Frontier Group Holdings, Inc. (Nasdaq: ULCC), parent company of
Frontier Airlines, Inc., today reported a quarterly profit for the
third quarter of 2022, its second consecutive quarterly profit,
underpinned by record ancillary revenue per passenger and an
improvement in unit costs.
Total operating revenue for the third quarter of 2022 was $906
million, 35 percent higher than the corresponding quarter in 2019.
Ancillary revenue per passenger during the quarter was a record
$78, 38 percent higher than the corresponding quarter in 2019,
contributing to a 26 percent increase in revenue per available seat
mile ("RASM") over the same period. Operating expenses totaled $850
million or 10.57 cents of costs per available seat mile ("CASM")
during the third quarter, which was 11 percent lower than the prior
quarter. Comments about relative operating statistics exclude
pandemic-affected quarters during 2020.
Earnings before taxes for the quarter were $58 million, while
adjusted (non-GAAP) earnings before taxes were $47 million,
reflecting a pre-tax margin of 6.4 percent and an adjusted pre-tax
margin of 5.2 percent (on a non-GAAP basis excluding special
items). Net income for the third quarter of 2022 was $31 million,
or $33 million on an adjusted (non-GAAP) basis.
"We are proud of our 26 percent increase in RASM versus 2019 and
the improvement in unit costs versus the second quarter, which
delivered an adjusted pre-tax margin of 5.2 percent, nearly double
the prior quarter margin," said Barry Biffle, president and CEO.
"Further, we achieved another record quarter of $78 of ancillary
revenue per passenger."
"Leisure demand has structurally changed with customers having
more flexibility and a desire to travel more often," Biffle added.
"With our Low Fares Done Right model and significant order book of
A320neo family aircraft, Frontier is positioned to capture a
disproportionate share of the growing leisure segment as America's
ultra-low-cost carrier. The dedicated members of Team Frontier are
the foundation of our success, and I'm immensely proud of
them."
The following is a summary of select financial results for the
third quarter of 2022, 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) |
|
|
Three Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
|
As Reported (GAAP) |
|
Adjusted(Non-GAAP) |
|
As Reported (GAAP) |
|
Adjusted (Non-GAAP) |
|
As Reported(GAAP) |
|
Adjusted(Non-GAAP) |
Total operating revenues |
|
$ |
906 |
|
|
$ |
906 |
|
|
$ |
630 |
|
|
$ |
630 |
|
|
$ |
669 |
|
|
$ |
669 |
|
Total operating expenses |
|
$ |
850 |
|
|
$ |
861 |
|
|
$ |
587 |
|
|
$ |
658 |
|
|
$ |
560 |
|
|
$ |
581 |
|
Pre-tax income (loss) |
|
$ |
58 |
|
|
$ |
47 |
|
|
$ |
41 |
|
|
$ |
(30 |
) |
|
$ |
113 |
|
|
$ |
92 |
|
Pre-tax income (loss)
margin |
|
|
6.4 |
% |
|
|
5.2 |
% |
|
|
6.5 |
% |
|
|
(4.8 |
)% |
|
|
16.9 |
% |
|
|
13.8 |
% |
Net income (loss) |
|
$ |
31 |
|
|
$ |
33 |
|
|
$ |
23 |
|
|
$ |
(24 |
) |
|
$ |
87 |
|
|
$ |
72 |
|
Third Quarter 2022 Highlights:
- Achieved total operating revenues of $906 million, 35 percent
higher than the corresponding quarter in 2019 and 44 percent higher
than the corresponding quarter in 2021
- Generated a record $78 of ancillary revenue per passenger
during the third quarter of 2022, 38 percent higher than the
corresponding quarter in 2019, 23 percent higher than the
corresponding quarter in 2021 and four percent higher than the
prior quarter
- Realized a 6.4 percent pre-tax margin, or a 5.2 percent
adjusted pre-tax margin (on a non-GAAP basis excluding special
items), nearly double the adjusted pre-tax margin in the prior
quarter
- Ended the quarter in a strong liquidity position with
$674 million of unrestricted cash and cash equivalents, or
$251 million net of total debt
- Took delivery of the first 240-seat A321neo aircraft in late
September and two A320neo aircraft during the quarter, bringing the
total fleet size to 115 aircraft and increasing the proportion of
the fleet comprised of the more fuel-efficient A320neo family
aircraft to 70 percent as of September 30, 2022
- Operated the most fuel-efficient fleet of all major U.S.
carriers when measured by available seat miles ("ASMs") per fuel
gallon consumed, generating 101 ASMs per gallon during the third
quarter of 2022, four percent higher than the corresponding quarter
in 2019
- Announced expanded service in 18
domestic markets and seven international markets
Looking forward to the fourth quarter, the Company expects
strong travel demand and continued RASM strength, with capacity
anticipated to grow 15 to 17 percent versus the corresponding
quarter in 2019. Adjusted pre-tax margin is anticipated to be
between 3 and 7 percent (on a non-GAAP basis excluding special
items). See "Forward Guidance" below for further information,
including with respect to non-GAAP guidance.
Revenue Performance
Total GAAP operating revenue for the third quarter of 2022 was
$906 million, 35 percent higher than the corresponding quarter in
2019, with total operating revenue per passenger of $135, 24
percent higher than the corresponding quarter in 2019. Ancillary
revenue per passenger during the quarter was a record $78, 38
percent higher than the corresponding quarter in 2019, contributing
to a 26 percent increase in RASM over the same period. The
exceptional revenue performance was achieved alongside capacity
growth of eight percent over the corresponding quarter in 2019 to
eight billion ASMs.
Average daily aircraft utilization increased to 11.1 hours per
day in the third quarter of 2022, with a further improvement to
over 11.5 hours per day expected in the fourth quarter as
operations continue to normalize through the travel recovery.
Cost Performance
Total operating expenses for the third quarter of 2022 were $850
million, including $12 million in net transaction and
merger-related credits associated with the Company's terminated
combination with Spirit Airlines, Inc. ("Spirit") and $1 million of
costs related to a one-time contract ratification incentive for the
Company's aircraft technicians. Excluding these items, adjusted
(non-GAAP) total operating expenses were $861 million, including
$306 million of fuel expenses at an average cost of $3.85 per
gallon. Adjusted (non-GAAP) total operating expenses (excluding
fuel) were $555 million. On a unit basis, CASM was 10.57 cents in
the third quarter, while adjusted CASM was 10.71 cents and adjusted
CASM (excluding fuel), was 6.90 cents.
Adjusted CASM including net interest in the third quarter
totaled 10.68 cents and was eight percent lower than the prior
quarter, primarily due to a 13 percent lower average fuel cost per
gallon coupled with lower station costs, higher utilization and
longer stage length, partly offset by higher maintenance costs.
Adjusted CASM (excluding fuel), declined 5 percent compared to
the prior quarter, to 6.90 cents, and is expected to further
improve in the fourth quarter as utilization continues to normalize
towards pre-pandemic levels and cost management efforts
materialize. Additionally, the Company accepted delivery of its
first A321neo aircraft at the end of September 2022. This aircraft
is expected to drive meaningful scale efficiencies by way of fuel
savings and higher average seats per departure. Another five
A321neo aircraft deliveries are expected during the fourth quarter
of 2022, with a total of 36 expected by the end of 2023, including
direct leases. Compared to the corresponding quarter in 2019,
Adjusted CASM, excluding fuel, was higher due, in part, to lower
average daily aircraft utilization and stage length, which are
continuing to recover to more optimal levels, as well as labor cost
inflation.
Cash and Liquidity
Frontier ended the third quarter of 2022 with $674 million
of unrestricted cash and cash equivalents, or $251 million net
of total debt. The Company is able to access substantial liquidity,
if desired, through its co-brand credit card program and related
brand assets based on similar debt financings by other
airlines.
Fleet
As of September 30, 2022, Frontier had a fleet of 115
Airbus single-aisle aircraft, all financed with operating leases
that expire between 2022 and 2034, as follows:
Equipment |
Quantity |
Seats |
A320neo |
80 |
186 |
A320ceo |
13 |
180 - 186 |
A321ceo |
21 |
230 |
A321neo |
1 |
240 |
Total fleet |
115 |
|
Frontier’s fleet is the most fuel-efficient of all major U.S.
carriers when measured by ASMs per fuel gallon consumed, generating
101 ASMs per gallon during the third quarter of 2022, four percent
higher than the corresponding quarter in 2019.
Frontier took delivery of two A320neo and its first A321neo
aircraft during the third quarter.
As of September 30, 2022, the Company had commitments to
take delivery of an additional 236 aircraft to be delivered through
2029, including purchase commitments for 69 A320neo aircraft, 157
A321neo aircraft and another 10 A321neo aircraft through direct
leases.
During the fourth quarter of 2022, the Company expects seven
A320neo family aircraft deliveries, of which five are A321neo
aircraft. By the end of 2023, the Company expects to have a total
of 36 A321neo aircraft in its fleet. The A320neo family of aircraft
is anticipated to contribute meaningfully to a reduction in CASM,
supported by the A321neo's materially higher seats per departure
compared to the Company's current average and significantly higher
fuel efficiency, leading to improved cost efficiency versus
industry carriers.
Forward Guidance
The fourth quarter 2022 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 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
because such amounts cannot be determined at this time.
Looking forward to the fourth quarter, the Company expects
strong travel demand and continued RASM strength, bolstered by
continued improvement in ancillary revenue performance. Capacity is
anticipated to grow 15 to 17 percent versus the corresponding
quarter in 2019. Fuel costs are expected to be between $3.70 to
$3.75 per gallon based on the blended fuel curve on October 21,
2022 and adjusted (non-GAAP) total operating expenses (excluding
fuel) are anticipated to be between $565 and $585 million. Adjusted
pre-tax margin is anticipated to be between 3 and 7 percent (on a
non-GAAP basis excluding special items). The current forward
guidance estimates are presented in the following table:
|
Fourth Quarter |
|
2022(a) |
Capacity growth (versus 4Q
2019)(b) |
15% to 17% |
Adjusted total operating
expenses (excluding fuel) ($ millions)(c) |
$565 to $585 |
Average fuel cost per
gallon(d) |
$3.70 to $3.75 |
Effective tax rate |
24% |
Adjusted pre-tax margin |
3% to 7% |
Pre-delivery deposits, net of
refunds - year-over-year change ($ millions) |
$25 |
Other capital expenditures ($
millions) (e) |
$30-$35 |
_________________
(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) |
The Company's guidance is based on its expectation that demand will
continue to recover to more normalized levels; the Company will
monitor and adjust capacity levels as appropriate. Given the
dynamic nature of the current demand environment, including any
impact from COVID-19 variants, the actual capacity adjustments made
by the Company may be different than what is currently expected,
and those differences may be material. |
|
|
(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 and the
Company's continued investment in the post-pandemic recovery. |
|
|
(d) |
Estimated fuel cost per gallon is based upon the blended jet fuel
curve on October 21, 2022 and is inclusive of estimated fuel taxes
and into-plane fuel costs. |
|
|
(e) |
Other capital expenditures estimate includes capitalized heavy
maintenance. |
Investor Day
Frontier will host an Investor Day on November 15, 2022 from
9:00 a.m. Eastern Time (USA) until approximately 11:30 a.m. Eastern
Time (USA) at Nasdaq's Times Square headquarters in New York City,
NY. The event will feature a panel of speakers from the Frontier
executive management team along with Justin Dennis, President of
ATP Flight School ("ATP"), who will expand on the recently launched
pilot cadet program, a unique partnership between Frontier and
ATP.
The event will be live streamed and an archive will be available
on the investor relations section of the Company's website.
Registration is required for both in-person and virtual settings,
though in-person participants must register at least 24 hours in
advance of the event. For more information and to register, visit
ir.flyfrontier.com or investorday2022.flyfrontier.com.
Conference Call
Frontier’s quarterly earnings conference call is scheduled to be
held today, October 26, 2022, at 4:30 p.m. Eastern Time (USA).
The conference call will be broadcast live over the Internet.
Investors may listen to the live audio webcast on the investor
relations section of the Company's website at
https://ir.flyfrontier.com/news-and-events/events. For those
unavailable for the live webcast, the call will be archived and
available for at least 30 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 115
A320 family aircraft and has among the largest A320neo family
fleets in the U.S. The use of these aircraft and Frontier’s seating
configuration, weight-saving tactics and baggage process have all
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 230 new Airbus planes on
order, including direct leases, 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 the Securities Act
of 1933, as amended, 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. Such
forward-looking statements are and will be subject to many risks
and uncertainties relating to the Company’s operations and business
environment that may cause actual results to differ materially from
any future results expressed or implied in such forward-looking
statements. 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 factors including,
without limitation, the following: the potential future impacts of
the COVID-19 pandemic, including any future variants or subvariants
of the virus, and possible outbreaks of another disease or similar
public health threat in the future, on the Company’s business,
operating results, financial condition, liquidity and near-term and
long-term strategic operating plan, including possible additional
adverse impacts resulting from the duration and spread of the
pandemic; unfavorable economic and political conditions in the
states where the Company operates and globally; the highly
competitive nature of the global airline industry and
susceptibility of the industry to price discounting and changes in
capacity; high and/or volatile fuel prices or significant
disruptions in the supply of aircraft fuel, including as a result
of the recent conflict 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 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 for per
share data)
|
|
Three Months Ended September 30, |
|
Percent Change |
|
Nine Months Ended September 30, |
|
Percent Change |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
2022 vs. 2021 |
|
2022 vs. 2019 |
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
2022 vs. 2021 |
|
2022 vs. 2019 |
Operating revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Passenger |
|
$ |
883 |
|
|
$ |
610 |
|
|
$ |
652 |
|
|
45 |
% |
|
35 |
% |
|
$ |
2,361 |
|
|
$ |
1,408 |
|
|
$ |
1,807 |
|
|
68 |
% |
|
31 |
% |
Other |
|
|
23 |
|
|
|
20 |
|
|
|
17 |
|
|
15 |
% |
|
35 |
% |
|
|
59 |
|
|
|
43 |
|
|
|
46 |
|
|
37 |
% |
|
28 |
% |
Total operating
revenues |
|
|
906 |
|
|
|
630 |
|
|
|
669 |
|
|
44 |
% |
|
35 |
% |
|
|
2,420 |
|
|
|
1,451 |
|
|
|
1,853 |
|
|
67 |
% |
|
31 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft fuel |
|
|
306 |
|
|
|
166 |
|
|
|
164 |
|
|
84 |
% |
|
87 |
% |
|
|
856 |
|
|
|
389 |
|
|
|
468 |
|
|
120 |
% |
|
83 |
% |
Salaries, wages and
benefits |
|
|
182 |
|
|
|
161 |
|
|
|
108 |
|
|
13 |
% |
|
69 |
% |
|
|
528 |
|
|
|
454 |
|
|
|
373 |
|
|
16 |
% |
|
42 |
% |
Aircraft rent |
|
|
140 |
|
|
|
128 |
|
|
|
96 |
|
|
9 |
% |
|
46 |
% |
|
|
401 |
|
|
|
399 |
|
|
|
270 |
|
|
1 |
% |
|
49 |
% |
Station operations |
|
|
101 |
|
|
|
108 |
|
|
|
91 |
|
|
(6 |
)% |
|
11 |
% |
|
|
326 |
|
|
|
285 |
|
|
|
252 |
|
|
14 |
% |
|
29 |
% |
Sales and marketing |
|
|
42 |
|
|
|
33 |
|
|
|
36 |
|
|
27 |
% |
|
17 |
% |
|
|
120 |
|
|
|
80 |
|
|
|
96 |
|
|
50 |
% |
|
25 |
% |
Maintenance, materials and
repairs |
|
|
42 |
|
|
|
29 |
|
|
|
24 |
|
|
45 |
% |
|
75 |
% |
|
|
107 |
|
|
|
82 |
|
|
|
60 |
|
|
30 |
% |
|
78 |
% |
Depreciation and
amortization |
|
|
8 |
|
|
|
10 |
|
|
|
10 |
|
|
(20 |
)% |
|
(20 |
)% |
|
|
36 |
|
|
|
28 |
|
|
|
35 |
|
|
29 |
% |
|
3 |
% |
CARES Act credits |
|
|
— |
|
|
|
(72 |
) |
|
|
— |
|
|
N/M |
|
N/M |
|
|
— |
|
|
|
(295 |
) |
|
|
— |
|
|
N/M |
|
N/M |
Transaction and merger-related
costs, net |
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
N/M |
|
N/M |
|
|
8 |
|
|
|
— |
|
|
|
— |
|
|
N/M |
|
N/M |
Other operating |
|
|
41 |
|
|
|
24 |
|
|
|
31 |
|
|
71 |
% |
|
32 |
% |
|
|
128 |
|
|
|
60 |
|
|
|
58 |
|
|
113 |
% |
|
121 |
% |
Total operating
expenses |
|
|
850 |
|
|
|
587 |
|
|
|
560 |
|
|
45 |
% |
|
52 |
% |
|
|
2,510 |
|
|
|
1,482 |
|
|
|
1,612 |
|
|
69 |
% |
|
56 |
% |
Operating income
(loss) |
|
|
56 |
|
|
|
43 |
|
|
|
109 |
|
|
30 |
% |
|
(49 |
)% |
|
|
(90 |
) |
|
|
(31 |
) |
|
|
241 |
|
|
190 |
% |
|
N/M |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(4 |
) |
|
|
(4 |
) |
|
|
(2 |
) |
|
— |
% |
|
100 |
% |
|
|
(16 |
) |
|
|
(31 |
) |
|
|
(8 |
) |
|
(48 |
)% |
|
100 |
% |
Capitalized interest |
|
|
3 |
|
|
|
1 |
|
|
|
2 |
|
|
200 |
% |
|
50 |
% |
|
|
6 |
|
|
|
3 |
|
|
|
8 |
|
|
100 |
% |
|
(25 |
)% |
Interest income and other |
|
|
3 |
|
|
|
1 |
|
|
|
4 |
|
|
200 |
% |
|
(25 |
)% |
|
|
5 |
|
|
|
1 |
|
|
|
12 |
|
|
400 |
% |
|
(58 |
)% |
Total other income
(expense) |
|
|
2 |
|
|
|
(2 |
) |
|
|
4 |
|
|
N/M |
|
(50 |
)% |
|
|
(5 |
) |
|
|
(27 |
) |
|
|
12 |
|
|
(81 |
)% |
|
N/M |
Income (loss) before income
taxes |
|
|
58 |
|
|
|
41 |
|
|
|
113 |
|
|
41 |
% |
|
(49 |
)% |
|
|
(95 |
) |
|
|
(58 |
) |
|
|
253 |
|
|
64 |
% |
|
N/M |
Income tax expense
(benefit) |
|
|
27 |
|
|
|
18 |
|
|
|
26 |
|
|
50 |
% |
|
4 |
% |
|
|
(18 |
) |
|
|
(9 |
) |
|
|
58 |
|
|
100 |
% |
|
N/M |
Net income
(loss) |
|
$ |
31 |
|
|
$ |
23 |
|
|
$ |
87 |
|
|
35 |
% |
|
(64 |
)% |
|
$ |
(77 |
) |
|
$ |
(49 |
) |
|
$ |
195 |
|
|
57 |
% |
|
N/M |
Earnings (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (a) |
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.40 |
|
|
30 |
% |
|
(68 |
)% |
|
$ |
(0.36 |
) |
|
$ |
(0.23 |
) |
|
$ |
0.93 |
|
|
57 |
% |
|
N/M |
Diluted (a) |
|
$ |
0.13 |
|
|
$ |
0.10 |
|
|
$ |
0.40 |
|
|
30 |
% |
|
(68 |
)% |
|
$ |
(0.36 |
) |
|
$ |
(0.23 |
) |
|
$ |
0.93 |
|
|
57 |
% |
|
N/M |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (a) |
|
|
218 |
|
|
|
215 |
|
|
|
199 |
|
|
1 |
% |
|
10 |
% |
|
|
218 |
|
|
|
210 |
|
|
|
199 |
|
|
4 |
% |
|
10 |
% |
Diluted (a) |
|
|
220 |
|
|
|
218 |
|
|
|
200 |
|
|
1 |
% |
|
10 |
% |
|
|
218 |
|
|
|
210 |
|
|
|
200 |
|
|
4 |
% |
|
9 |
% |
__________________
(a) |
Share amounts included in the basic and diluted earnings (loss) per
share calculations for 2022 and 2021, as reflected in the condensed
consolidated statements of operations, include the impact of the 15
million shares issued and sold by the Company as part of its
initial public offering that closed on April 6, 2021. Additionally,
in periods of net income, the dilutive impact of the 3.1 million
warrants outstanding relating to CARES Act funding, 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 7.5 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 September 30, |
|
Percent Change |
|
Nine Months Ended September 30, |
|
Percent Change |
|
2022 |
|
|
2021 |
|
|
2019 |
|
|
2022 vs. 2021 |
|
2022 vs. 2019 |
|
2022 |
|
|
2021 |
|
|
2019 |
|
|
2022 vs. 2021 |
|
2022 vs. 2019 |
Available seat miles (ASMs) (millions) |
8,040 |
|
|
7,505 |
|
|
7,463 |
|
|
7 |
% |
|
8 |
% |
|
23,076 |
|
|
19,031 |
|
|
20,560 |
|
|
21 |
% |
|
12 |
% |
Departures |
42,627 |
|
|
40,418 |
|
|
37,432 |
|
|
5 |
% |
|
14 |
% |
|
122,040 |
|
|
101,953 |
|
|
100,802 |
|
|
20 |
% |
|
21 |
% |
Average stage length (statute
miles) |
974 |
|
|
960 |
|
|
1,033 |
|
|
1 |
% |
|
(6 |
)% |
|
976 |
|
|
965 |
|
|
1,055 |
|
|
1 |
% |
|
(7 |
)% |
Block hours |
113,922 |
|
|
107,038 |
|
|
103,185 |
|
|
6 |
% |
|
10 |
% |
|
329,533 |
|
|
269,655 |
|
|
284,149 |
|
|
22 |
% |
|
16 |
% |
Average aircraft in
service |
112 |
|
|
109 |
|
|
90 |
|
|
3 |
% |
|
24 |
% |
|
111 |
|
|
105 |
|
|
86 |
|
|
6 |
% |
|
29 |
% |
Aircraft – end of period |
115 |
|
|
112 |
|
|
93 |
|
|
3 |
% |
|
24 |
% |
|
115 |
|
|
112 |
|
|
93 |
|
|
3 |
% |
|
24 |
% |
Average daily aircraft
utilization (hours) |
11.1 |
|
|
10.6 |
|
|
12.5 |
|
|
5 |
% |
|
(11 |
)% |
|
10.9 |
|
|
9.4 |
|
|
12.2 |
|
|
16 |
% |
|
(11 |
)% |
Passengers (thousands) |
6,704 |
|
|
5,958 |
|
|
6,137 |
|
|
13 |
% |
|
9 |
% |
|
18,650 |
|
|
14,813 |
|
|
16,713 |
|
|
26 |
% |
|
12 |
% |
Average seats per
departure |
193 |
|
|
193 |
|
|
192 |
|
|
— |
% |
|
1 |
% |
|
193 |
|
|
193 |
|
|
192 |
|
|
— |
% |
|
1 |
% |
Revenue passenger miles (RPMs)
(millions) |
6,635 |
|
|
5,807 |
|
|
6,405 |
|
|
14 |
% |
|
4 |
% |
|
18,547 |
|
|
14,562 |
|
|
17,797 |
|
|
27 |
% |
|
4 |
% |
Load Factor (%) |
82.5 |
% |
|
77.4 |
% |
|
85.8 |
% |
|
5.1 pts |
|
(3.3) pts |
|
80.4 |
% |
|
76.5 |
% |
|
86.6 |
% |
|
3.9 pts |
|
(6.2) pts |
Fare revenue per
passenger ($) |
57.57 |
|
|
42.74 |
|
|
52.60 |
|
|
35 |
% |
|
9 |
% |
|
55.49 |
|
|
38.36 |
|
|
54.15 |
|
|
45 |
% |
|
2 |
% |
Non-fare passenger revenue per
passenger ($) |
74.18 |
|
|
59.77 |
|
|
53.64 |
|
|
24 |
% |
|
38 |
% |
|
71.09 |
|
|
56.72 |
|
|
53.97 |
|
|
25 |
% |
|
32 |
% |
Other revenue per
passenger ($) |
3.45 |
|
|
3.24 |
|
|
2.68 |
|
|
6 |
% |
|
29 |
% |
|
3.18 |
|
|
2.85 |
|
|
2.74 |
|
|
12 |
% |
|
16 |
% |
Total ancillary revenue per
passenger ($) |
77.63 |
|
|
63.01 |
|
|
56.32 |
|
|
23 |
% |
|
38 |
% |
|
74.27 |
|
|
59.57 |
|
|
56.71 |
|
|
25 |
% |
|
31 |
% |
Total revenue per
passenger ($) |
135.20 |
|
|
105.75 |
|
|
108.92 |
|
|
28 |
% |
|
24 |
% |
|
129.76 |
|
|
97.93 |
|
|
110.86 |
|
|
33 |
% |
|
17 |
% |
Total revenue per available
seat mile (RASM) (¢) |
11.27 |
|
|
8.40 |
|
|
8.96 |
|
|
34 |
% |
|
26 |
% |
|
10.49 |
|
|
7.62 |
|
|
9.01 |
|
|
38 |
% |
|
16 |
% |
Cost per available seat mile
(CASM) (¢) |
10.57 |
|
|
7.83 |
|
|
7.49 |
|
|
35 |
% |
|
41 |
% |
|
10.88 |
|
|
7.79 |
|
|
7.84 |
|
|
40 |
% |
|
39 |
% |
CASM (excluding fuel) (¢) |
6.76 |
|
|
5.62 |
|
|
5.29 |
|
|
20 |
% |
|
28 |
% |
|
7.17 |
|
|
5.74 |
|
|
5.56 |
|
|
25 |
% |
|
29 |
% |
CASM + net interest (¢) |
10.55 |
|
|
7.85 |
|
|
7.44 |
|
|
34 |
% |
|
42 |
% |
|
10.90 |
|
|
7.93 |
|
|
7.78 |
|
|
37 |
% |
|
40 |
% |
Adjusted CASM (¢) |
10.71 |
|
|
8.77 |
|
|
7.77 |
|
|
22 |
% |
|
38 |
% |
|
10.80 |
|
|
9.28 |
|
|
7.79 |
|
|
16 |
% |
|
39 |
% |
Adjusted CASM (excluding fuel)
(¢) |
6.90 |
|
|
6.55 |
|
|
5.57 |
|
|
5 |
% |
|
24 |
% |
|
7.09 |
|
|
7.24 |
|
|
5.52 |
|
|
(2 |
)% |
|
28 |
% |
Adjusted CASM + net interest
(¢) |
10.68 |
|
|
8.79 |
|
|
7.72 |
|
|
22 |
% |
|
38 |
% |
|
10.79 |
|
|
9.31 |
|
|
7.73 |
|
|
16 |
% |
|
40 |
% |
Fuel cost per gallon ($) |
3.85 |
|
|
2.19 |
|
|
2.13 |
|
|
76 |
% |
|
81 |
% |
|
3.76 |
|
|
2.06 |
|
|
2.21 |
|
|
83 |
% |
|
70 |
% |
Fuel gallons consumed
(thousands) |
79,566 |
|
|
75,938 |
|
|
76,898 |
|
|
5 |
% |
|
3 |
% |
|
227,559 |
|
|
189,003 |
|
|
211,774 |
|
|
20 |
% |
|
7 |
% |
Employees (FTE) |
6,126 |
|
|
5,405 |
|
|
4,811 |
|
|
13 |
% |
|
27 |
% |
|
6,126 |
|
|
5,405 |
|
|
4,811 |
|
|
13 |
% |
|
27 |
% |
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 Adjusted Pre-tax Income (Loss)
($ in millions)
(unaudited) |
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
Net income (loss), as
reported |
|
$ |
31 |
|
|
$ |
23 |
|
|
$ |
87 |
|
|
$ |
(77 |
) |
|
$ |
(49 |
) |
|
$ |
195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft
Rent |
|
|
|
|
|
|
|
|
|
|
|
|
Early lease termination costs(a) |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
Salaries, wages and
benefits |
|
|
|
|
|
|
|
|
|
|
|
|
Collective bargaining contract ratification(b) |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
18 |
|
Pilot phantom equity(c) |
|
|
— |
|
|
|
— |
|
|
|
(21 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
Flight attendant early out program(d) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Depreciation and
amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment(e) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
Early lease termination costs(a) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Other operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and merger-related costs, net(f) |
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
— |
|
CARES Act – grant recognition and employee retention
credits(g) |
|
|
— |
|
|
|
(72 |
) |
|
|
— |
|
|
|
— |
|
|
|
(295 |
) |
|
|
— |
|
Interest
expense |
|
|
|
|
|
|
|
|
|
|
|
|
CARES Act – write-off of deferred financing costs due to paydown of
loan(h) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
CARES Act – mark to market impact for warrants(i) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
— |
|
Pre-tax impact |
|
|
(11 |
) |
|
|
(71 |
) |
|
|
(21 |
) |
|
|
24 |
|
|
|
(262 |
) |
|
|
10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax benefit (expense), non-GAAP(j) |
|
|
13 |
|
|
|
24 |
|
|
|
6 |
|
|
|
(3 |
) |
|
|
64 |
|
|
|
(2 |
) |
Net income (loss) impact |
|
|
2 |
|
|
|
(47 |
) |
|
|
(15 |
) |
|
|
21 |
|
|
|
(198 |
) |
|
|
8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income
(loss), non-GAAP(k) |
|
$ |
33 |
|
|
$ |
(24 |
) |
|
$ |
72 |
|
|
$ |
(56 |
) |
|
$ |
(247 |
) |
|
$ |
203 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes, as reported |
|
$ |
58 |
|
|
$ |
41 |
|
|
$ |
113 |
|
|
$ |
(95 |
) |
|
$ |
(58 |
) |
|
$ |
253 |
|
Pre-tax impact |
|
|
(11 |
) |
|
|
(71 |
) |
|
|
(21 |
) |
|
|
24 |
|
|
|
(262 |
) |
|
|
10 |
|
Adjusted pre-tax
income (loss), non-GAAP(k) |
|
$ |
47 |
|
|
$ |
(30 |
) |
|
$ |
92 |
|
|
$ |
(71 |
) |
|
$ |
(320 |
) |
|
$ |
263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
(a) |
As a result of an early termination and buyout agreement executed
in May 2021 with one of the Company’s lessors, Frontier was able to
accelerate the removal of the remaining four A319 aircraft from its
fleet. These aircraft were originally scheduled to return in
December 2021 and were instead returned during the second and third
quarters of 2021. The Company incurred $1 million and
$10 million in aircraft rent costs during the three and nine
months ended September 30, 2021, respectively, and
$1 million in depreciation costs during the nine months ended
September 30, 2021 relating to the acceleration and resulting
changes to its lease return obligations. |
|
|
(b) |
Represents (i) $1 million and $2 million of costs related
to a one-time incentive bonus and related payroll adjustments
during the three and nine months ended September 30, 2022,
respectively, resulting from the May 2022 contract ratification
with IBT, the union representing the Company's aircraft technicians
and (ii) $18 million of costs related to a one-time contract
ratification incentive plus payroll-related taxes and certain other
compensation and benefits-related accruals earned through March 31,
2019 and committed to by the Company as part of a tentative
agreement with the union representing the Company's flight
attendants that was reached in March 2019 for a contract that was
ratified and became effective in May 2019. |
|
|
(c) |
Represents the impact of the change in value and vesting of phantom
equity units pursuant to the Pilot Phantom Equity Plan. In
accordance with the amended and restated phantom equity agreement,
the remaining phantom equity obligation became fixed as of December
31, 2019 and was no longer subject to valuation adjustments. |
|
|
(d) |
Represents expenses associated with an early out program agreed to
in 2019 with the Company's flight attendants, payable throughout
2019, 2020 and 2021. |
|
|
(e) |
Represents a write-off of capitalized software development costs as
a result of a termination of a vendor arrangement. |
|
|
(f) |
For the three and nine months ended September 30, 2022,
adjustments represent $4 million and $16 million,
respectively, in transaction costs, including banking, legal and
accounting fees, and $9 million and $17 million,
respectively, in employee retention costs incurred in connection
with the proposed merger with Spirit, offset by $25 million in
reimbursements from Spirit after the termination of the Merger
Agreement in each of the three and nine months ended
September 30, 2022. |
|
|
(g) |
Represents the recognition of $72 million and
$278 million of grant funding received from the U.S.
government for payroll support during the three and nine months
ended September 30, 2021, respectively, in addition to
$17 million in employee retention credits the Company
qualified for under the CARES Act during the nine months ended
September 30, 2021. |
|
|
(h) |
On February 2, 2022, the Company repaid the Treasury Loan which
resulted in a one-time write-off of the remaining $7 million
in debt acquisition costs. This amount is a component of interest
expense. |
|
|
(i) |
Represents the mark to market adjustment to the value of the
warrants issued as part of the funding provided under the CARES
Act. This amount is a component of interest expense. As a result of
the Company's initial public offering and the resulting
reclassification of warrants from liability-based awards to
equity-based awards, as of April 6, 2021, the Company no longer
uses mark to market accounting for the warrants. |
|
|
(j) |
Represents the tax impact of the non-GAAP adjustments. For purposes
of determining the tax rate applicable to adjusted (i.e., non-GAAP)
net income (loss) with respect to the three and nine months ended
September 30, 2022, the Company established its adjusted
effective tax rate by using September 30, 2022 actual results. In
contrast, for all prior interim periods, the Company determined its
effective tax rate on a non-GAAP basis by using full year actual
and projected results to determine the effective tax rate to
calculate adjusted net income (loss). Management believes the use
of September 30, 2022 actuals to calculate an adjusted tax rate for
the three and nine month interim periods then ended provides a more
meaningful relationship between income tax expense and adjusted
pre-tax income (loss) than would be produced using the full year
and projected results method due to the shift from an adjusted
pre-tax loss in early 2022 to actual and forecasted profitability
in the third and fourth quarters of 2022 combined with an
expectation of annual adjusted pre-tax results being near
break-even and the resulting impact of non-deductible items. GAAP
permits the use of the actual results method under such
circumstances. However, the foregoing methodology has been applied
solely to the non-GAAP presentation and the Company continues to
calculate income tax expense on a GAAP basis for all periods
presented using the estimated annual effective tax rate method
which uses an expectation of full year 2022 pre-tax income (loss)
in the determination of interim effective tax rates as this method
does not produce significant variations in the customary
relationship between income tax expense and pre-tax accounting
income. The tax impact on the 2021 adjustments takes into
consideration the non-deductibility of the warrant mark to market
adjustments. |
|
|
(k) |
Adjusted net income (loss) and adjusted pre-tax income (loss) are
included as a supplemental disclosure because they are a useful
indicator of its operating performance. Derivations of net 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 an analytical tool. 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 does 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 its usefulness as a comparative measure.
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) 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 its use as an indicator of the Company's
profitability. Accordingly, you are cautioned not to place undue
reliance on this information. |
Reconciliation of Total Operating Expenses to Adjusted
Total Operating Expenses and Adjusted Total Operating Expenses
(excluding fuel)
($ in millions)
(unaudited) |
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
Total operating
expenses, as reported(a) |
|
$ |
850 |
|
|
$ |
587 |
|
|
$ |
560 |
|
|
$ |
2,510 |
|
|
$ |
1,482 |
|
|
$ |
1,612 |
|
Transaction and merger-related
costs, net |
|
|
12 |
|
|
|
— |
|
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
— |
|
Asset impairment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
— |
|
|
|
— |
|
Collective bargaining contract
ratification |
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(18 |
) |
Early lease termination
costs |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
— |
|
|
|
(11 |
) |
|
|
— |
|
CARES Act – grant recognition
and employee retention credits |
|
|
— |
|
|
|
72 |
|
|
|
— |
|
|
|
— |
|
|
|
295 |
|
|
|
— |
|
Pilot phantom equity |
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
13 |
|
Flight attendant early out
program |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5 |
) |
Adjusted total
operating expenses, non-GAAP(b) |
|
|
861 |
|
|
|
658 |
|
|
|
581 |
|
|
|
2,493 |
|
|
|
1,766 |
|
|
|
1,602 |
|
Aircraft fuel |
|
|
(306 |
) |
|
|
(166 |
) |
|
|
(164 |
) |
|
|
(856 |
) |
|
|
(389 |
) |
|
|
(468 |
) |
Adjusted total
operating expenses (excluding fuel),
non-GAAP(b) |
|
$ |
555 |
|
|
$ |
492 |
|
|
$ |
417 |
|
|
$ |
1,637 |
|
|
$ |
1,377 |
|
|
$ |
1,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
expenses, as reported |
|
$ |
850 |
|
|
$ |
587 |
|
|
$ |
560 |
|
|
$ |
2,510 |
|
|
$ |
1,482 |
|
|
$ |
1,612 |
|
Aircraft fuel |
|
|
(306 |
) |
|
|
(166 |
) |
|
|
(164 |
) |
|
|
(856 |
) |
|
|
(389 |
) |
|
|
(468 |
) |
Total operating
expenses (excluding fuel) |
|
$ |
544 |
|
|
$ |
421 |
|
|
$ |
396 |
|
|
$ |
1,654 |
|
|
$ |
1,093 |
|
|
$ |
1,144 |
|
__________________
(a) |
See “Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items. |
|
|
(b) |
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.Adjusted total operating expenses and adjusted total
operating expenses (excluding fuel) have limitations as analytical
tools and other companies in the industry may calculate 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,
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 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 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, 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 EBITDA and EBITDAR to Adjusted EBITDA
and Adjusted EBITDAR
($ in millions)
(unaudited) |
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, EBITDAR,
Adjusted EBITDA and Adjusted EBITDAR reconciliation
(unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
31 |
|
|
$ |
23 |
|
|
$ |
87 |
|
|
$ |
(77 |
) |
|
$ |
(49 |
) |
|
$ |
195 |
|
Plus (minus): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
4 |
|
|
|
4 |
|
|
|
2 |
|
|
|
16 |
|
|
|
31 |
|
|
|
8 |
|
Capitalized interest |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(6 |
) |
|
|
(3 |
) |
|
|
(8 |
) |
Interest income and other |
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(1 |
) |
|
|
(12 |
) |
Income tax expense (benefit) |
|
|
27 |
|
|
|
18 |
|
|
|
26 |
|
|
|
(18 |
) |
|
|
(9 |
) |
|
|
58 |
|
Depreciation and amortization |
|
|
8 |
|
|
|
10 |
|
|
|
10 |
|
|
|
36 |
|
|
|
28 |
|
|
|
35 |
|
EBITDA |
|
|
64 |
|
|
|
53 |
|
|
|
119 |
|
|
|
(54 |
) |
|
|
(3 |
) |
|
|
276 |
|
Plus: Aircraft rent |
|
|
140 |
|
|
|
128 |
|
|
|
96 |
|
|
|
401 |
|
|
|
399 |
|
|
|
270 |
|
EBITDAR |
|
$ |
204 |
|
|
$ |
181 |
|
|
$ |
215 |
|
|
$ |
347 |
|
|
$ |
396 |
|
|
$ |
546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
$ |
64 |
|
|
$ |
53 |
|
|
$ |
119 |
|
|
$ |
(54 |
) |
|
$ |
(3 |
) |
|
$ |
276 |
|
Plus (minus)(a): |
|
|
|
|
|
|
|
|
|
|
|
|
Transaction and merger-related costs, net |
|
|
(12 |
) |
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
— |
|
Collective bargaining contract ratification |
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
|
18 |
|
Early lease termination costs |
|
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
CARES Act – grant recognition and employee retention credits |
|
|
— |
|
|
|
(72 |
) |
|
|
— |
|
|
|
— |
|
|
|
(295 |
) |
|
|
— |
|
Pilot phantom equity |
|
|
— |
|
|
|
— |
|
|
|
(21 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13 |
) |
Flight attendant early out program |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5 |
|
Adjusted
EBITDA(b) |
|
|
53 |
|
|
|
(18 |
) |
|
|
98 |
|
|
|
(44 |
) |
|
|
(288 |
) |
|
|
286 |
|
Plus: Aircraft rent(c) |
|
|
140 |
|
|
|
127 |
|
|
|
96 |
|
|
|
401 |
|
|
|
389 |
|
|
|
270 |
|
Adjusted
EBITDAR(d) |
|
$ |
193 |
|
|
$ |
109 |
|
|
$ |
194 |
|
|
$ |
357 |
|
|
$ |
101 |
|
|
$ |
556 |
|
__________________
(a) |
See “Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Pre-tax Income (Loss)” above for discussion on
adjusting items. |
|
|
(b) |
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; EBITDA and adjusted
EBITDA do not reflect the Company's cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
EBITDA and adjusted EBITDA do not reflect changes in, or cash
requirements for, the Company's working capital needs; EBITDA and
adjusted EBITDA do not reflect 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; 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;
and other companies in the airline industry may calculate EBITDA
and adjusted EBITDA differently than the Company does, limiting its
usefulness as a comparative measure. 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. |
|
|
(c) |
Represents aircraft rent expense included in adjusted EBITDA.
Excludes aircraft rent expense of $1 million and $10 million for
the three and nine months ended September 30, 2021,
respectively, for costs incurred due to the early termination of
the Company's A319 leased aircraft. See footnote (a) under the
caption “Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Pre-tax Income (Loss)”. |
|
|
(d) |
EBITDAR and adjusted EBITDAR are included as supplemental
disclosures because the Company believes they are useful solely as
valuation metrics for airlines as their calculations isolates the
effects of financing in general, the accounting effects of capital
spending and acquisitions (primarily aircraft, which may be
acquired directly, directly subject to acquisition debt, by capital
lease or by operating lease, each of which is presented differently
for accounting purposes), and income taxes, which may vary
significantly between periods and for different airlines for
reasons unrelated to the underlying value of a particular airline.
However, EBITDAR and adjusted EBITDAR are not determined in
accordance with GAAP, are susceptible to varying calculations and
not all companies calculate the measures in the same manner. As a
result, EBITDAR and adjusted EBITDAR, as presented, may not be
directly comparable to similarly titled measures presented by other
companies. In addition, EBITDAR and adjusted EBITDAR should not be
viewed as a measure of overall performance since they exclude
aircraft rent, which is a normal, recurring cash operating expense
that is necessary to operate the business. Accordingly, you are
cautioned not to place undue reliance on this information. |
Reconciliation of CASM to Adjusted CASM (excluding
fuel), Adjusted CASM and Adjusted CASM including net
interest
(unaudited) |
|
|
Three Months Ended September 30, |
|
2022 |
|
|
2021 |
|
|
2019 |
|
|
($ in millions) |
|
Per ASM (¢) |
|
($ in millions) |
|
Per ASM (¢) |
|
($ in millions) |
|
Per ASM (¢) |
CASM(a)(b) |
|
|
10.57 |
|
|
|
|
7.83 |
|
|
|
|
7.49 |
|
Aircraft fuel |
(306 |
) |
|
(3.81 |
) |
|
(166 |
) |
|
(2.21 |
) |
|
(164 |
) |
|
(2.20 |
) |
CASM (excluding
fuel) |
|
|
6.76 |
|
|
|
|
5.62 |
|
|
|
|
5.29 |
|
Transaction and merger-related
costs, net |
12 |
|
|
0.15 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Collective bargaining contract
ratification |
(1 |
) |
|
(0.01 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Early lease termination
costs |
— |
|
|
— |
|
|
(1 |
) |
|
(0.02 |
) |
|
— |
|
|
— |
|
CARES Act – grant
recognition |
— |
|
|
— |
|
|
72 |
|
|
0.95 |
|
|
— |
|
|
— |
|
Pilot phantom equity |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21 |
|
|
0.28 |
|
Adjusted CASM
(excluding fuel)(c) |
|
|
6.90 |
|
|
|
|
6.55 |
|
|
|
|
5.57 |
|
Aircraft fuel |
306 |
|
|
3.81 |
|
|
166 |
|
|
2.22 |
|
|
164 |
|
|
2.20 |
|
Adjusted
CASM(d) |
|
|
10.71 |
|
|
|
|
8.77 |
|
|
|
|
7.77 |
|
Net interest expense
(income) |
(2 |
) |
|
(0.03 |
) |
|
2 |
|
|
0.02 |
|
|
(4 |
) |
|
(0.05 |
) |
Adjusted CASM + net
interest(e) |
|
|
10.68 |
|
|
|
|
8.79 |
|
|
|
|
7.72 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASM |
|
|
10.57 |
|
|
|
|
7.83 |
|
|
|
|
7.49 |
|
Net interest expense
(income) |
(2 |
) |
|
(0.02 |
) |
|
2 |
|
|
0.02 |
|
|
(4 |
) |
|
(0.05 |
) |
CASM + net
interest |
|
|
10.55 |
|
|
|
|
7.85 |
|
|
|
|
7.44 |
|
__________________
(a) |
Cost per ASM figures may not recalculate due to rounding |
|
|
(b) |
See “Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Pre-tax Income (Loss)" above for discussion on
adjusting items. |
|
|
(c) |
Adjusted CASM (excluding fuel) is included as a supplemental
disclosure 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. Adjusted CASM (excluding fuel) is
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 is included as a supplemental
disclosure because the Company believes it is a useful metric to
properly compare the Company's 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 this metric is useful because it
removes certain items that may not be indicative of base operating
performance or future results. Adjusted CASM including net interest
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. |
Reconciliation of CASM to Adjusted CASM (excluding
fuel), Adjusted CASM and Adjusted CASM including net
interest
(unaudited) |
|
|
Nine Months Ended September 30, |
|
2022 |
|
|
2021 |
|
|
2019 |
|
|
($ in millions) |
|
Per ASM (¢) |
|
($ in millions) |
|
Per ASM (¢) |
|
($ in millions) |
|
Per ASM (¢) |
CASM(a)(b) |
|
|
10.88 |
|
|
|
|
7.79 |
|
|
|
|
7.84 |
|
Aircraft fuel |
(856 |
) |
|
(3.71 |
) |
|
(389 |
) |
|
(2.05 |
) |
|
(468 |
) |
|
(2.28 |
) |
CASM (excluding
fuel) |
|
|
7.17 |
|
|
|
|
5.74 |
|
|
|
|
5.56 |
|
Transaction and merger-related
costs, net |
(8 |
) |
|
(0.04 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Asset impairment |
(7 |
) |
|
(0.03 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Collective bargaining contract
ratification |
(2 |
) |
|
(0.01 |
) |
|
— |
|
|
— |
|
|
(18 |
) |
|
(0.09 |
) |
Early lease termination
costs |
— |
|
|
— |
|
|
(11 |
) |
|
(0.05 |
) |
|
— |
|
|
— |
|
Cares Act – grant recognition
and employee retention credits |
— |
|
|
— |
|
|
295 |
|
|
1.55 |
|
|
— |
|
|
— |
|
Pilot phantom equity |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
13 |
|
|
0.07 |
|
Flight attendant early out
program |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(5 |
) |
|
(0.02 |
) |
Adjusted CASM
(excluding fuel) |
|
|
7.09 |
|
|
|
|
7.24 |
|
|
|
|
5.52 |
|
Aircraft fuel |
856 |
|
|
3.71 |
|
|
389 |
|
|
2.04 |
|
|
468 |
|
|
2.27 |
|
Adjusted
CASM |
|
|
10.80 |
|
|
|
|
9.28 |
|
|
|
|
7.79 |
|
Net interest expense
(income) |
5 |
|
|
0.02 |
|
|
27 |
|
|
0.14 |
|
|
(12 |
) |
|
(0.06 |
) |
CARES Act – write-off of
deferred financing costs due to paydown of loan |
(7 |
) |
|
(0.03 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
CARES Act – mark to market
impact for warrants |
— |
|
|
— |
|
|
(22 |
) |
|
(0.11 |
) |
|
— |
|
|
— |
|
Adjusted CASM + net
interest |
|
|
10.79 |
|
|
|
|
9.31 |
|
|
|
|
7.73 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASM |
|
|
10.88 |
|
|
|
|
7.79 |
|
|
|
|
7.84 |
|
Net interest expense
(income) |
5 |
|
|
0.02 |
|
|
27 |
|
|
0.14 |
|
|
(12 |
) |
|
(0.06 |
) |
CASM + net
interest |
|
|
10.90 |
|
|
|
|
7.93 |
|
|
|
|
7.78 |
|
__________________
(a) |
Cost per ASM figures may not recalculate due to rounding. |
|
|
(b) |
See “Reconciliation of Net Income (Loss) to Adjusted Net Income
(Loss) and Adjusted Pre-tax Income (Loss)” above for discussion on
adjusting items. |
Contacts:
Jennifer F. de la Cruz, Corporate Communications
Email: JenniferF.Delacruz@flyfrontier.com
Phone: 720.374.4207
David Erdman, Investor Relations
Email: David.Erdman@flyfrontier.com
Phone: 720.798.5886
Frontier (NASDAQ:ULCC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Frontier (NASDAQ:ULCC)
Historical Stock Chart
From Sep 2023 to Sep 2024