,419

 
Nonoperating income (expense):                          

Interest income

 

 

1,351,410

 

 

546,013

 

 

3,757,596

 

 

2,074,050

 

Interest expense

 

 

(3,779,184

)

 

(2,896,370

)

 

(13,184,345

)

 

(13,961,074

)

Emergency Wartime Supplemental Appropriations Act compensation

 

 

—  

 

 

—  

 

 

—  

 

 

15,024,052

 

Loss on early extinguishment of debt

 

 

—  

 

 

—  

 

 

—  

 

 

(9,815,517

)

Other, net

 

 

(136,421

)

 

(68,066

)

 

36,148

 

 

(346,434

)

Total nonoperating income (expense), net

 

 

(2,564,195

)

 

(2,418,423

)

 

(9,390,601

)

 

(7,024,923

)

Income (loss) before income tax expense

 

 

(5,322,137

)

 

(9,439,499

)

 

(35,838,096

)

 

20,457,496

 

Income tax expense (benefit)

 

 

(1,605,683

)

 

(3,687,357

)

 

(12,407,910

)

 

7,822,361

 

Net income (loss)

 

$

(3,716,454

)

$

(5,752,142

)

$

(23,430,186

)

$

12,635,135

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

$

(0.16

)

$

(0.66

)

$

0.39

 

Diluted

 

$

(0.10

)

$

(0.16

)

$

(0.66

)

$

0.36

 

Weighted average shares of common stock outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,729,769

 

 

35,455,016

 

 

35,641,370

 

 

32,732,567

 

Diluted

 

 

35,729,769

 

 

35,455,016

 

 

35,641,370

 

 

35,276,416

 


FRONTIER AIRLINES, INC.
COMPARATIVE OPERATING STATISTICS
(unaudited)

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Selected Operating Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

Passenger revenue (000s)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

191,850

 

 

157,259

 

 

731,822

 

 

615,390

 

Regional Partner (5)

 

 

21,650

 

 

11,191

 

 

84,269

 

 

11,191

 

System Combined

 

 

213,500

 

 

168,450

 

 

816,091

 

 

626,581

 

Revenue passengers carried (000s)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

1,675

 

 

1,442

 

 

6,653

 

 

5,569

 

Regional Partner (5)

 

 

214

 

 

115

 

 

872

 

 

115

 

System Combined

 

 

1,890

 

 

1,557

 

 

7,525

 

 

5,684

 

Revenue passenger miles (RPMs) (000s) (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

1,659,174

 

 

1,360,107

 

 

6,587,589

 

 

5,120,587

 

Regional Partner (5)

 

 

124,193

 

 

75,974

 

 

527,205

 

 

75,974

 

System Combined

 

 

1,783,367

 

 

1,436,081

 

 

7,114,794

 

 

5,196,561

 

Available seat miles (ASMs) (000s) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

2,252,957

 

 

1,941,542

 

 

9,115,868

 

 

7,153,740

 

Regional Partner

 

 

182,265

 

 

111,144

 

 

736,287

 

 

111,144

 

System Combined

 

 

2,435,222

 

 

2,052,686

 

 

9,852,155

 

 

7,264,884

 

Passenger load factor

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

73.6

%

 

70.1

%

 

72.3

%

 

71.6

%

Regional Partner (5)

 

 

68.1

%

 

68.4

%

 

71.6

%

 

68.4

%

System Combined

 

 

73.2

%

 

70.0

%

 

72.2

%

 

71.5

%

Mainline Break-even load factor (1)

 

 

76.1

%

 

70.8

%

 

74.8

%

 

68.0

%

Mainline block hours

 

 

45,795

 

 

39,127

 

 

182,581

 

 

142,466

 

Mainline departures

 

 

18,165

 

 

16,398

 

 

72,888

 

 

61,812

 

Mainline average seats per departure

 

 

130

 

 

131

 

 

130

 

 

132

 

Mainline average stage length

 

 

957

 

 

904

 

 

962

 

 

877

 

Mainline average length of haul

 

 

991

 

 

943

 

 

990

 

 

919

 

Mainline average daily block hour utilization

 

 

11.0

 

 

11.1

 

 

11.1

 

 

10.4

 

Yield per RPM (cents) (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

11.48

 

 

11.53

 

 

11.03

 

 

11.96

 

Regional Partner (5)

 

 

17.43

 

 

14.73

 

 

15.98

 

 

14.73

 

System Combined

 

 

11.90

 

 

11.69

 

 

11.39

 

 

12.01

 

Total yield per RPM (cents) (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

11.87

 

 

11.83

 

 

11.38

 

 

12.35

 

Regional Partner (5)

 

 

17.43

 

 

14.73

 

 

15.98

 

 

14.73

 

System Combined

 

 

12.25

 

 

11.99

 

 

11.72

 

 

12.39

 

Yield per ASM (cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

8.46

 

 

8.07

 

 

7.97

 

 

8.56

 

Regional Partner (5)

 

 

11.88

 

 

10.07

 

 

11.45

 

 

10.07

 

System Combined

 

 

8.71

 

 

8.18

 

 

8.23

 

 

8.59

 
Total yield per ASM (cents) (2) (3)                          

Mainline

 

 

8.74

 

 

8.29

 

 

8.22

 

 

8.84

 

Regional Partner (5)

 

 

11.88

 

 

10.07

 

 

11.45

 

 

10.07

 

System Combined

 

 

8.97

 

 

8.39

 

 

8.46

 

 

8.86

 

Cost per ASM (cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline

 

 

8.77

 

 

8.47

 

 

8.42

 

 

8.41

 

Regional Partner (5)

 

 

12.95

 

 

13.17

 

 

12.56

 

 

13.17

 

System Combined

 

 

9.09

 

 

8.73

 

 

8.73

 

 

8.48

 

Mainline Expense per ASM excluding fuel (cents) (4)

 

 

6.68

 

 

6.78

 

 

6.39

 

 

6.89

 

Mainline average fare

 

$

106

 

$

102

 

$

102

 

$

104

 

Mainline average aircraft in service

 

 

46.1

 

 

38.6

 

 

44.9

 

 

37.3

 

Mainline aircraft in service at end of year

 

 

47.0

 

 

38.0

 

 

47.0

 

 

38.0

 

Mainline average age of aircraft in service at end of year

 

 

2.5

 

 

3.9

 

 

2.5

 

 

3.9

 

1.

“Break-even load factor” is the passenger load factor that will result in operating revenues being equal to operating expenses, net of certain adjustments, assuming constant yield per RPM and no change in ASMs. Break-even load factor as presented above may be deemed a non-GAAP financial measure under regulations issued by the Securities and Exchange Commission. We believe that presentation of break-even load factor calculated after certain adjustments is useful to investors because the elimination of special or unusual items allows a meaningful period-to-period comparison. Furthermore, in preparing operating plans and forecasts we rely on an analysis of break-even load factor exclusive of these special and unusual items. Our presentation of non-GAAP results should not be viewed as a substitute for our financial or statistical results based on GAAP, and other airlines may not necessarily compute break-even load factor in a manner that is consistent with our computation.


A reconciliation of the components of the calculation of break-even load factor is as follows:

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

(In thousands)

 

(Income) loss

 

$

3,716

 

$

5,752

 

$

23,430

 

$

(12,635

)

Income tax (expense) benefit

 

 

1,346

 

 

3,687

 

 

12,408

 

 

(7,822

)

Passenger revenue

 

 

191,850

 

 

157,259

 

 

731,822

 

 

615,390

 

Regional Partner Expense

 

 

(23,607

)

 

(14,634

)

 

(92,481

)

 

(14,634

)

Regional Partner Revenue

 

 

21,650

 

 

11,191

 

 

84,269

 

 

11,191

 

Charter revenue

 

 

(1,336

)

 

(506

)

 

(5,381

)

 

(2,724

)

Passenger revenue (excluding charter and regional revenue) required to break even

 

 

193,879

 

 

162,749

 

 

754,067

 

 

588,766

 

Non-GAAP adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Emergency Wartime Supplemental Appropriations Act compensation, net of bonuses

 

 

—  

 

 

—  

 

 

—  

 

 

13,842

 

Aircraft and facility lease exit costs, net of bonuses

 

 

—  

 

 

—  

 

 

—  

 

 

(4,949

)

Early retirement of debt costs, net of bonuses

 

 

—  

 

 

—  

 

 

—  

 

 

(9,677

)

Sales/leaseback and sale of engine loss, net of bonuses

 

 

400

 

 

91

 

 

(85

)

 

(1,693

)

Rotable/Engine Impairment, net of bonuses

 

 

137

 

 

(3,327

)

 

(5,123

)

 

(3,281

)

Unrealized derivative gains (losses), net of bonuses

 

 

2,405

 

 

(64

)

 

2,837

 

 

432

 

Horizon start-up costs, net of and bonuses

 

 

—  

 

 

(1,061

)

 

—  

 

 

(1,061

)

Passenger revenue (excluding charter and regional partner revenue) required to break-even (based on adjusted amounts)

 

$

196,821

 

$

158,388

 

$

751,696

 

$

582,378

 


The calculation of the break-even load factor follows:

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Calculation of break-even load factor using GAAP amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

Passenger revenue required to break-even

 

 

193,879

 

 

162,749

 

 

754,067

 

 

588,766

 

Yield per RPM (cents)

 

 

11.48

 

 

11.53

 

 

11.03

 

 

11.96

 

Revenue passenger miles to break even assuming constant yield per RPM 

 

 

1,688,480

 

 

1,412,133

 

 

6,838,110

 

 

4,920,834

 

Available seat miles (000’s)

 

 

2,252,957

 

 

1,941,542

 

 

9,115,868

 

 

7,153,740

 

Break-even load factor

 

 

74.9

%

 

72.7

%

 

75.0

%

 

68.8

%

Calculation of break-even load factor using Non-GAAP components:

 

 

 

 

 

 

 

 

 

 

 

 

 

Passenger revenue (excluding charter and regional partner revenue) required to break even (based on adjusted amounts)

 

 

196,821

 

 

158,388

 

 

751,696

 

 

582,378

 

Yield per RPM (cents)

 

 

11.48

 

 

11.53

 

 

11.03

 

 

11.96

 

Revenue passenger miles to break even assuming constant yield per RPM 

 

 

1,714,101

 

 

1,374,290

 

 

6,816,609

 

 

4,867,442

 

Available seat miles (000’s)

 

 

2,252,957

 

 

1,941,542

 

 

9,115,868

 

 

7,153,740

 

Break-even load factor (as adjusted)

 

 

76.1

%

 

70.8

%

 

74.8

%

 

68.0

%

GAAP difference

 

 

-1.1

%

 

1.9

%

 

0.2

%

 

0.7

%


2.

“Yield per RPM” is determined by dividing passenger revenues (excluding charter revenue) by revenue passenger miles.
   

3.

For purposes of these yield calculations, charter revenue is excluded from passenger revenue.  These figures may be deemed non-GAAP financial measures under regulations issued by the Securities and Exchange Commission.  We believe that presentation of yield excluding charter revenue is useful to investors because charter flights are not included in RPMs or ASMs.  Furthermore, in preparing operating plans and forecasts, we rely on an analysis of yield exclusive of charter revenue.  Our presentation of non-GAAP financial measures should not be viewed as a substitute for our financial or statistical results based on GAAP.  The calculation of passenger revenue excluding charter revenue is as follows:

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Passenger revenues - mainline, as reported

 

 

191,850

 

 

157,259

 

 

731,822

 

 

615,390

 

Less: charter revenue

 

 

1,336

 

 

506

 

 

5,381

 

 

2,724

 

Passenger revenues - mainline excluding charter

 

 

190,514

 

 

156,753

 

 

726,441

 

 

612,666

 

Add: Passenger revenues - regional partner

 

 

21,650

 

 

11,191

 

 

84,269

 

 

11,191

 

Passenger revenues, system combined

 

$

212,164

 

$

167,944

 

$

810,710

 

$

623,857

 

4.

This may be deemed a non-GAAP financial measure under regulations issued by the Securities and Exchange Commission. We believe the presentation of financial information excluding fuel expense is useful to investors because we believe that fuel expense tends to fluctuate more than other operating expenses, it facilitates comparison of results of operations between current and past periods and enables investors to better forecast future trends in our operations. Furthermore, in preparing operating plans and forecasts, we rely, in part, on trends in our historical results of operations excluding fuel expense. However, our presentation of non-GAAP financial measures should not be viewed as a substitute for our financial results determined in accordance with GAAP.
   

5.

In September 2003, we signed a 12-year agreement with Horizon, under which Horizon operates up to nine 70-seat CRJ 700 aircraft under our Frontier JetExpress brand. The service began on January 1, 2004 and replaced our codeshare with Mesa Airlines which terminated on December 31, 2003. In accordance with Emerging Issues Task Force No. 01-08, “Determining Whether an Arrangement Contains a Lease” (“EITF 01-08”), we have concluded that the Horizon agreement contains leases as the agreement conveys the right to use a specific number and specific type of aircraft over a stated period of time. Therefore, we began recording revenues and expenses related to the Horizon agreement gross. Under the Mesa agreement, we recorded JetExpress revenues reduced by related expenses net in other revenues. JetExpress operations under the Mesa agreement from April 1, 2003 to December 31, 2003 are not included in regional partner statistics in 2003 as the Mesa arrangement was effective prior to May 28, 2003, the effective date of EITF 01-08.


Amounts included in other revenues for Mesa for the three months and years ended March 31, 2005 and 2004 were as follows:

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Mesa revenues (000s)

 

$

—  

 

$

—  

 

$

—  

 

$

25,155

 

Mesa expenses (000s)

 

$

—  

 

$

—  

 

 

—  

 

 

(23,438

)

Net amount included in other revenues

 

$

—  

 

$

—  

 

$

—  

 

$

1,717

 

Mesa’s revenue passenger miles (RPMs) and available seat miles (ASMs) for the three months and years ended March 31, 2005 and 2004 were as follows:

 

 

Three Months Ended
March 31,

 

Year Ended
March 31,

 

 

 

 

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

Mesa RPMs (000s)

 

 

—  

 

 

—  

 

 

—  

 

 

148,163

 

Mesa ASMs (000s)

 

 

—  

 

 

—  

 

 

—  

 

 

174,435

 

*

NOTE:  Amounts may not recalculate due to rounding.

SOURCE  Frontier Airlines
          -0-                                       05/26/2005
          /CONTACT:  Joe Hodas of Frontier Airlines, +1-720-374-4504, jhodas@flyfrontier.com/
          /Web site:  http://www.frontierairlines.com/