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Frontier Airlines Reports Fiscal Second Quarter 2006 Results
Thursday October 27, 8:27 pm ET
DENVER, Oct. 27 /PRNewswire-FirstCall/ -- Frontier Airlines, Inc. (Nasdaq: FRNT - News) today reported a net income of $6.9 million, or $.18 per diluted common share, for the airline's second fiscal quarter ended September 30, 2005 compared to a net loss of $2.1 million, or $0.06 per diluted common share, for the same period last year. Included in the net income for the three months ended September 30, 2005 were the following items before the effect of income taxes: unrealized gains on fuel hedges of $0.3 million and net gains of $0.6 million related primarily to the sale of Boeing assets held for sale. These items, net of income taxes, increased net income by $0.02 per diluted share. Included in the net loss for the quarter ended September 30, 2004 were the following items before the effect of income taxes: a loss of $74,000 on the sale of other assets; a write-down of $4.2 million of the carrying value of expendable Boeing 737 inventory; and an unrealized gain on fuel hedges of $4.1 million. These items, net of income taxes, decreased the airline's net loss by approximately $.01 per diluted share.
Chief Executive Officer's Comments
Frontier President and CEO Jeff Potter said, "While we can point to numbers and speak to yields and revenue as the heroes of this quarter's solid performance, there is no doubt in my mind that our return to profitability is a direct reflection of the hard work, dedication and sheer excellence of our employees. Our on-time performance this quarter was one of the best in the industry, and across the board we are providing a customer service experience second to none. The end result is that customers are responding in growing numbers, and not just in Denver, but across all of our markets. We generated a significant 16 percent year-over-year increase in the number of mainline passengers we carried, and quite simply, we are running as good an airline as we ever have in our history.
"Although a quarter as strong as this is certainly cause to celebrate and for our employees to congratulate each other on a job well done, we recognize that the ills that continue to plague this industry haven't disappeared. Fuel remains at historic highs and the market still suffers from overcapacity leading to general weakness in fares. We don't anticipate a solution to these issues in the coming quarter, and we expect that high fuel costs and weak fares will adversely affect earnings for our fiscal third quarter 2006."
Operating Highlights
Mainline passenger revenue increased 21.9 percent as mainline revenue passenger miles (RPMs) grew at a rate of 11.6 percent during the fiscal second quarter, while mainline capacity growth as measured by mainline ASMs increased 5.7 percent from the same quarter last year. As a result, the airline's mainline load factor was 77.1 percent for its fiscal second quarter of 2006, 4.2 load factor points more than the airline's mainline load factor of 72.9 percent during the same quarter last year. The airline's mainline breakeven load factor, excluding special items, for the fiscal second quarter 2006 decreased 0.6 load factor points from 73.4 percent to 72.8 percent. Frontier's mainline breakeven load factor, excluding special items, decreased from the prior comparable period principally as a result of an 8.8 percent increase in mainline passenger yield and a 29.5 percent increase in mainline other revenue partially offset by an 8.1 percent increase in mainline cost per available seat mile (CASM).
During the fiscal second quarter 2006, the airline's mainline passenger revenue per available seat mile (RASM) increased 14.9 percent to 9.01 cents from the same quarter last year. The increase in mainline RASM was due to the combination of the 8.8 percent increase in mainline yield per RPM and the 4.2 point load factor increase. Mainline average length of haul decreased 3.7 percent on a year-over-year basis, primarily because the prior year included traffic from the Company's focus city, Los Angeles, which the Company subsequently discontinued.
Mainline fuel cost per gallon, excluding unrealized hedging gains, was $1.95 during the quarter ended September 30, 2005, compared to $1.41 during the quarter ended September 30, 2004, an increase of 38.3 percent.
The airline's mainline CASM for the fiscal second quarter, excluding fuel, was 5.86 cents compared to 6.16 cents for the same quarter last year, a decrease of 4.9 percent. Included in CASM, excluding fuel, for the quarter ended September 30, 2005 was a reduction of sales and promotion expense of $3.6 million or 0.14 cents per ASM, due to a favorable sales and use tax credit on the taxation of ticketing services and $0.6 million, or 0.02 cents per ASM, in net gains related to the sale of Boeing assets held for sale. Included in CASM excluding fuel, for the quarter ended September 30, 2004 was .18 cents per ASM of impairments and losses on sales of Boeing assets.
Senior Vice President and Chief Financial Officer Paul Tate discussed the airline's quarter ended September 30, 2005 unit costs stating, "Even when one excludes these large cost credits discussed above, our CASM ex-fuel further demonstrates our classification as one of the industry's low cost producers, particularly in light of the 14.9 percent year-over-year passenger unit revenue increase and 3.7 percent length of haul decrease." The airline's current unrestricted cash and short term investments and working capital as of September 30, 2005 was $144.1 million and $41.8 million, respectively. This compares to the Company's unrestricted cash and working capital for the same period last year of 160.1 million and $67.3 million, respectively.
Thursday October 27, 8:27 pm ET
DENVER, Oct. 27 /PRNewswire-FirstCall/ -- Frontier Airlines, Inc. (Nasdaq: FRNT - News) today reported a net income of $6.9 million, or $.18 per diluted common share, for the airline's second fiscal quarter ended September 30, 2005 compared to a net loss of $2.1 million, or $0.06 per diluted common share, for the same period last year. Included in the net income for the three months ended September 30, 2005 were the following items before the effect of income taxes: unrealized gains on fuel hedges of $0.3 million and net gains of $0.6 million related primarily to the sale of Boeing assets held for sale. These items, net of income taxes, increased net income by $0.02 per diluted share. Included in the net loss for the quarter ended September 30, 2004 were the following items before the effect of income taxes: a loss of $74,000 on the sale of other assets; a write-down of $4.2 million of the carrying value of expendable Boeing 737 inventory; and an unrealized gain on fuel hedges of $4.1 million. These items, net of income taxes, decreased the airline's net loss by approximately $.01 per diluted share.
Chief Executive Officer's Comments
Frontier President and CEO Jeff Potter said, "While we can point to numbers and speak to yields and revenue as the heroes of this quarter's solid performance, there is no doubt in my mind that our return to profitability is a direct reflection of the hard work, dedication and sheer excellence of our employees. Our on-time performance this quarter was one of the best in the industry, and across the board we are providing a customer service experience second to none. The end result is that customers are responding in growing numbers, and not just in Denver, but across all of our markets. We generated a significant 16 percent year-over-year increase in the number of mainline passengers we carried, and quite simply, we are running as good an airline as we ever have in our history.
"Although a quarter as strong as this is certainly cause to celebrate and for our employees to congratulate each other on a job well done, we recognize that the ills that continue to plague this industry haven't disappeared. Fuel remains at historic highs and the market still suffers from overcapacity leading to general weakness in fares. We don't anticipate a solution to these issues in the coming quarter, and we expect that high fuel costs and weak fares will adversely affect earnings for our fiscal third quarter 2006."
Operating Highlights
Mainline passenger revenue increased 21.9 percent as mainline revenue passenger miles (RPMs) grew at a rate of 11.6 percent during the fiscal second quarter, while mainline capacity growth as measured by mainline ASMs increased 5.7 percent from the same quarter last year. As a result, the airline's mainline load factor was 77.1 percent for its fiscal second quarter of 2006, 4.2 load factor points more than the airline's mainline load factor of 72.9 percent during the same quarter last year. The airline's mainline breakeven load factor, excluding special items, for the fiscal second quarter 2006 decreased 0.6 load factor points from 73.4 percent to 72.8 percent. Frontier's mainline breakeven load factor, excluding special items, decreased from the prior comparable period principally as a result of an 8.8 percent increase in mainline passenger yield and a 29.5 percent increase in mainline other revenue partially offset by an 8.1 percent increase in mainline cost per available seat mile (CASM).
During the fiscal second quarter 2006, the airline's mainline passenger revenue per available seat mile (RASM) increased 14.9 percent to 9.01 cents from the same quarter last year. The increase in mainline RASM was due to the combination of the 8.8 percent increase in mainline yield per RPM and the 4.2 point load factor increase. Mainline average length of haul decreased 3.7 percent on a year-over-year basis, primarily because the prior year included traffic from the Company's focus city, Los Angeles, which the Company subsequently discontinued.
Mainline fuel cost per gallon, excluding unrealized hedging gains, was $1.95 during the quarter ended September 30, 2005, compared to $1.41 during the quarter ended September 30, 2004, an increase of 38.3 percent.
The airline's mainline CASM for the fiscal second quarter, excluding fuel, was 5.86 cents compared to 6.16 cents for the same quarter last year, a decrease of 4.9 percent. Included in CASM, excluding fuel, for the quarter ended September 30, 2005 was a reduction of sales and promotion expense of $3.6 million or 0.14 cents per ASM, due to a favorable sales and use tax credit on the taxation of ticketing services and $0.6 million, or 0.02 cents per ASM, in net gains related to the sale of Boeing assets held for sale. Included in CASM excluding fuel, for the quarter ended September 30, 2004 was .18 cents per ASM of impairments and losses on sales of Boeing assets.
Senior Vice President and Chief Financial Officer Paul Tate discussed the airline's quarter ended September 30, 2005 unit costs stating, "Even when one excludes these large cost credits discussed above, our CASM ex-fuel further demonstrates our classification as one of the industry's low cost producers, particularly in light of the 14.9 percent year-over-year passenger unit revenue increase and 3.7 percent length of haul decrease." The airline's current unrestricted cash and short term investments and working capital as of September 30, 2005 was $144.1 million and $41.8 million, respectively. This compares to the Company's unrestricted cash and working capital for the same period last year of 160.1 million and $67.3 million, respectively.
