DENVER, May 2, 2024
/PRNewswire/ -- Frontier Group Holdings, Inc. (Nasdaq: ULCC),
parent company of Frontier Airlines, Inc., today reported financial
results for the first quarter of 2024 and issued guidance for the
second quarter and full-year 2024.
First Quarter 2024 Summary:
- Total operating revenues were $865
million, 2 percent higher than the comparable 2023 quarter,
on capacity growth of 8 percent
- Cost per available seat mile ("CASM") was 9.49 cents, a reduction of 5 percent over the
comparable 2023 quarter
- Adjusted CASM (excluding fuel), a non-GAAP measure, was
6.71 cents, on a 9 percent shorter
average stage length; adjusted CASM (excluding fuel) on a
stage-adjusted basis to 1,000 miles, a non-GAAP measure, was 3
percent lower than the comparable 2023 quarter
- Pre-tax loss and adjusted (non-GAAP) pre-tax loss were each
$24 million; pre-tax margin and
adjusted (non-GAAP) pre-tax margin were each (2.8) percent,
reflecting better than expected cost and revenue performance
- Took delivery of six A321neo aircraft during the first
quarter, increasing the proportion of the fleet comprised of the
more fuel-efficient A320neo family aircraft to 80 percent as of
March 31, 2024, the highest of all major U.S. carriers
- Generated 105 available seat miles ("ASM") per gallon, a 2
percent improvement compared to the corresponding 2023
quarter, reaffirming Frontier's position as "America's
Greenest Airline" as measured by fuel efficiency (ASMs per fuel
gallon consumed during the first quarter; compared to all other
major U.S. carriers)
- As part of the strategy to diversify revenue and provide
additional premium options, the Company launched BizFare, a new
program designed to help companies save money on business travel
and deliver a convenient, rewarding experience, and UpFront Plus, a
new upgraded seating option with extra space and comfort in the
first two rows of the aircraft
- Opened a 10th crew base in Cleveland, announced Frontier's largest
network expansion focused on high-fare, underserved markets and
continued to trend as planned toward targeted levels of scheduled
out-and-back flying by peak summer 2024
- Launched a reimagined Frontier Miles loyalty program which
contributed to the Frontier Airlines World Mastercard being
recognized by Money.com as the best airline credit card for budget
travel, citing its high reward rate and the fact that every dollar
spent counts toward elite status
"Rigorous cost and revenue management contributed to first
quarter results which exceeded expectations," commented
Barry Biffle, Chief Executive
Officer. "We expect results in the balance of the year to build on
the revenue and network enhancements we're implementing, most
notably the transition to underserved, high-fare markets, revenue
diversification and cost savings, including benefits related to
network simplification. I'm proud of Team Frontier for their
extraordinary contributions and for their ongoing commitment to
deliver Low Fares Done Right every day."
First Quarter 2024 Select Financial
Highlights
The following is a summary of first quarter select financial
results, including both GAAP and adjusted (non-GAAP) metrics. Refer
to "Reconciliations of Non-GAAP Financial Information" in the
appendix of this release.
|
(unaudited, in
millions, except for percentages and per share data)
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
As Reported
(GAAP)
|
|
Adjusted
(Non-GAAP)
|
|
As Reported
(GAAP)
|
|
Adjusted
(Non-GAAP)
|
|
Total operating
revenues
|
$
865
|
|
$
865
|
|
$
848
|
|
$
848
|
|
Total operating
expenses
|
$
896
|
|
$
896
|
|
$
873
|
|
$
872
|
|
Pre-tax income
(loss)
|
$
(24)
|
|
$
(24)
|
|
$
(17)
|
|
$
(16)
|
|
Pre-tax
margin
|
(2.8) %
|
|
(2.8) %
|
|
(2.0) %
|
|
(1.9) %
|
|
Net income
(loss)
|
$
(26)
|
|
$
(21)
|
|
$
(13)
|
|
$
(12)
|
|
Diluted earnings (loss)
per share
|
$
(0.12)
|
|
$
(0.09)
|
|
$
(0.06)
|
|
$
(0.06)
|
Revenue Performance
Total operating revenue for the first quarter of 2024 increased
2 percent to $865 million on capacity
growth of 8 percent, both compared to the corresponding 2023
quarter, resulting in a revenue per available seat mile ("RASM") of
9.16 cents, a reduction of 5 percent
compared to the corresponding 2023 quarter. Departures increased 14
percent on a 9 percent shorter average stage length, and total
revenue per passenger was $123.53,
down 1 percent, all compared to the corresponding 2023 quarter. The
decline in RASM from 9.67 cents in the 2023 quarter was driven
by a decrease in flown load factor from 83 percent to 73
percent, associated with the Company's focus on maximizing total
revenue, with passenger mile yields in the first quarter of 2024
increasing to 12.6 cents compared to
11.7 cents in the corresponding 2023
quarter.
Cost Performance
Total operating expenses for the first quarter of 2024 were
$896 million, including $263 million of fuel expenses at an average cost
of $2.93 per gallon. Adjusted total
operating expenses (excluding fuel), a non-GAAP measure, were
$633 million, approximately 3 percent
below the midpoint of guidance due primarily to
better-than-expected cost performance across the organization.
CASM was 9.49 cents in the first
quarter of 2024, 5 percent lower than the comparable 2023 quarter.
CASM (excluding fuel), a non-GAAP measure, was 6.71 cents, 1 percent higher than the 2023
quarter. Adjusted CASM (excluding fuel) stage-length adjusted to
1,000 miles, a non-GAAP measure, was 3 percent lower than the
comparable 2023 quarter due primarily to three additional
sale-leaseback transactions in the quarter along with aggressive
cost management across the organization that helped mitigate year
over year inflationary impacts.
Earnings
Pre-tax loss for the first quarter of 2024 was $24 million, reflecting a pre-tax margin of (2.8)
percent.
Net loss for the first quarter of 2024 was $26 million, inclusive of a $5 million non-cash valuation allowance against
deferred tax assets largely related to the pre-tax losses generated
during the quarter. This allowance is not expected to affect the
Company's ability to utilize cumulative net operating losses
against future potential income tax liabilities. Excluding this
item, adjusted (non-GAAP) net loss was $21 million.
Cash and Liquidity
Unrestricted cash and cash equivalents as of March 31, 2024
was $622 million, $13 million higher than year-end
2023.
Fleet
As of March 31, 2024, Frontier had a fleet of 142 Airbus
single-aisle aircraft, as scheduled below, all financed through
operating leases that expire between 2025 and 2036.
|
Equipment
|
Quantity
|
Seats
|
|
A320neo
|
82
|
186
|
|
A320ceo
|
8
|
180 - 186
|
|
A321ceo
|
21
|
230
|
|
A321neo
|
31
|
240
|
|
Total
fleet
|
142
|
|
Frontier is "America's Greenest Airline" as measured by fuel
efficiency (ASMs per fuel gallon consumed during the first quarter;
compared to all other major U.S. carriers). During the first
quarter of 2024, Frontier generated 105 ASMs per gallon, a 2
percent improvement compared to the corresponding 2023 quarter.
Frontier took delivery of six A321neo aircraft during the first
quarter of 2024, increasing the proportion of the fleet comprised
of the more fuel-efficient A320neo family aircraft to 80 percent as
of March 31, 2024, the highest of all major U.S. carriers. The
A321neo is expected to unlock meaningful scale efficiencies by way
of fuel savings and higher average seats per departure. As of
March 31, 2024, the Company had commitments for an additional
204 aircraft to be delivered through 2029, including purchase
commitments for 67 A320neo aircraft and 137 A321neo aircraft, the
latter of which represents 67 percent of future committed
deliveries.
New, Upgraded FRONTIER MILES℠ Frequent Flyer
Program
In January 2024, the Company
officially launched its reimagined FRONTIER Miles℠ loyalty program
allowing consumers to "Get It All For Less." The new program
enables consumers to earn Travel Miles and Elite Status Points fast
and get rewarded for each dollar spent with the Frontier Airlines
World Mastercard with the highest earn rate on total eligible
purchases in the industry, at up to 20 miles or points per dollar
spent for completed flights.
Travel Miles and Elite Status Points now accrue based on dollars
spent on Frontier eligible products, including flights, bags, seat
assignments, and bundles, with a standard 10x multiplier such that
$1 of spend earns 10 miles. Mileage
multipliers increase at every status level up to 20x.
The enhancements to the credit card earned a distinction from a
leading personal finance publication. In March 2024, Money.com recognized the Frontier
Airlines World Mastercard as being the best airline credit card for
budget travel, citing its high reward rate and the fact that every
dollar spent counts toward elite status.
Forward Guidance
The guidance provided below is based on the Company's current
estimates and is not a guarantee of future performance. This
guidance is subject to significant risks and uncertainties that
could cause actual results to differ materially, including the risk
factors discussed in the Company's reports on file with the
Securities and Exchange Commission (the "SEC").
Frontier undertakes no duty to update any forward-looking
statements or estimates, except as required by applicable law.
Further, this guidance excludes special items and the
reconciliation of non-GAAP measures to the comparable GAAP measures
because such amounts cannot be determined at this time.
The Company is making significant progress to simplify its
network and allocate growth to high fare and underserved "VFR"
(Visiting Friends and Relatives) markets and is on track to achieve
its target of over 80 percent out-and-back flying by June 2024. These efforts are supported by the
expansion to 13 crew bases, with Cincinnati and Chicago expected to open in May 2024 and San Juan,
Puerto Rico expected to open in June
2024. Alongside seasonality factors, revenue diversification
and non-fuel cost savings initiatives, the network transition is
expected to drive sequentially higher adjusted (non-GAAP) pre-tax
margin in the second quarter and support the full-year 2024
adjusted (non-GAAP) pre-tax margin guide of 3 to 6 percent, despite
higher fuel costs.
Second Quarter 2024
Capacity is expected to grow by 12 to 14 percent over the
comparable 2023 quarter. Pursuant to the shift to high-fare,
underserved markets, a significant portion of scheduled capacity in
the second quarter of 2024 is allocated to new markets which the
Company believes will drive higher RASM as they mature. Fuel costs
are expected to be $2.80 to
$2.90 per gallon based on the blended
fuel curve on May 1, 2024. Adjusted
(non-GAAP) total operating expenses (excluding fuel) are expected
to be $705 to $720 million. Adjusted (non-GAAP) pre-tax margin
(excluding special items) is expected to be 3 to 6 percent,
including the impact of higher fuel prices and network
transition.
Full Year 2024
Full-year guidance is unchanged from February 6, 2024 with the exception of fuel
prices. To recap, capacity is expected to be 12 to 15 percent
higher compared to 2023 and adjusted (non-GAAP) pre-tax margin is
expected to be 3 to 6 percent (excluding special items). Fuel costs
are now expected to be $2.80 to
$2.90 per gallon based on the blended
fuel curve on May 1, 2024,
$0.10 per gallon higher than
previous guidance. Adjusted (non-GAAP) CASM (excluding fuel),
stage-length adjusted to 1,000 miles, is expected to be down 1 to 3
percent over the prior year. Pre-delivery deposits, net of refunds,
are expected to be $20 to
$50 million and other capital
expenditures are expected to be $160
to $180 million.
The current forward guidance estimates are presented in the
following tables:
|
Second
Quarter
|
|
2024(a)
|
|
Capacity growth (versus
2Q 2023)(b)
|
12 to 14
percent
|
|
Adjusted (non-GAAP)
total operating expenses (excluding fuel) ($
millions)(c)
|
$705 to $720
|
|
Average fuel cost per
gallon(d)
|
$2.80 to
$2.90
|
|
Effective tax
rate(e)
|
~23 percent
|
|
Adjusted (non-GAAP)
pre-tax margin
|
3 to 6
percent
|
|
|
|
Full
Year
|
|
2024(a)
|
|
Capacity growth (versus
2023)(b)
|
12 to 15
percent
|
|
Average fuel cost per
gallon(d)
|
$2.80 to
$2.90
|
|
Adjusted (non-GAAP)
CASM (excluding fuel), stage-length adjusted to 1,000
miles(c)
|
Down 1 to 3
percent
|
|
Adjusted (non-GAAP)
pre-tax margin
|
3 to 6
percent
|
|
Pre-delivery deposits,
net of refunds ($ millions)
|
$20 to $50
|
|
Other capital
expenditures ($ millions)(f)
|
$160 to $180
|
|
|
_________________
|
(a)
|
Includes guidance on
certain non-GAAP measures, including adjusted total operating
expenses (excluding fuel) and adjusted pre-tax margin, and which
excludes, among other things, special items. The Company is unable
to reconcile these forward-looking projections to GAAP as the
nature or amount of such special items cannot be determined at this
time.
|
|
|
|
(b)
|
Given the dynamic
nature of the current demand environment, actual capacity
adjustments made by the Company may be materially different than
what is currently expected.
|
|
|
|
(c)
|
Amount estimated
excludes fuel expense and special items, the latter of which are
not estimable at this time. The amount takes into consideration the
additional expected capacity. Stage-length adjusted to 1,000 miles:
Adjusted CASM (excluding fuel) * Square root (stage length /
1,000).
|
|
|
|
(d)
|
Estimated fuel cost per
gallon is based upon the blended jet fuel curve on May 1, 2024 and
is inclusive of estimated fuel taxes and into-plane fuel
costs.
|
|
|
|
(e)
|
The Company's second
quarter actual tax rate may differ from the forecasted rate due to
varying factors which may include, but are not limited to, the
composition of items of income and expense recognized, including
the amount of non-deductible or other similar items.
|
|
|
|
(f)
|
Other capital
expenditures estimate includes capitalized heavy
maintenance.
|
Conference Call
The Company will host a conference call to discuss first quarter
2024 results today, May 2, 2024, at 11:00 a.m. Eastern Time (USA). Investors may listen to a live,
listen-only webcast available on the investor relations section of
the Company's website at
https://ir.flyfrontier.com/news-and-events/events. The call will
also be archived and available for 90 days on the investor
relations section of the Company's website.
About Frontier Airlines
Frontier Airlines, Inc., a subsidiary of Frontier Group
Holdings, Inc. (Nasdaq: ULCC), is committed to "Low Fares Done
Right." Headquartered in Denver,
Colorado, the Company operates 142 A320 family aircraft and
has the largest A320neo family fleet in the U.S. The use of these
aircraft, along with Frontier's high-density seating configuration
and weight-saving initiatives, have contributed to Frontier's
continued ability to be the most fuel-efficient of all major U.S.
carriers when measured by ASMs per fuel gallon consumed. With more
than 200 new Airbus planes on order, Frontier will continue to grow
to deliver on the mission of providing affordable travel across
America.
Cautionary Statement Regarding Forward-Looking Statements and
Information
Certain statements in this release should be considered
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, Section 21E of the Securities
Exchange Act of 1934, as amended, and the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are
based on the Company's current expectations and beliefs with
respect to certain current and future events and anticipated
financial and operating performance. Words such as "expects,"
"will," "plans," "intends," "anticipates," "indicates," "remains,"
"believes," "estimates," "forecast," "guidance," "outlook,"
"goals," "targets" and similar expressions are intended to identify
forward-looking statements. Additionally, forward-looking
statements include statements that do not relate solely to
historical facts, such as statements which identify uncertainties
or trends, discuss the possible future effects of current known
trends or uncertainties, or which indicate that the future effects
of known trends or uncertainties cannot be predicted, guaranteed or
assured. All forward-looking statements in this release are based
upon information available to the Company on the date of this
release. The Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new
information, future events, changed circumstances or otherwise,
except as required by applicable law.
Actual results could differ materially from these
forward-looking statements due to numerous risks and uncertainties
relating to the Company's operations and business environment
including, without limitation, the following: unfavorable economic
and political conditions in the states where the Company operates
and globally, including an inflationary environment and potential
recession, and the resulting impact on cost inputs and/or consumer
demand for air travel; the highly competitive nature of the global
airline industry and susceptibility of the industry to price
discounting and changes in capacity; disruptions to the Company's
flight operations, including due to factors beyond the Company's
control, such as adverse weather events or air traffic controller
staffing shortages; the Company's ability to attract and retain
qualified personnel at reasonable costs; high and/or volatile fuel
prices or significant disruptions in the supply of aircraft fuel,
including as a result of the war between Russia and Ukraine; the Company's reliance on technology
and automated systems to operate its business and the impact of any
significant failure or disruption of, or failure to effectively
integrate and implement, the technology or systems; the Company's
reliance on third-party service providers and the impact of any
failure of these parties to perform as expected, or interruptions
in the Company's relationships with these providers or their
provision of services; adverse publicity and/or harm to the
Company's brand or reputation; reduced travel demand and potential
tort liability as a result of an accident, catastrophe or incident
involving the Company, its codeshare partners or another airline;
terrorist attacks, international hostilities or other security
events, or the fear of terrorist attacks or hostilities, even if
not made directly on the airline industry; increasing privacy and
data security obligations or a significant data breach; further
changes to the airline industry with respect to alliances and joint
business arrangements or due to consolidations; changes in the
Company's network strategy or other factors outside its control
resulting in less economic aircraft orders, costs related to
modification or termination of aircraft orders or entry into less
favorable aircraft orders; the Company's reliance on a single
supplier for its aircraft and two suppliers for its engines, and
the impact of any failure to obtain timely deliveries, additional
equipment or support from any of these suppliers; the impacts of
union disputes, employee strikes or slowdowns, and other
labor-related disruptions on the Company's operations; extended
interruptions or disruptions in service at major airports where the
Company operates; the impacts of seasonality and other factors
associated with the airline industry; the Company's failure to
realize the full value of its intangible assets or its long-lived
assets, causing the Company to record impairments; the costs of
compliance with extensive government regulation of the airline
industry; costs, liabilities and risks associated with
environmental regulation and climate change; the Company's
inability to accept or integrate new aircraft into the Company's
fleet as planned; the impacts of the Company's significant amount
of financial leverage from fixed obligations, the possibility the
Company may seek material amounts of additional financial liquidity
in the short-term and the impacts of insufficient liquidity on the
Company's financial condition and business; failure to comply with
the covenants in the Company's financing agreements or failure to
comply with financial and other covenants governing the Company's
other debt; changes in, or failure to retain, the Company's senior
management team or other key employees; current or future
litigation and regulatory actions, or failure to comply with the
terms of any settlement, order or arrangement relating to these
actions; increases in insurance costs or inadequate insurance
coverage; and other risks and uncertainties set forth from time to
time under sections captioned "Risk Factors" in the Company's
reports and other documents filed with the SEC, including the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2023, which was filed with the SEC on
February 20, 2024, and the Company's Quarterly Report on Form
10-Q being filed at or around the date hereof.
|
Frontier Group
Holdings, Inc.
|
|
Condensed
Consolidated Statements of Operations
|
|
(unaudited, in
millions, except share and per share data)
|
|
|
Three Months Ended
March 31,
|
|
Percent
Change
|
|
2024
|
|
2023
|
|
|
Operating
revenues:
|
|
|
|
|
|
|
Passenger
|
$
845
|
|
$
830
|
|
2 %
|
|
Other
|
20
|
|
18
|
|
11 %
|
|
Total operating
revenues
|
865
|
|
848
|
|
2 %
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
Aircraft
fuel
|
263
|
|
292
|
|
(10) %
|
|
Salaries, wages and
benefits
|
233
|
|
203
|
|
15 %
|
|
Aircraft
rent
|
159
|
|
131
|
|
21 %
|
|
Station
operations
|
137
|
|
124
|
|
10 %
|
|
Maintenance, materials
and repairs
|
49
|
|
45
|
|
9 %
|
|
Sales and
marketing
|
40
|
|
40
|
|
— %
|
|
Depreciation and
amortization
|
16
|
|
11
|
|
45 %
|
|
Other
operating
|
(1)
|
|
27
|
|
N/M
|
|
Total operating
expenses
|
896
|
|
873
|
|
3 %
|
|
Operating income
(loss)
|
(31)
|
|
(25)
|
|
24 %
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest
expense
|
(9)
|
|
(6)
|
|
50 %
|
|
Capitalized
interest
|
9
|
|
6
|
|
50 %
|
|
Interest income and
other
|
7
|
|
8
|
|
(13) %
|
|
Total other income
(expense)
|
7
|
|
8
|
|
(13) %
|
|
Income (loss) before
income taxes
|
(24)
|
|
(17)
|
|
41 %
|
|
Income tax expense
(benefit)
|
2
|
|
(4)
|
|
N/M
|
|
Net income
(loss)
|
$
(26)
|
|
$
(13)
|
|
100 %
|
|
Earnings (loss) per
share:
|
|
|
|
|
|
|
Basic
(a)
|
$
(0.12)
|
|
$
(0.06)
|
|
100 %
|
|
Diluted
(a)
|
$
(0.12)
|
|
$
(0.06)
|
|
100 %
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
Basic
(a)
|
223,428,610
|
|
218,181,386
|
|
2 %
|
|
Diluted
(a)
|
223,428,610
|
|
218,181,386
|
|
2 %
|
__________________
|
N/M = Not
meaningful
|
|
|
(a)
|
In periods of net
income, the dilutive impact of the 3.1 million warrants outstanding
relating to funding provided pursuant to the CARES Act and related
legislation, any non-participating options and unvested restricted
stock units are included in the diluted earnings per share
calculations. In addition, most of the Company's 2.6 million
outstanding options are participating securities and are therefore
not expected to be part of the Company's diluted share count under
the two-class method until they are exercised, but, in periods of
net income, are included as an adjustment to the numerator of the
Company's earnings per share calculation as they are eligible to
participate in the Company's earnings. The participating securities
impact has been subtracted from periods presented with positive net
income in the computation of basic and diluted earnings per
share.
|
|
Frontier Group
Holdings, Inc.
Selected Operating
Statistics
(unaudited)
|
|
Three Months Ended
March 31,
|
|
Percent
Change
|
|
2024
|
|
2023
|
|
|
Operating statistics
(a)
|
|
|
|
|
|
|
Available seat miles
("ASMs") (millions)
|
9,446
|
|
8,775
|
|
8 %
|
|
Departures
|
48,666
|
|
42,712
|
|
14 %
|
|
Average stage length
(miles)
|
956
|
|
1,053
|
|
(9) %
|
|
Block hours
|
132,057
|
|
122,970
|
|
7 %
|
|
Average aircraft in
service
|
137
|
|
121
|
|
13 %
|
|
Aircraft – end of
period
|
142
|
|
125
|
|
14 %
|
|
Average daily aircraft
utilization (hours)
|
10.6
|
|
11.3
|
|
(6) %
|
|
Passengers
(thousands)
|
7,005
|
|
6,826
|
|
3 %
|
|
Average seats per
departure
|
202
|
|
195
|
|
4 %
|
|
Revenue passenger miles
("RPMs") (millions)
|
6,869
|
|
7,262
|
|
(5) %
|
|
Load Factor
|
72.7 %
|
|
82.8 %
|
|
(10.1) pts
|
|
Fare revenue per
passenger ($)
|
46.21
|
|
44.33
|
|
4 %
|
|
Non-fare passenger
revenue per passenger ($)
|
74.41
|
|
77.25
|
|
(4) %
|
|
Other revenue per
passenger ($)
|
2.91
|
|
2.70
|
|
8 %
|
|
Total ancillary revenue
per passenger ($)
|
77.32
|
|
79.95
|
|
(3) %
|
|
Total revenue per
passenger ($)
|
123.53
|
|
124.28
|
|
(1) %
|
|
Total revenue per
available seat mile ("RASM") (¢)
|
9.16
|
|
9.67
|
|
(5) %
|
|
Cost per available seat
mile ("CASM") (¢)
|
9.49
|
|
9.95
|
|
(5) %
|
|
CASM (excluding fuel)
(¢) (b)
|
6.71
|
|
6.62
|
|
1 %
|
|
CASM + net interest
(¢) (b)
|
9.42
|
|
9.86
|
|
(4) %
|
|
Adjusted CASM
(¢) (b)
|
9.49
|
|
9.94
|
|
(5) %
|
|
Adjusted CASM
(excluding fuel) (¢) (b)
|
6.71
|
|
6.61
|
|
2 %
|
|
Adjusted CASM
(excluding fuel), stage-length adjusted to 1,000 miles (¢)
(b)(c)
|
6.56
|
|
6.78
|
|
(3) %
|
|
Adjusted CASM + net
interest (¢) (b)
|
9.42
|
|
9.85
|
|
(4) %
|
|
Fuel cost per gallon
($)
|
2.93
|
|
3.45
|
|
(15) %
|
|
Fuel gallons consumed
(thousands)
|
89,657
|
|
84,587
|
|
6 %
|
|
Full-time equivalent
employees
|
7,675
|
|
6,587
|
|
17 %
|
____________________
|
(a)
|
Figures may not
recalculate due to rounding.
|
|
|
|
(b)
|
These metrics are not
calculated in accordance with GAAP. For the reconciliation to
corresponding GAAP measures, see "Reconciliation of CASM to
CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted
CASM, Adjusted CASM including net interest and CASM including net
interest."
|
|
|
|
(c)
|
Stage-length adjusted
to 1,000 miles: Adjusted CASM (excluding fuel) * Square root
(stage length / 1,000).
|
Reconciliations of Non-GAAP Financial Information
The Company is providing below a reconciliation of GAAP
financial information to the non-GAAP financial information
provided. The non-GAAP financial information is included to provide
supplemental disclosures because the Company believes they are
useful additional indicators of, among other things, its operating
and cost performance. These non-GAAP financial measures have
limitations as analytical tools. Because of these limitations,
determinations of the Company's operating performance or CASM
excluding unrealized gains and losses, special items or other items
should not be considered in isolation or as a substitute for
performance measures calculated in accordance with GAAP. These
non-GAAP financial measures may be presented on a different basis
than other companies using similarly titled non-GAAP financial
measures.
|
Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss) and Pre-Tax Income
(Loss) to Adjusted Pre-Tax Income (Loss)
|
|
($ in millions)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Net income (loss), as
reported
|
$
(26)
|
|
$
(13)
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
Transaction and
merger-related costs(a)
|
—
|
|
1
|
|
Pre-tax
impact
|
—
|
|
1
|
|
Tax benefit (expense),
related to non-GAAP adjustments
|
—
|
|
—
|
|
Valuation
allowance(b)
|
5
|
|
—
|
|
Net income (loss)
impact
|
$
5
|
|
$
1
|
|
|
|
|
|
Adjusted net income
(loss)(c)
|
$
(21)
|
|
$
(12)
|
|
|
|
|
|
Income (loss) before
income taxes, as reported
|
$
(24)
|
|
$
(17)
|
|
Pre-tax
impact
|
—
|
|
1
|
|
Adjusted pre-tax
income (loss)(c)
|
$
(24)
|
|
$
(16)
|
____________________
|
(a)
|
Represents $1 million
in employee retention costs incurred in connection with the
terminated merger with Spirit Airlines, Inc., for the three months
ended March 31, 2023.
|
|
|
|
(b)
|
During the three months
ended March 31, 2024, a $5 million non-cash valuation allowance was
recorded against U.S. federal and state net operating loss
deferred tax assets, which largely do not expire, mainly as a
result of being in a three-year historical cumulative pre-tax loss
position and due to the current quarter loss, which has no impact
on cash taxes and is not reflective of the Company's effective tax
rate for deductible net operating losses generated or actual cash
tax obligations created.
|
|
|
|
(c)
|
Adjusted net income
(loss) and adjusted pre-tax income (loss) are included as a
supplemental disclosure because the Company believes they are
useful indicators of its operating performance. Derivations of net
income (loss) and pre-tax income (loss) are well-recognized
performance measurements in the airline industry that are
frequently used by the Company's management, as well as by
investors, securities analysts and other interested parties, in
comparing the operating performance of companies in the airline
industry.
|
|
|
|
Adjusted net income
(loss) and adjusted pre-tax income (loss) have limitations as
analytical tools. Adjusted net income (loss) and adjusted pre-tax
income (loss) do not reflect the impact of certain cash charges
resulting from matters the Company considers not to be indicative
of the Company's ongoing operations and do not reflect the
Company's cash expenditures, or future requirements, for capital
expenditures or contractual commitments, and other companies in the
industry may calculate adjusted net income (loss) and adjusted
pre-tax income (loss) differently than the Company does, limiting
their usefulness as comparative measures. Because of these
limitations, adjusted net income (loss) and adjusted pre-tax income
(loss) should not be considered in isolation from or as a
substitute for performance measures calculated in accordance with
GAAP. In addition, because derivations of adjusted net income
(loss) and adjusted pre-tax income (loss), including adjusted
pre-tax margin, are not determined in accordance with GAAP, such
measures are susceptible to varying calculations and not all
companies calculate the measures in the same manner. As a result,
derivations of net income, including adjusted net income (loss) and
adjusted pre-tax income (loss), as presented may not be directly
comparable to similarly titled measures presented by other
companies. For the foregoing reasons, adjusted net income (loss)
and adjusted pre-tax income (loss) have significant limitations
which affect their use as indicators of the Company's
profitability. Accordingly, you are cautioned not to place undue
reliance on this information.
|
|
Reconciliation of
Total Operating Expenses to Total Operating Expenses (excluding
fuel), Adjusted Total Operating Expenses and Adjusted Total
Operating Expenses (excluding fuel)
|
|
($ in millions)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Total operating
expenses, as reported(a)
|
$
896
|
|
$
873
|
|
Transaction and
merger-related costs
|
—
|
|
(1)
|
|
Adjusted total
operating expenses(b)
|
896
|
|
872
|
|
Aircraft
fuel
|
(263)
|
|
(292)
|
|
Adjusted total
operating expenses (excluding fuel)(b)
|
$
633
|
|
$
580
|
|
|
|
|
|
Total operating
expenses, as reported
|
$
896
|
|
$
873
|
|
Aircraft
fuel
|
(263)
|
|
(292)
|
|
Total operating
expenses (excluding fuel)(b)
|
$
633
|
|
$
581
|
__________________
|
(a)
|
See "Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss) and Pre-Tax Income
(Loss) to Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items.
|
|
|
|
(b)
|
Total operating
expenses (excluding fuel), adjusted total operating expenses and
adjusted total operating expenses (excluding fuel) are included as
supplemental disclosures because the Company believes they are
useful indicators of its operating performance. Derivations of
total operating expenses are well-recognized performance
measurements in the airline industry that are frequently used by
the Company's management, as well as by investors, securities
analysts and other interested parties, in comparing the operating
performance of companies in the airline industry.
|
|
|
|
Total operating
expenses (excluding fuel), adjusted total operating expenses and
adjusted total operating expenses (excluding fuel) have limitations
as analytical tools and other companies in the industry may
calculate total operating expenses (excluding fuel), adjusted total
operating expenses and adjusted total operating expenses (excluding
fuel) differently than the Company does, limiting their usefulness
as comparative measures. Because of these limitations, total
operating expenses (excluding fuel), adjusted total operating
expenses and adjusted total operating expenses (excluding fuel)
should not be considered in isolation from or as a substitute for
performance measures calculated in accordance with GAAP. In
addition, because derivations of total operating expenses
(excluding fuel), adjusted total operating expenses and adjusted
total operating expenses (excluding fuel) are not determined in
accordance with GAAP, such measures are susceptible to varying
calculations and not all companies calculate the measures in the
same manner. As a result, derivations of total operating expenses,
including total operating expenses (excluding fuel), adjusted total
operating expenses and adjusted total operating expenses (excluding
fuel) as presented may not be directly comparable to similarly
titled measures presented by other companies. For the foregoing
reasons, total operating expenses (excluding fuel), adjusted total
operating expenses and adjusted total operating expenses (excluding
fuel) have significant limitations which affect their use as an
indicator of the Company's profitability. Accordingly, you are
cautioned not to place undue reliance on this
information.
|
|
Reconciliation of
Net Income (Loss) to EBITDA and EBITDAR and to Adjusted EBITDA and
Adjusted EBITDAR
|
|
($ in millions)
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Net income
(loss)
|
$
(26)
|
|
$
(13)
|
|
Plus
(minus):
|
|
|
|
|
Interest
expense
|
9
|
|
6
|
|
Capitalized
interest
|
(9)
|
|
(6)
|
|
Interest income and
other
|
(7)
|
|
(8)
|
|
Income tax expense
(benefit)
|
2
|
|
(4)
|
|
Depreciation and
amortization
|
16
|
|
11
|
|
EBITDA(a)
|
(15)
|
|
(14)
|
|
Plus: Aircraft
rent
|
159
|
|
131
|
|
EBITDAR(b)
|
$
144
|
|
$
117
|
|
|
|
|
|
EBITDA(a)
|
$
(15)
|
|
$
(14)
|
|
Plus
(minus)(c):
|
|
|
|
|
Transaction and
merger-related costs
|
—
|
|
1
|
|
Adjusted
EBITDA(a)
|
(15)
|
|
(13)
|
|
Plus: Aircraft
rent
|
159
|
|
131
|
|
Adjusted
EBITDAR(b)
|
$
144
|
|
$
118
|
__________________
|
(a)
|
EBITDA and adjusted
EBITDA are included as supplemental disclosures because the Company
believes they are useful indicators of its operating performance.
Derivations of EBITDA are well-recognized performance measurements
in the airline industry that are frequently used by the Company's
management, as well as by investors, securities analysts and other
interested parties, in comparing the operating performance of
companies in the industry.
|
|
|
|
EBITDA and adjusted
EBITDA do not reflect the impact of certain cash charges resulting
from matters the Company considers not to be indicative of its
ongoing operations; the Company's cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
changes in, or cash requirements for, the Company's working capital
needs; or the interest expense, or the cash requirements necessary
to service interest or principal payments, on the Company's
indebtedness or possible cash requirements related to its warrants.
Further, although depreciation and amortization are non-cash
charges, the assets being depreciated and amortized will often have
to be replaced in the future, and EBITDA and adjusted EBITDA do not
reflect any cash requirements for such replacements. Other
companies in the airline industry may calculate EBITDA and adjusted
EBITDA differently than the Company does, limiting their usefulness
as comparative measures. Because of these limitations, EBITDA and
adjusted EBITDA should not be considered in isolation from or as a
substitute for performance measures calculated in accordance with
GAAP. In addition, because derivations of EBITDA and adjusted
EBITDA are not determined in accordance with GAAP, such measures
are susceptible to varying calculations and not all companies
calculate the measures in the same manner. As a result, derivations
of EBITDA, including adjusted EBITDA, as presented may not be
directly comparable to similarly titled measures presented by other
companies.
|
|
|
|
For the foregoing
reasons, each of EBITDA and adjusted EBITDA have significant
limitations which affect its use as an indicator of the Company's
profitability. Accordingly, you are cautioned not to place undue
reliance on this information.
|
|
|
|
(b)
|
EBITDAR and adjusted
EBITDAR are included as supplemental disclosures because the
Company believes they are useful solely as valuation metrics for
airlines as their calculations isolate the effects of financing in
general, the accounting effects of capital spending and
acquisitions (primarily aircraft, which may be acquired directly,
directly subject to acquisition debt, by capital lease or by
operating lease, each of which is presented differently for
accounting purposes), and income taxes, which may vary
significantly between periods and for different airlines for
reasons unrelated to the underlying value of a particular airline.
However, EBITDAR and adjusted EBITDAR are not determined in
accordance with GAAP, are susceptible to varying calculations and
not all companies calculate the measures in the same manner. As a
result, EBITDAR and adjusted EBITDAR, as presented, may not be
directly comparable to similarly titled measures presented by other
companies. In addition, EBITDAR and adjusted EBITDAR should not be
viewed as a measure of overall performance since they exclude
aircraft rent, which is a normal, recurring cash operating expense
that is necessary to operate the business. Accordingly, you are
cautioned not to place undue reliance on this
information.
|
|
|
|
(c)
|
See "Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss) and Pre-Tax Income
(Loss) to Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items.
|
|
Reconciliation of
CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel),
Adjusted CASM, Adjusted CASM including net interest and CASM
including net interest
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
($ in
millions)
|
|
Per ASM
(¢)
|
|
($ in
millions)
|
|
Per ASM
(¢)
|
|
CASM(a)(b)
|
|
|
9.49
|
|
|
|
9.95
|
|
Aircraft
fuel
|
(263)
|
|
(2.78)
|
|
(292)
|
|
(3.33)
|
|
CASM (excluding
fuel)(c)
|
|
|
6.71
|
|
|
|
6.62
|
|
Transaction and
merger-related costs
|
—
|
|
—
|
|
(1)
|
|
(0.01)
|
|
Adjusted CASM
(excluding fuel)(c)
|
|
|
6.71
|
|
|
|
6.61
|
|
Aircraft
fuel
|
263
|
|
2.78
|
|
292
|
|
3.33
|
|
Adjusted
CASM(d)
|
|
|
9.49
|
|
|
|
9.94
|
|
Net interest expense
(income)
|
(7)
|
|
(0.07)
|
|
(8)
|
|
(0.09)
|
|
Adjusted CASM + net
interest(e)
|
|
|
9.42
|
|
|
|
9.85
|
|
|
|
|
|
|
|
|
|
CASM
|
|
|
9.49
|
|
|
|
9.95
|
|
Net interest expense
(income)
|
(7)
|
|
(0.07)
|
|
(8)
|
|
(0.09)
|
|
CASM + net
interest(e)
|
|
|
9.42
|
|
|
|
9.86
|
_______________________
|
(a)
|
Cost per ASM
figures may not recalculate due to rounding.
|
|
|
|
(b)
|
See "Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss) and Pre-Tax Income
(Loss) to Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items.
|
|
|
|
(c)
|
CASM (excluding fuel)
and adjusted CASM (excluding fuel) are included as supplemental
disclosures because the Company believes that excluding aircraft
fuel is useful to investors as it provides an additional measure of
management's performance excluding the effects of a significant
cost item over which management has limited influence. The price of
fuel, over which the Company has limited control, impacts the
comparability of period-to-period financial performance, and
excluding allows management an additional tool to understand and
analyze the Company's non-fuel costs and core operating
performance, and increases comparability with other airlines that
also provide a similar metric. CASM (excluding fuel) and adjusted
CASM (excluding fuel) are not determined in accordance with GAAP
and should not be considered in isolation or as a substitute for
performance measures calculated in accordance with GAAP.
|
|
|
|
(d)
|
Adjusted CASM is
included as supplemental disclosure because the Company believes it
is a useful metric to properly compare the Company's cost
management and performance to other peers, as derivations of
adjusted CASM are well-recognized performance measurements in the
airline industry that are frequently used by the Company's
management, as well as by investors, securities analysts and other
interested parties in comparing the operating performance of
companies in the airline industry. Additionally, the Company
believes this metric is useful because it removes certain items
that may not be indicative of base operating performance or future
results. Adjusted CASM is not determined in accordance with GAAP,
may not be comparable across all carriers and should not be
considered in isolation or as a substitute for performance measures
calculated in accordance with GAAP.
|
|
|
|
(e)
|
Adjusted CASM
including net interest and CASM including net interest are included
as supplemental disclosures because the Company believes they are
useful metrics to properly compare its cost management and
performance to other peers that may have different capital
structures and financing strategies, particularly as it relates to
financing primary operating assets such as aircraft and engines.
Additionally, the Company believes these metrics are useful because
they remove certain items that may not be indicative of base
operating performance or future results. Adjusted CASM including
net interest and CASM including net interest are not determined in
accordance with GAAP, may not be comparable across all carriers and
should not be considered in isolation or as a substitute for
performance measures calculated in accordance with GAAP.
|
|
Reconciliation of
Net Income (Loss) per Share to Adjusted Net Income (Loss) per
Share
|
|
(unaudited)
|
|
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Net income (loss)
per share, diluted, as reported(a)(b)
|
$
(0.12)
|
|
$
(0.06)
|
|
Transaction and
merger-related costs
|
—
|
|
—
|
|
Valuation
allowance
|
0.03
|
|
—
|
|
Adjusted net income
(loss) per share, diluted(c)
|
$
(0.09)
|
|
$
(0.06)
|
______________________
|
(a)
|
See "Reconciliation of
Net Income (Loss) to Adjusted Net Income (Loss) and Pre-Tax Income
(Loss) to Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items.
|
|
|
|
(b)
|
Cost per share figures
may not recalculate due to rounding.
|
|
|
|
(c)
|
Adjusted net income
(loss) per share is included as a supplemental disclosure because
the Company believes it is a useful indicator of operating
performance. Derivations of net income are well-recognized
performance measurements in the airline industry that are
frequently used by management, as well as by investors, securities
analysts and other interested parties in comparing the operating
performance of companies in the industry.
|
|
|
|
Adjusted net income
(loss) per share has limitations as an analytical tool. Adjusted
net income (loss) per share does not reflect the impact of certain
cash charges resulting from matters the Company considers not to be
indicative of ongoing operations and does not reflect the cash
expenditures, or future requirements, for capital expenditures or
contractual commitments, and other companies in the industry may
calculate Adjusted net income (loss) per share differently than the
Company does, limiting its usefulness as a comparative measure.
Because of these limitations, Adjusted net income (loss) per share
should not be considered in isolation from or as a substitute for
performance measures calculated in accordance with GAAP. In
addition, because derivations of adjusted net income are not
determined in accordance with GAAP, such measures are susceptible
to varying calculations and not all companies calculate the
measures in the same manner. As a result, derivations of net
income, including Adjusted net income (loss) per share, as
presented may not be directly comparable to similarly titled
measures presented by other companies. For the foregoing reasons,
Adjusted net income (loss) per share has significant limitations
which affect its use as an indicator of profitability. Accordingly,
you are cautioned not to place undue reliance on this
information.
|
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SOURCE Frontier Group Holdings, Inc.