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Jun 2, 1999|
Frontier Airlines Reports First Profitable Year in Company's History
DENVER (June 2, 1999) -- ; Frontier Airlines (Nasdaq: FRNT ) today announced record earnings for its fourth quarter and fiscal year ended March 31, 1999. The airline reported fiscal year 1999 net income of $30.6 million, or $1.98 per fully diluted common share, an improvement over fiscal year 1998 when the airline reported a net loss of $17.7 million. Excluding a one-time tax benefit of $5.5 million related to the reversal of the valuation allowance on deferred tax assets, the airline's net income for fiscal year 1999 was $25.1 million, or $1.63 per fully diluted common share. For the airline's fourth quarter, it reported net income of $17.8 million, or $1.00 per fully diluted common share. Excluding the one-time tax benefit related to the valuation allowance on deferred tax assets, the company reported net income of $12.3 million, or $0.69 per fully diluted common share, for its fourth quarter.
Operating revenues increased 49.9 percent to $220.6 million for fiscal year 1999, up from $147.1 million for fiscal year 1998. The airline's operating expenses for fiscal year 1999 increased 18.2 percent to $195.9 million on increased capacity of 27.1 percent.
"To say we are pleased with our fiscal fourth quarter and year-end results would be an immense understatement," said Frontier President Sam Addoms. "It has been quite a journey for Frontier over the past five years and it is particularly gratifying to realize the positive results of the Frontier focus. That focus has encompassed steps during fiscal year 1999 to improve revenue, including the addition of three aircraft to the Frontier fleet, the introduction of service to four new markets and the improvement of schedule connection opportunities per flight. In addition, our increasing ability to attract additional business travelers and present a more rational pricing structure in the Denver marketplace have led to the overall yield improvement we've seen throughout our system. The combination of all of these factors ultimately led to the significant year over year improvement in revenue per available seat mile (RASM)."
Total revenue per passenger mile (yield) for fiscal year 1999 increased 11.3 percent to 14.64 cents from 13.15 cents for the prior fiscal year. The airline's total revenue per available seat mile (RASM) for fiscal year 1999 increased 17.9 percent to 8.69 cents from 7.37 cents for the prior fiscal year.
On the cost side, Addoms noted, "Our focus has included bringing several previously outsourced functions in-house, including our below the wing operation in September 1998 and our heavy "C" check level maintenance in March 1999 at our Denver hub."
Cost per available seat mile (CASM) for fiscal year 1999 decreased 7.0 percent to 7.72 cents from 8.30 cents for the prior fiscal year. CASM exclusive of the airline's fuel costs, which averaged 55.4 cents per gallon during fiscal year 1999, decreased to 6.82 cents, compared to 7.13 cents for fiscal year 1998. The airline's break-even load factor fell 10.7 points to 52.4 percent for fiscal year 1999, compared to 63.1 percent during fiscal year 1998.
General and administrative expenses increased 44.2 percent from $6.4 million for fiscal year 1998 to $9.2 million for fiscal year 1999. Included in this increase was the expense of a one-time company performance bonus to eligible employees of approximately $1.8 million, all of which was recognized during the fourth fiscal quarter.
"Distributing company performance bonuses to the Frontier family is one of the airline's most memorable events," said Addoms. "The road we have traveled to today has rarely been easy, yet our employees have continually personified the Frontier spirit. In addition, I am personally grateful and appreciative to the many employees who stayed the course, despite all the odds being stacked against us. Today's Frontier employees have, in essence, cleared Frontier for takeoff and it is only fitting that they be recognized and applauded for their efforts."
The company recognized an income tax benefit of $5.5 million attributable to the probable realization of its remaining income tax loss carryforwards for which a valuation allowance had been recorded. As a result of the airline's profitability in fiscal 1999 and projected taxable income in fiscal 2000, a valuation allowance is no longer considered to be necessary. As a result of reversing its valuation allowance, the company expects it will recognize income tax expense on future income based on statutory rates.
Cash and cash equivalents available for operations on March 31, 1999 were $47.3 million, compared to March 31, 1998 when the company reported cash and cash equivalents of $3.6 million.
Highlights from Frontier's first profitable fiscal year include:
Denver-based Frontier Airlines commenced operations on July 5, 1994. Unlike other airlines, Frontier's low fares do not have a Saturday night stay requirement. In addition, Frontier offers frequent flier mileage points in Continental Airlines' OnePass® program. Effective June 14, the airline will serve 20 cities coast to coast with a fleet of 19 Boeing 737 jets. The airline currently employs approximately 1,600 travel professionals. Frontier was recently named "Best Domestic Low-Fare Air Carrier" by Entrepreneur magazine in the publication's sixth annual Business Travel Awards. Frontier's Web site may be viewed at http://www.frontierairlines.com .
Statements contained in this press release which are not historical facts are forward-looking statements as that item is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from estimated results. Such risks and uncertainties are detailed in the Company's filings with the Securities and Exchange Commission
-Financial Tables To Follow-
FRONTIER AIRLINES, INC.