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May 25, 2006Frontier Airlines Reports Fiscal Year 2006 ResultsDENVER, May 25 /PRNewswire-FirstCall/ -- Frontier Airlines Holdings, Inc. formerly known as Frontier Airlines, Inc., (Nasdaq: FRNT - News) today reported a net loss of $14.0 million, or $0.39 per diluted common share, for its fiscal year ended March 31, 2006. This compares to a net loss of $23.4 million, or $0.66 per diluted common share for the previous fiscal year. The Company's fiscal year 2006 net loss included the following items before the effect of income taxes: aircraft lease and facility exit charges of $3.4 million primarily relating to three leased Boeing 737-300 aircraft that the Company ceased using during the first quarter; gains of $1.1 million related to the sale of Boeing parts held for sale and other assets; and an unrealized gain on fuel hedges of $1.0 million. These items, net of income taxes, increased the Company's net loss by $0.02 per diluted share. Included in the Company's net loss for the prior fiscal year ended March 31, 2005 were the following items before the effect of income taxes: a write down of $5.1 million of the carrying value of Boeing rotable spare parts which was offset by an unrealized gain on fuel hedges of $3.1 million. These items, net of income taxes, increased the Company's net loss by $0.04 per diluted share. For Frontier's fiscal fourth quarter ended March 31, 2006, the airline reported a net loss of $7.9 million, or $0.22 per diluted common share, compared to a net loss of $3.7 million, or $0.10 per diluted common share, for the same period last year. The fiscal fourth quarter 2006 results, on a pre-tax basis, included a $0.5 million unrealized fuel derivative gain and a $0.2 million gain from the sale of spare parts and inventory. These items, net of income taxes, reduced the Company's net loss by $.01 per diluted share. The fiscal fourth quarter 2005 results, on a pre-tax basis, included a $3.8 million unrealized fuel derivative gain and a $0.4 million gain from the sale of spare parts and inventory. These items, net of income taxes, reduced the Company's net loss by $.08 per diluted share. Chief Executive Officer's Comments Frontier President and CEO Jeff Potter said, "Although we made progress in all facets of our business, it was not enough to offset the many challenges that face the industry and our company during our fiscal fourth quarter. "In an industry that has trended towards overall reduced capacity, Denver International Airport (DIA) was an anomaly, adding the second greatest number of seats of the top 33 airports in the country on a year-over-year basis for the fiscal fourth quarter. Looking into the summer months, we expect to see year-over-year seat capacity growth at DIA, but at a lower percentage increase than in this year's March quarter. "Against that backdrop, we made great progress with the fundamentals underlying our growth. In spite of the capacity additions and increased competition, our mainline revenue per available seat mile (RASM) increased 2.2 percent for the quarter and 10.3 percent for the year on a year-over-year basis. In addition, while we continue to absorb the impact of relentless fuel price increases, our mainline cost per available seat mile (CASM) excluding fuel fell 6.3 percent for the quarter and 2.7 percent for the year on a year-over-year basis. "We are especially pleased that we now have secured the gates at DIA that are necessary to support our growth. With this development, we have more flexibility for current operations and future opportunities, which we expect will ultimately benefit our bottom line." Fourth Quarter Operating Highlights Compared to the same quarter last year, mainline passenger revenue increased 16.4 percent as mainline revenue passenger miles (RPMs) grew at a rate of 13.4 percent during the fiscal fourth quarter, while mainline capacity growth as measured by mainline available seat miles (ASMs) increased 13.6 percent. As a result, the airline's mainline load factor was 73.5 percent for its fiscal fourth quarter of 2006, 0.1 load factor points less than the airline's mainline load factor of 73.6 percent during the same quarter last year. The airline's mainline breakeven load factor, excluding special items, for the fiscal fourth quarter 2006 decreased 0.3 load factor points from 76.6 percent to 76.3 percent. During the fiscal fourth quarter 2006, the airline's mainline RASM increased 2.2 percent to 8.65 cents from the same quarter last year. The increase in mainline RASM was primarily due to the 2.4 percent mainline yield per RPM increase on a year-over-year basis. Mainline average length of haul decreased 4.1 percent on a year-over-year basis. Mainline fuel cost per gallon during the quarter (excluding unrealized fuel hedging gains) increased 30.6 percent to $2.05 compared to $1.57 for the same period last year. Mainline CASM excluding fuel decreased 6.3 percent to 6.26 cents from the same period last year, when CASM excluding fuel was 6.68 cents. Senior Vice President and Chief Financial Officer Paul Tate discussed the airline's year-over-year unit cost comparatives stating, "Our fiscal fourth quarter generated continued improvement in our mainline CASM excluding fuel, despite a 4.1 percent reduction in our average aircraft stage length and a 2.2 percent increase in RASM and associated increase in passenger related expenses per ASM. We continued to benefit from our operation of a single fleet type compared to the fleet transition costs we were incurring in last year's March quarter." The Company's current unrestricted cash and working capital position as of March 31, 2006 was $272.8 million and $89.9 million, respectively. This compares to the Company's unrestricted cash (including short-term investments) and working capital position for the same period last year of $174.8 million and $41.7 million, respectively. Year End Operating and Financial Highlights The airline's mainline passenger revenues during its fiscal year 2006 increased 20.1 percent to $878.7 million from $731.8 million for the prior fiscal year. The airline's mainline capacity, as measured by ASMs, increased 8.4 percent during fiscal year 2006. During fiscal year 2006, the airline's mainline break-even load factor, excluding special items, increased 0.9 points to 75.7 percent. The airline's average fare during its fiscal year 2006 increased 0.7 percent to $103.05 from $102.31 from the prior fiscal year. The Company's mainline passenger RASM for fiscal year 2006 increased 10.3 percent to 8.79 cents from 7.97 cents for fiscal year 2005. Mainline CASM for the fiscal year 2006 increased to 9.06 cents from 8.42 cents for fiscal year 2006. Mainline CASM excluding the airline's fuel costs decreased 2.7 percent to 6.21 cents during fiscal year 2006, compared to 6.38 cents during fiscal year 2005. During fiscal year 2006, the average cost per gallon of fuel was $1.99, a 41.1 percent increase from the last fiscal year. Daily aircraft utilization for fiscal year 2006 averaged 11.5 hours, an increase of 3.6 percent from fiscal year 2005.
Business developments during the quarter included:
* Completed a corporate reorganization making Frontier Airlines, Inc., a
Colorado corporation, a wholly-owned subsidiary of Frontier Airlines
Holdings, Inc., a Delaware corporation, effective April 3, 2006.
* Announced the firm order of six new Airbus A320 aircraft, as well as
the exchange of eight existing A319 aircraft orders for four A318 and
four A320 aircraft orders. The amended aircraft order introduces the
A320 aircraft to Frontier's existing fleet plan and extends Frontier's
growth plan into fiscal year 2011 from its previous last delivery date
of March 2008.
* Announced new non-stop service between Calgary and Denver, which began
May 25th, 2006, making Frontier the first American low cost carrier
(LCC) to enter Canada.
* Began new non-stop service between Indianapolis and Cancun, Mexico
* Announced a five-year renewal of Frontier's sponsorship of the Colorado
Rockies.
* Took delivery of one new Airbus A319 aircraft.
* Launched a successful integrated marketing, advertising and PR
campaign, "Flip to Mexico," in Denver, generating local and national
interest as well as critical acclaim including a coveted Clio award.
* Began allowing Portable Oxygen Containers (POCs) on all flights
* Received seventh consecutive Diamond Award, the FAAs highest honor for
maintenance and safety.
OutlookPotter concluded, "While we recognize that the unique competitive nature of the Denver market isn't likely to change in the near term, with the continuing strength in revenues and bookings heading into what we expect to be the busiest summer in the Company's history, combined with the progress we continue to achieve in our unit costs, we expect to return to profitability in the current June quarter." Senior leadership will host a conference call to discuss Frontier's quarterly and annual results on May 26, 2006 at 9:00 a.m. Mountain Daylight Time. The call is available via the World Wide Web on the airline's Web site at FrontierAirlines.com or using the following URL: http://www.vcall.com/CEPage.asp?ID=92158. Currently in its 12th year of operations, Denver-based Frontier Airlines is the second largest jet service carrier at Denver International Airport, employing approximately 4,800 aviation professionals. With 52 aircraft and the youngest Airbus fleet in North America, Frontier offers 24 channels of DIRECTV® service in every seatback along with 33 inches of legroom in an all coach configuration. In conjunction with Frontier JetExpress operated by Horizon Air, Frontier operates routes linking its Denver hub to 55 destinations including 47 destinations in 29 states spanning the nation from coast to coast, seven cities in Mexico and Calgary, Canada. Frontier's maintenance and engineering department has received the Federal Aviation Administration's highest award, the Diamond Certificate of Excellence, in recognition of 100 percent of its maintenance and engineering employees completing advanced aircraft maintenance training programs, for seven consecutive years. In July 2005, Frontier ranked as one of the "Top 10 Domestic Airlines" as determined by readers of Travel & Leisure magazine. Frontier provides capacity information and other operating statistics on its Web site, which may be viewed at FrontierAirlines.com. Legal Notice Regarding Forward-Looking Statements Statements contained in this press release that are not historical facts may be considered forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from these forward looking statements. Many of these risks and uncertainties cannot be predicted with accuracy and some might not even be anticipated. Some of the factors that could significantly impact the forward-looking statements in this press release include, but are not limited to: further downward pressure on airfares due to competition, overcapacity, demand or other factors; continuing high fuel costs and the inability to recover these higher fuel costs in airfares; unanticipated decreases in the volume of passenger traffic due to terrorist acts or additional incidents that could cause the public to question the safety and/or efficiency of air travel; the inability to secure adequate gate facilities at Denver International Airport and at other airports where Frontier operates; weather, maintenance or other operational disruptions; air traffic control-related difficulties; the impact of labor issues; actions of the federal and local governments; changes in the government's policy regarding relief or assistance to the airline industry; the stability of the U.S. economy and the economic environment of the airline industry; and other factors detailed in the Company's public filings with the Securities and Exchange Commission. Any forward-looking statement is qualified by reference to these risks and factors. These risks and factors are not exclusive, and the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release. Additional information regarding these and other factors may be contained in the Company's SEC filings, including without limitation, the Company's Form 10-K for its fiscal year ended March 31, 2005. The Company's filings are available from the Securities and Exchange Commission or may be obtained through the Company's website, FrontierAirlines.com.
FRONTIER AIRLINES, INC.
SELECTED BALANCE SHEET DATA
(unaudited)
March 31,
2006 2005
Cash, cash equivalents and
short-term investments 272,839 174,794
Current assets 390,957 275,550
Total assets 970,432 792,011
Current liabilities 301,012 233,850
Long-term debt 405,482 282,792
Total liabilities 741,656 544,090
Stockholders' equity 228,776 237,920
Working capital 89,946 41,700
FRONTIER AIRLINES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2006 AND 2005
(unaudited)
Three Months Ended Twelve Months Ended
March 31, March 31, March 31, March 31,
2006 2005 2006 2005
Revenues:
Passenger
- mainline $223,404,437 $191,850,462 $878,680,878 $731,821,890
Passenger
- regional
partner 22,991,589 21,650,116 92,826,244 84,268,560
Cargo 1,623,306 1,095,713 5,676,883 4,957,731
Other 4,457,314 3,947,835 17,088,741 12,591,260
Total
revenues 252,476,646 218,544,126 994,272,746 833,639,441
Operating expenses:
Flight
operations 37,218,529 35,933,047 141,315,684 132,022,593
Aircraft fuel 73,515,265 47,278,731 281,906,430 185,821,202
Aircraft lease 23,954,740 23,118,007 94,228,608 87,095,717
Aircraft and
traffic
servicing 37,441,648 34,261,116 138,491,985 129,469,952
Maintenance 20,222,825 19,097,242 77,238,247 76,678,749
Promotion
and sales 22,133,084 18,634,207 82,501,933 76,461,549
General and
administrative 12,176,349 13,195,114 48,978,978 48,350,563
Operating
expenses -
regional
partner 27,296,688 23,606,729 106,865,952 92,480,847
Aircraft lease
and facility
exit costs 49,417 -- 3,413,932 --
(Gains) losses
on sales of
assets, net (179,299) (400,054) (1,144,041) 84,610
Impairments -- (136,399) -- 5,123,224
Depreciation 7,292,776 6,714,328 28,372,292 26,497,930
Total
operating
expenses 261,122,022 221,302,068 1,002,170,000 860,086,936
Operating
income (8,645,376) (2,757,942) (7,897,254) (26,447,495)
Nonoperating
income (expense):
Interest income 3,530,749 1,351,410 9,365,958 3,757,596
Interest expense (6,887,253) (3,779,184) (21,758,135) (13,184,345)
Other, net 24,101 (136,421) (179,340) 36,148
Total nonoperating
income
(expense), net (3,332,403) (2,564,195) (12,571,517) (9,390,601)
Loss before
income tax
benefit (11,977,779) (5,322,137) (20,468,771) (35,838,096)
Income tax
benefit (4,124,949) (1,605,683) (6,497,325) (12,407,910)
Net loss $(7,852,830) $(3,716,454) $(13,971,446) $(23,430,186)
Loss per share:
Basic $(0.22) $(0.10) $(0.39) $(0.66)
Diluted $(0.22) $(0.10) $(0.39) $(0.66)
Weighted average
shares of common
stock outstanding:
Basic 36,287,483 35,729,769 36,166,972 35,641,370
Diluted 36,287,483 35,729,769 36,166,972 35,641,370
FRONTIER AIRLINES, INC.
COMPARATIVE OPERATING STATISTICS
(unaudited)
Three months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
Selected Operating Data - Mainline:
Passenger
revenue (000s) $223,404 $191,850 $878,681 $731,822
Revenue passengers
carried (000s) 1,980 1,675 7,764 6,653
Revenue
passenger miles
(RPMs) (000s) 1,881,737 1,659,174 7,436,830 6,587,589
Available
seat miles
(ASMs) (000s) 2,559,519 2,252,957 9,885,599 9,115,868
Passenger load
factor 73.5% 73.6% 75.2% 72.3%
Break-even
load factor (1) 76.3% 76.6% 75.7% 74.8%
Block hours 52,977 45,795 202,300 182,581
Departures 21,540 18,165 82,878 72,888
Average seats
per departure 129.4 129.6 129.4 130.1
Average stage length 918 957 922 961
Average length of haul 950 991 958 990
Average daily block
hour utilization 11.9 11.0 11.5 11.1
Passenger yield per
RPM (cents) (2), (3) 11.76 11.48 11.68 11.03
Total yield per
RPM (cents) 12.20 11.87 12.12 11.38
Passenger yield
per ASM (cents) 8.65 8.46 8.79 7.97
Total yield per
ASM (cents) 8.97 8.74 9.12 8.22
Cost per ASM (cents) 9.14 8.77 9.06 8.42
Fuel expense
per ASM (cents) 2.88 2.09 2.85 2.04
Cost per ASM
excluding fuel (cents) 6.26 6.68 6.21 6.38
Average fare $101.97 $105.78 $103.05 $102.31
Average aircraft
in service 49.4 46.1 48.2 44.9
Aircraft in service
at end of period 50 47 50 47
Average age of aircraft
at end of period 2.6 2.5 2.6 2.5
Average fuel cost
per gallon $2.03 $ 1.46 $1.99 $1.41
Average fuel cost
per gallon (excluding
unrealized fuel
hedging gains) (5) $2.05 $ 1.57 $2.00 $1.43
Fuel gallons
consumed (000's) 36,144 32,423 141,474 131,906
Three months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
Selected Operating Data - Regional Partner:
Passenger
revenue (000s) $22,992 $21,650 $92,826 $84,269
Revenue passengers
carried (000s) 217 214 912 872
Revenue passenger
miles (RPMs) (000s) 149,509 124,193 591,787 527,205
Available seat
miles (ASMs) (000s) 213,050 182,265 821,244 736,287
Passenger load
factor 70.2% 68.1% 72.1% 71.6%
Passenger yield
per RPM (cents) 15.38 17.43 15.69 15.98
Passenger yield
per ASM (cents) 10.79 11.88 11.30 11.45
Cost per ASM (cents) 12.81 12.95 13.01 12.56
Average fare (15) $105.71 $101.01 $101.78 $96.66
Aircraft in service
at end of period 9 9 9 9
Three months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
Selected Operating Data - Combined:
Passenger
revenue (000s) $246,396 $213,500 $971,507 $816,091
Revenue passengers
carried (000s) 2,197 1,889 8,676 7,525
Revenue
passenger miles
(RPMs) (000s) 2,031,246 1,783,367 8,028,617 7,114,794
Available
seat miles
(ASMs) (000s) 2,772,569 2,435,222 10,706,843 9,852,155
Passenger load
factor 73.3% 73.2% 75.0% 72.2%
Passenger yield per
RPM (cents) (2), (3) 12.03 11.90 11.98 11.39
Total yield per
RPM (cents) 12.43 12.25 12.38 11.72
Passenger yield
per ASM (cents) 8.81 8.71 8.98 8.23
Total yield
per ASM (cents) 9.11 8.97 9.29 8.46
Cost per ASM (cents) 9.42 9.09 9.36 8.73
1. "Break-even load factor" is the passenger load factor that will
result in operating revenues being equal to operating expenses, net
of certain adjustments, assuming constant yield per RPM and no change
in ASMs. Break-even load factor as presented above may be deemed a
non-GAAP financial measure under regulations issued by the Securities
and Exchange Commission. We believe that presentation of break-even
load factor calculated after certain adjustments is useful to
investors because the elimination of special or unusual items allows
a meaningful period-to-period comparison. Furthermore, in preparing
operating plans and forecasts we rely on an analysis of break-even
load factor exclusive of these special and unusual items. Our
presentation of non-GAAP results should not be viewed as a substitute
for our financial or statistical results based on GAAP, and other
airlines may not necessarily compute break-even load factor in a
manner that is consistent with our computation.
A reconciliation of the components of the calculation of break-even load
factor is as follows:
Three Months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
(in thousands) (in thousands)
(Income) loss before
cumulative effect
of accounting change $7,853 $3,716 $13,971 $23,430
Income tax
(expense) benefit 4,125 1,606 6,497 12,408
Passenger revenue 223,404 191,850 878,681 731,822
Regional partner
expense (27,297) (23,607) (106,866) (92,481)
Regional partner
revenue 22,992 21,650 92,826 84,269
Charter revenue (2,052) (1,336) (10,011) (5,381)
Passenger revenue
mainline (excluding
charter and regional
partner revenue
required to break
even (based on GAAP
amounts) $229,025 $193,879 $875,098 $754,067
Non-GAAP adjustments:
Gain on fuel hedging 509 3,769 976 3,139
Aircraft and
facility lease
exit costs (49) -- (3,414) --
Impairments -- 136 -- (5,123)
Gain (losses) on
sale of assets 179 400 1,144 (85)
Passenger revenue
(excluding charter
and regional partner
revenue) required to
break-even (based
on adjusted
amounts) $229,664 $198,184 $873,804 $751,998
The calculation of the break-even load factor follows:
Three Months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
(in thousands) (in thousands)
Calculation of break-even load factor using GAAP amounts:
Passenger revenue
mainline (excluding
charter and regional
partner revenue
required to break
even (based on GAAP
amounts) ($000s) $229,025 $193,879 $875,098 $754,067
Mainline yield
per RPM (cents) 11.76 11.48 11.68 11.03
Mainline revenue
passenger miles
(000s) to break
even assuming
constant yield
per RPM 1,947,491 1,688,841 7,492,277 6,836,510
Mainline available
seat miles (000's) 2,559,519 2,252,957 9,885,599 9,115,868
Mainline break-even
load factor using
GAAP amounts 76.1% 75.0% 75.8% 75.0%
Calculation of
break-even load
factor using
Non-GAAP amounts:
Passenger revenue
(excluding charter
and regional partner
revenue) required
to break even (based
on adjusted
amounts) ($000s) $229,664 $198,184 $873,804 $751,998
Mainline yield
per RPM (cents) 11.76 11.48 11.68 11.03
Mainline revenue
passenger miles
to break even assuming
constant yield
per RPM 1,952,925 1,726,341 7,481,199 6,817,752
Mainline
available seat
miles (000's) 2,559,519 2,252,957 9,885,599 9,115,868
Mainline break-even
load factor using
non-GAAP amounts 76.3% 76.6% 75.7% 74.8%
2. "Passenger yield per RPM" is determined by dividing passenger
revenues (excluding charter revenue) by revenue passenger miles.
3. For purposes of these yield calculations, charter revenue is excluded
from passenger revenue. These figures may be deemed non-GAAP
financial measures under regulations issued by the Securities and
Exchange Commission. We believe that presentation of yield excluding
charter revenue is useful to investors because charter flights are
not included in RPMs or ASMs. Furthermore, in preparing operating
plans and forecasts, we rely on an analysis of yield exclusive of
charter revenue. Our presentation of non-GAAP financial measures
should not be viewed as a substitute for our financial or statistical
results based on GAAP. The calculation of passenger revenue
excluding charter revenue is as follows:
Three Months Ended Year Ended
March 31, March 31,
2006 2005 2006 2005
Passenger
revenues - mainline,
as reported $223,404 $191,850 $878,681 $731,822
Less: charter
revenue 2,052 1,336 10,011 5,381
Passenger
revenues - mainline
excluding charter 221,352 190,514 868,670 726,441
Add: Passenger
revenues - regional
partner 22,992 21,650 92,826 84,269
Passenger revenues,
system combined $244,344 $212,164 $961,496 $810,710
4. This may be deemed a non-GAAP financial measure under regulations
issued by the Securities and Exchange Commission. We believe the
presentation of financial information excluding fuel expense is
useful to investors because we believe that fuel expense tends to
fluctuate more than other operating expenses, it facilitates
comparison of results of operations between current and past periods
and enables investors to better forecast future trends in our
operations. Furthermore, in preparing operating plans and forecasts,
we rely, in part, on trends in our historical results of operations
excluding fuel expense. However, our presentation of non-GAAP
financial measures should not be viewed as a substitute for our
financial results determined in accordance with GAAP.
5. "Average fuel cost per gallon" excludes unrealized fuel hedge gains
of $510,000 and $3,769,000 for the three months ended March 31, 2006
and 2005, respectively, and $976,000 and $3,139,000 for the years
ended March 31, 2006 and 2005, respectively.
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