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Aug 1, 2003|
Frontier Airlines Reports Fiscal First Quarter 2004 Results
DENVER (July 31, 2003) - Frontier Airlines (Nasdaq: FRNT) today reported fiscal first quarter 2004 net income of $10.9 million, or $0.36 per diluted common share, compared with a net loss of $2.5 million, or $0.09 per common share, before the cumulative effect of change in method of accounting for maintenance checks, for the airline's fiscal first quarter last year. The Company's fiscal first quarter 2004 net income included $15.0 million received under the Emergency Wartime Supplemental Appropriations Act and an unrealized gain on fuel hedges of $752,000, offset by aircraft lease exit costs of $686,000. These items, net of income taxes and related profit sharing, total $0.29 per diluted common share.
Chief Executive Officer's Comments
The airline's cost per available seat mile (CASM) for the quarter decreased 3.1 percent to 8.13 cents from 8.39 cents for the same quarter last year. Fuel cost per gallon during the quarter, including taxes and the cost of delivering fuel into the aircraft, increased 14.7 percent to 95.7 cents per gallon, compared to 83.4 cents for the same period last year. CASM excluding fuel decreased 5.3 percent to 6.74 cents from the same period last year when CASM excluding fuel was 7.12 cents.
The airline's traffic, as measured by revenue passenger miles (RPMs), grew at a rate of 30.9 percent during its fiscal first quarter, while capacity growth, as measured by available seat miles (ASMs), increased by 22.3 percent, from the same time last year. As a result, the airline's load factor was 67.2 percent for its fiscal first quarter, 4.4 load factor points greater than the airline's load factor of 62.8 percent during the same time last year. During fiscal first quarter 2004, the airline's breakeven load factor increased .9 load factor points from 65.0 percent to 65.9 percent.
During fiscal first quarter 2004, passenger revenue per passenger mile (yield) decreased 3.3 percent to 12.29 cents from 12.71 cents for the same period last year. The airline's average fare during its fiscal first quarter 2004 was $105, a 2.8 percent decrease from its fiscal first quarter 2003, when the average fare was $108.
Chief Financial Officer Paul Tate discussed the airline's year-over-year unit cost improvements, stating, "During the quarter, we continued to reduce our unit costs, in part achieved by increasing the number of owned aircraft from an average of three and a half to nine. In addition, bringing in newer Airbus A319 aircraft has decreased our overall maintenance costs, reduced our fuel burn per block hour, and enabled us to increase average aircraft utilization from 9.9 hours, during the first fiscal quarter 2003, to 10.2 hours, during the fiscal first quarter 2004. We are also experiencing greater economies of scale associated with slower indirect cost growth in relation to our 22.3 percent increase in ASMs during the quarter."
The airline's fleet on June 30, 2003 consisted of nine owned Airbus A319 aircraft, nine leased Airbus A319 aircraft and 18 leased Boeing 737 aircraft. Discussing fleet management activities since June 30, 2003, Tate continued, "We have brought three additional Airbus aircraft into our fleet since the end of our fiscal first quarter. Also, during our current quarter, which ends September 30, 2003, we plan to take a non-cash charge of approximately $2.7 million, net of taxes, for the early retirement of our last two Boeing 737-200s,and the closure of our El Paso, Texas maintenance facility."
Business developments during the quarter included:
Cash activity since the conclusion of the airline's fiscal first quarter 2004 includes receipt of a $26.6 million federal income tax refund, and as required by the Company's agreement with the Air Transportation Stabilization Board ("ATSB"), the airline prepaid $10 million of its $70 million ATSB loan.
Potter concluded, "We have announced a variety of initiatives designed to build upon the momentum begun during our fiscal first quarter 2004. These include initiating service to Milwaukee, Wisconsin and Orange County, California at the end of August 2003; initiating service to St. Louis, Missouri in November 2003; opening two additional Mexico destinations in November 2003; and, introducing airport-based kiosks and Internet check-in options for customers this fall. In addition, we will continue to explore both mainline growth opportunities and regional jet partnerships in order to build our expanding route system. We recently took delivery of the world's first Airbus A318 aircraft, and given the tremendous drive of our 3,300 employees, it should come as no surprise that the A318 transition into our fleet was seamless. Building the infrastructure to support the A318's induction into our fleet occurred while carrying record passenger loads, as evidenced during June 2003, when our load factor set an all-time record for Frontier of 75.6 percent. While we will continue to face revenue challenges against a weak domestic economic backdrop, I am confident our employees will continue to demonstrate tremendous perseverance as we work hard to bring Frontier's affordable fares to more cities across America."
Senior leadership will host a conference call to discuss Frontier's quarterly earnings on Aug. 1, 2003 at 9:00 a.m. Mountain Daylight Time. The call is available via the World Wide Web on the airline's Web site at www.frontierairlines.com or using the following URL: http://www.vcall.com/CEPage.asp?ID=84217.
Currently in its tenth year of operations, Denver-based Frontier Airlines is the second largest jet service carrier at Denver International Airport with a fleet of 38 aircraft and employing approximately 3,300 aviation professionals. Frontier and its affiliate Frontier JetExpress currently serve 37 U.S. cities with 190 daily flights. 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 four consecutive years. In April 2003, Entrepreneur ranked Frontier one of two "Best Low-Fare Airlines." Frontier provides capacity information and other operating statistics on its Web site, which may be viewed at www.frontierairlines.com.
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