Frontier Airlines Reports Fiscal Third Quarter 2006 Results

[Paul]

Frontier Airlines, Inc.
(Nasdaq: FRNT) today reported a net loss of $10.3 million, or $0.28 cents per
diluted common share, for the airline's third fiscal quarter ended December
31, 2005 compared to a net loss of $11.1 million, or $0.31 cents per diluted
common share, for the same period last year. Included in the net loss for the
three months ended December 31, 2005 were the following items before the
effect of income taxes: unrealized losses on fuel hedges of $1.5 million and
gains of $0.3 million related primarily to the sale of Boeing parts held for
sale. These items, net of income taxes, increased Frontier's net loss by $.03
cents per diluted common share. Included in the net loss for the quarter
ended December 31, 2004 were the following items before the effect of income
taxes: a gain on the sale of assets of $0.1 million, a write down of $0.7
million of the carrying value of expendable Boeing 737 inventory, and an
unrealized loss on fuel derivative hedges of $3.2 million. These items, net
of income taxes, increased Frontier's net loss by $.07 cents per diluted
common share.

Chief Executive Officer's Comments
Frontier President and CEO Jeff Potter said, "While this quarter's results
are in stark contrast with the previous quarter's profits, we once again saw
several promising indicators. Our mainline passenger revenue increased almost
20 percent as we carried 14 percent more passengers on capacity growth of only
nine percent. In addition, our year-over-year mainline average fare improved
for the fourth straight quarter, increasing almost two percent on a year-over-
year basis. However, the resulting nine percent increase in mainline revenue
per available seat mile (RASM), was overshadowed by three significant
aberrations to our fiscal performance -- a 35 percent year-over-year increase
in fuel cost per gallon; an estimated $4.8 million in lost revenue due to the
disruption of our Cancun and Cozumel service as a result of Hurricane Wilma;
and an estimated $1.2 million in lost revenue due to the discontinuation of
service to New Orleans as a result of Hurricane Katrina."

PR Newswire

 

[Busdrvr]

Average fare increased only 2%? Compared to everyone elses yield growth YOY, it appears FRNT's growth is killing the bottom line. They appear to be adding capacity then having to off Indy Air type fares in an attempt to pay for it. No good.

 

[Ch. 12]

Average fare increased only 2%? Compared to everyone elses yield growth YOY, it appears FRNT's growth is killing the bottom line. They appear to be adding capacity then having to off Indy Air type fares in an attempt to pay for it. No good.

It also doesn't help that IIRC, F9 focused nearly all of its energy about 18 months ago to building an almost "mini-hub" in CUN from strange places in the US. I'm sure that the net effect was fairly substantial though Potter does seem to minimize it in his statements. F9 is having an identity crisis and it's getting worse with the intro of WN to the market. Should be interesting to see if they will continue to stretch themselves thin with 2-a-days to new markets or if they'll start beefing up presence on existing routes. I agree, though...they can't sustain their growth w/o continueing to pay the price in yields.

 

[jimmyd]

The next few quarters will be interesting to see how Frontier performs. The 4Q results are not even reflective of Southwest's entry at Denver. Frontier is being attacked at all fronts at Denver. Some of their highest yielding markets to the West are the same markets that Southwest has started serving (PHX,LAS) and are planning to serve (SLC). The yield pressures will be severe. I was thinking that Frontier could expand Eastbound to some of the larger business markets such as NYC, WAS, and PHL. The problem is that Frontier has decent loads in these markets but their yield is absolutely atrocious, as a result of United's ability to better attract the business traveler and the lack of Fronteir name recognition outside of Denver. So I'm perplexed on how Frontier will be able to improve profitability at Denver with the expected further expansion of Southwest, fuel prices remaining high, and United's aggressive competitive approach. Stay tuned.

 

[mrfish3726]

jimmyd, HMMMMMM funny how you don't even mention that most of the finacial loses were due to the service inturuptions F9 had in the southern US and Mexico during one of the most devistating hurricane seasons on record. If we had not had to suffer the devistations that everyone did from Wilma, Rita, and Katrina the results would have not been as harsh. Not only for F9 but for others as well including SWA.

I laugh so hard at all who think that F9 is a dying airline! Wait till you see whats in store for 2006 and beyond. I wonder, as traffic improves to the MEX destinations or when we start our lucrative trips up north to Canada will you be so speculative as to F9's demises. We'll still be here JIM trust me. UniTED has been here trying to put our F9's lights for 12 years now and still hasn't done it. And SWA, well, I've been watching the ticket counters over there and the gates on pax that are boarding and REALLY SWA isn't even putting a dent in F9 or UniTED traffic so far. SO AS YOU PUT IT, "STAY TUNED"

 

[jimmyd]

Fish, I certainly respect your compassion and loyalty to Frontier. Believe me, I'm a neutral 3rd party in all of this and I'm not predicting the demise of Frontier or any other carrier for that matter, except for FLIY, oh wait a minute, that already happened I make a living staring at airline and airport data all day long and try to make sense of it all. I am fascinated with how it will all play out at DIA with the competitive sitiuation now at play. I heard SWA will be up to 40 flights by the early Summer. Correct me if I'm wrong, but Frontier does not have a huge influx of aicraft on the way. You say wait until 2006 and beyond. Don't leave me hanging Fish, what can Frontier do in 2006 and beyond to thrive in the ultra-competitive situation that exists at DIA today. Alot of us are watching this closely since it could set the framework for the future at similar airports.

 

[mrfish3726]

So then JIM, why don't we all just get it over with and just make it Southwest United States Airlines???

Since you pour over airline data all day, did you miss the part about the 4 new airbus aircraft that we start taking delivery of at the end of FEB? And still have 50 options on the books!

 

[jimmyd]

Lighten up Fish, If I was flying DEN-LAS, I would take Frontier over SWA any day, any time, so I'm not sure where you are going with the SWA rant.

You confirmed my previous point, 4 aircraft is not a huge influx of deliveries, especially when you compare it to the other LCC's out there. Actually, the data sources out there shows 11 aircraft ordered and 25 options, but obviously it must be wrong, since I certainly have no idea what I'm talking about.

You still haven't answered the question of where does Frontier grow. They certainly can not be betting their future on "lucrative" Canadian routes. Are they completely married to DIA? How about setting up a focus city in another city. DEN-CAK looks to be performing well. Are there other mid-sized, alternative airport markets worthy of serving? How about DEN-RDU? I don't know, just trying to talk out issues and not get bogged down in tit-for-tat silly remarks.

 

[mrfish3726]

Hell JIM I work in maintenance in a position to make sure that F9's aircraft are running up to snuff everyday. I think that with the announcement of a new holding company may make a few operational opportunities for me maybe a move to a new city like MCI or even CAK.

With this new holding company I can't see F9 continually getting F*&ked by DIA to court a preditory airline like SWA! We'll have to move some of our operations somewhere to show Denver that they don't hold all the playing cards!