Frontier experienced strengthening demand for leisure travel during the second quarter, with capacity, as measured by ASMs, exceeding the levels achieved in the comparable pre-COVID quarter in 2019. The Company was profitable on a GAAP basis and ended the quarter with $936 million of unrestricted cash and cash equivalents, the highest cash balance in the Company’s history. Frontier is focused on positioning the airline to be an industry leader in the recovery from the COVID-19 pandemic, and during the quarter returned all of its aircraft and employees into service across all of its stations.
Frontier had 109 aircraft at the end of the quarter, 11 percent higher than the corresponding prior-year period. The airline is expected to take delivery of five additional A320neo aircraft in the third quarter of 2021 with no aircraft expected to be delivered in the fourth quarter. Frontier opened 15 new stations during the second quarter of 2021 and operated over 400 flights per day during the quarter, which was 10 percent higher than the comparable pre-COVID quarter in 2019. While restoring the operation to pre-pandemic levels, Frontier remained financially disciplined, with the business ending the quarter in a very strong liquidity position.
"I am extremely proud of our Frontier team for all of their hard work, dedication and professionalism with our customers through the pandemic and their commitment to our mission of Low Fares Done Right," said Barry Biffle, Frontier's president and CEO. “During the quarter, as the recovery in leisure travel progressed, our capacity exceeded the comparable pre-COVID quarter and we leveraged our financial discipline and relative cost advantage to be profitable on a GAAP basis. Our focus on leisure travel, along with the strength and resilience of our business model and available liquidity, positions us to continue to be an industry leader in the recovery.”
Recent Company Highlights:
Frontier completed the second quarter of 2021 with $936 million of unrestricted cash and cash equivalents, the highest cash balance in the Company’s history.The Company reported $19 million of net income on a GAAP basis during the quarter as the recovery in demand for air travel across the U.S. continued to strengthen.Frontier's capacity during the quarter, as measured by ASMs, exceeded the levels achieved in the comparable pre-COVID quarter in 2019.Frontier took delivery of five A320neo aircraft during the quarter. This brings the airline's total fleet count to 109 aircraft, which is 11 percent higher than the prior year. Frontier expects to take delivery of an additional five A320neo aircraft during the third quarter of 2021, with no deliveries expected in the fourth quarter.Frontier’s fleet continues to be the most fuel-efficient of all major U.S. carriers when measured by ASMs per fuel gallon consumed, generating over 100 ASMs per gallon during the second quarter of 2021.Frontier signed a letter of intent with two of its leasing partners to add ten additional A321 aircraft through direct leases, with deliveries expected to begin in the second half of 2022 and continuing into the first half of 2023. The additional A321 aircraft will enable the Company to boost its ASM growth rate as the recovery from the COVID-19 pandemic continues.The Company generated approximately $60 of ancillary revenue per passenger, which was 6.1 percent higher than the ancillary revenue per passenger generated during the comparable pre-COVID quarter in 2019.Frontier added more leisure destinations for customers for the second half of 2021, including a significant expansion in its schedule in Orlando, Las Vegas and Atlanta, with over 160 destinations collectively from these cities, and further international expansion, including Antigua, Aruba, Belize, Costa Rica, St. Maarten, and Turks and Caicos.
Revenue Performance
Total operating revenues for the second quarter of 2021 totalled $550 million, an increase of 184 percent compared to the second quarter of 2020 as the recovery from the COVID-19 pandemic strengthened for leisure travel. Frontier had 81 percent more average aircraft in service during the second quarter of 2021 as compared to the prior year, with average daily aircraft utilization recovering to over 10 hours per day and the fleet operating at an 80 percent load factor. Further improvement is expected to the utilization and load factor levels achieved in the comparable pre-COVID period as the recovery from the COVID-19 pandemic continues. Frontier’s capacity during the quarter totalled 6,934 million ASMs and exceeded the 6,877 million ASMs achieved in the comparable pre-COVID quarter in 2019. Frontier’s total revenue per passenger totalled $98.06 during the quarter, with ancillary revenue per passenger of $59.99, which was 6.1 percent higher than the $56.52 of ancillary revenue per passenger generated during the comparable pre-COVID quarter in 2019.
Cost Performance
Total operating expenses for the second quarter of 2021 totalled $532 million, including $87 million of CARES Act credits and $6 million of early lease termination costs. The Company’s adjusted total operating expense totalled $613 million, including $139 million of fuel expenses at an average cost per gallon of $2.03. Frontier’s adjusted total operating expenses, excluding fuel, totalled $474 million with a resulting adjusted CASM (excluding fuel) of 6.84 cents during the quarter compared to 5.47 cents in the second quarter of 2019. The Company's Adjusted CASM (excluding fuel) was significantly improved from the second quarter of 2020, including the benefit from lease payment deferrals, substantially all of which have been repaid at the end of the second quarter of 2021. The Company's capacity during the second quarter of 2021 recovered to exceed the capacity in the comparable pre-COVID quarter in 2019. As the recovery from the pandemic continues to unfold and utilization levels normalize, the resulting capacity benefit on the Company's fleet, which had 26 percent more aircraft in service in the second quarter of 2021 compared to 2019, is expected to favourably impact the Company's Adjusted CASM (excluding fuel).
Fleet:
As of June 30, 2021, Frontier had a fleet of 109 Airbus single-aisle aircraft, consisting of 68 A320neos, 18 A320ceos, 21 A321ceos, and 2 A319ceos. All aircraft in the fleet are financed with operating leases that expire between 2021 and 2033. Frontier’s fleet is the most fuel-efficient of all major U.S. carriers when measured by ASMs per fuel gallon consumed. This fuel efficiency reflects Frontier’s operation of a large number of aircraft with new generation, fuel-efficient engines, lightweight seats, and an efficient seating layout.
Frontier took delivery of five A320neo aircraft during the quarter and expects to take delivery of an additional five A320neo aircraft during the third quarter of 2021, with no deliveries expected in the fourth quarter.
During July 2021, the Company signed a letter of intent with two of its leasing partners to add ten additional A321 aircraft through direct leases, with deliveries beginning in the second half of 2022 and continuing into the first half of 2023. The additional A321 aircraft will enable the Company to boost its ASM growth rate as recovery from the COVID-19 pandemic continues.
Frontier Group Holdings, Inc.
Condensed Consolidated Statements of Operations
(unaudited, in millions, except for per share data)
| Three Months Ended June 30, | Percent Change | Six Months Ended June 30, | Percent Change | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2021 vs. 2020 | 2021 vs. 2019 | 2021 | 2020 | 2019 | 2021 vs. 2020 | 2021 vs. 2019 | |||||||||||||||||||||||||||
| Operating revenues: | ||||||||||||||||||||||||||||||||||||
| Passenger | $ | 536 | $ | 185 | $ | 622 | 190 | % | (14 | )% | $ | 798 | $ | 713 | $ | 1,155 | 12 | % | (31 | )% | ||||||||||||||||
| Other | 14 | 9 | 15 | 56 | % | (7 | )% | 23 | 25 | 29 | (8 | )% | (21 | )% | ||||||||||||||||||||||
| Total operating revenues | 550 | 194 | 637 | 184 | % | (14 | )% | 821 | 738 | 1,184 | 11 | % | (31 | )% | ||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||||||||||
| Aircraft fuel | 139 | 15 | 163 | 827 | % | (15 | )% | 223 | 219 | 304 | 2 | % | (27 | )% | ||||||||||||||||||||||
| Salaries, wages and benefits | 154 | 130 | 121 | 18 | % | 27 | % | 293 | 278 | 265 | 5 | % | 11 | % | ||||||||||||||||||||||
| Aircraft rent | 133 | 48 | 92 | 177 | % | 45 | % | 271 | 151 | 174 | 79 | % | 56 | % | ||||||||||||||||||||||
| Station operations | 107 | 23 | 86 | 365 | % | 24 | % | 177 | 119 | 161 | 49 | % | 10 | % | ||||||||||||||||||||||
| Sales and marketing | 30 | 15 | 33 | 100 | % | (9 | )% | 47 | 45 | 60 | 4 | % | (22 | )% | ||||||||||||||||||||||
| Maintenance materials and repairs | 27 | 16 | 20 | 69 | % | 35 | % | 53 | 42 | 36 | 26 | % | 47 | % | ||||||||||||||||||||||
| Depreciation and amortization | 10 | 7 | 12 | 43 | % | (17 | )% | 18 | 15 | 25 | 20 | % | (28 | )% | ||||||||||||||||||||||
| CARES Act credits | (87 | ) | (91 | ) | — | (4 | )% | NM | (223 | ) | (91 | ) | — | (145 | )% | NM | ||||||||||||||||||||
| Other operating | 19 | 25 | 9 | (24 | )% | 111 | % | 36 | 60 | 27 | (40 | )% | 33 | % | ||||||||||||||||||||||
| Total operating expenses | 532 | 188 | 536 | 183 | % | (1 | )% | 895 | 838 | 1,052 | 7 | % | (15 | )% | ||||||||||||||||||||||
| Operating income (loss) | 18 | 6 | 101 | 200 | % | (82 | )% | (74 | ) | (100 | ) | 132 | (26 | )% | NM | |||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||||||||||||
| Interest expense | (5 | ) | (3 | ) | (3 | ) | 67 | % | 67 | % | (27 | ) | (5 | ) | (6 | ) | 440 | % | 350 | % | ||||||||||||||||
| Capitalized interest | 1 | 2 | 3 | (50 | )% | (67 | )% | 2 | 4 | 6 | (50 | )% | (67 | )% | ||||||||||||||||||||||
| Interest income and other | — | 1 | 4 | (100 | )% | (100 | )% | — | 4 | 8 | (100 | )% | (100 | )% | ||||||||||||||||||||||
| Total other income (expense) | (4 | ) | — | 4 | — | % | NM | (25 | ) | 3 | 8 | NM | NM | |||||||||||||||||||||||
| Income (loss) before income taxes | 14 | 6 | 105 | 133 | % | (87 | )% | (99 | ) | (97 | ) | 140 | 2 | % | NM | |||||||||||||||||||||
| Income tax expense (benefit) | (5 | ) | (11 | ) | 24 | (55 | )% | NM | (27 | ) | (50 | ) | 32 | (46 | )% | NM | ||||||||||||||||||||
| Net income (loss) | $ | 19 | $ | 17 | $ | 81 | 12 | % | (77 | )% | $ | (72 | ) | $ | (47 | ) | $ | 108 | 53 | % | NM | |||||||||||||||
| Earnings (loss) per share: | ||||||||||||||||||||||||||||||||||||
| Basic (a) | $ | 0.08 | $ | 0.08 | $ | 0.37 | 5 | % | (77 | )% | $ | (0.35 | ) | $ | (0.23 | ) | $ | 0.51 | 54 | % | NM | |||||||||||||||
| Diluted (a) | $ | 0.08 | $ | 0.08 | $ | 0.37 | 4 | % | (77 | )% | $ | (0.35 | ) | $ | (0.23 | ) | $ | 0.51 | 54 | % | NM | |||||||||||||||
| Weighted average shares outstanding: | ||||||||||||||||||||||||||||||||||||
| Basic (a) | 214 | 199 | 199 | 8 | % | 8 | % | 207 | 199 | 199 | 4 | % | 4 | % | ||||||||||||||||||||||
| Diluted (a) | 216 | 199 | 200 | 8 | % | 8 | % | 207 | 199 | 200 | 4 | % | 4 | % | ||||||||||||||||||||||
__________________
(a) Reference End Note 2 within the previous section for discussion on basic and diluted shares.
| Frontier Group Holdings, Inc. Selected Operating Statistics (unaudited) | |||||||||||||||||||||||||||||
| Three Months Ended June 30, | Percent Change | Six Months Ended June 30, | Percent Change | ||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2021 vs. 2020 | 2021 vs. 2019 | 2021 | 2020 | 2019 | 2021 vs. 2020 | 2021 vs. 2019 | ||||||||||||||||||||
| Available seat miles (ASMs) (millions) | 6,934 | 1,549 | 6,877 | 348 | % | 1 | % | 11,526 | 8,689 | 13,097 | 33 | % | (12 | )% | |||||||||||||||
| Departures | 37,126 | 9,038 | 33,799 | 311 | % | 10 | % | 61,535 | 44,285 | 63,370 | 39 | % | (3 | )% | |||||||||||||||
| Average stage length (statute miles) | 966 | 922 | 1,050 | 5 | % | (8 | )% | 969 | 1,022 | 1,069 | (5 | )% | (9 | )% | |||||||||||||||
| Block hours | 98,150 | 22,084 | 95,191 | 344 | % | 3 | % | 162,617 | 121,629 | 180,964 | 34 | % | (10 | )% | |||||||||||||||
| Average aircraft in service | 107 | 59 | 85 | 81 | % | 26 | % | 102 | 78 | 84 | 31 | % | 21 | % | |||||||||||||||
| Aircraft – end of period | 109 | 98 | 91 | 11 | % | 20 | % | 109 | 98 | 91 | 11 | % | 20 | % | |||||||||||||||
| Average daily aircraft utilization (hours) | 10.1 | 4.1 | 12.3 | 146 | % | (18 | )% | 8.8 | 8.6 | 12.0 | 2 | % | (27 | )% | |||||||||||||||
| Passengers (thousands) | 5,602 | 868 | 5,692 | 545 | % | (2 | )% | 8,855 | 5,850 | 10,576 | 51 | % | (16 | )% | |||||||||||||||
| Average seats per departure | 193 | 186 | 192 | 4 | % | 1 | % | 193 | 191 | 192 | 1 | % | 1 | % | |||||||||||||||
| Revenue passenger miles (RPMs) (millions) | 5,544 | 841 | 6,048 | 559 | % | (8 | )% | 8,755 | 6,156 | 11,392 | 42 | % | (23 | )% | |||||||||||||||
| Load Factor (%) | 80.0 | % | 54.3 | % | 87.9 | % | 25.7 pts | (7.9) pts | 76.0 | % | 70.9 | % | 87.0 | % | 5.1 pts | (11.0) pts | |||||||||||||
| Fare revenue per passenger ($) | 38.07 | 143.20 | 55.52 | (73 | )% | (31 | )% | 35.41 | 58.70 | 55.05 | (40 | )% | (36 | )% | |||||||||||||||
| Non-fare passenger revenue per passenger ($) | 57.52 | 69.96 | 53.76 | (18 | )% | 7 | % | 54.67 | 63.25 | 54.17 | (14 | )% | 1 | % | |||||||||||||||
| Other revenue per passenger ($) | 2.47 | 10.47 | 2.76 | (76 | )% | (11 | )% | 2.59 | 4.23 | 2.76 | (39 | )% | (6 | )% | |||||||||||||||
| Total revenue per passenger ($) | 98.06 | 223.63 | 112.04 | (56 | )% | (12 | )% | 92.67 | 126.18 | 111.98 | (27 | )% | (17 | )% | |||||||||||||||
| Total revenue per available seat mile (RASM) (¢) | 7.92 | 12.55 | 9.27 | (37 | )% | (15 | )% | 7.12 | 8.50 | 9.04 | (16 | )% | (21 | )% | |||||||||||||||
| Cost per available seat mile (CASM) (¢) | 7.68 | 12.17 | 7.80 | (37 | )% | (2 | )% | 7.76 | 9.65 | 8.04 | (20 | )% | (3 | )% | |||||||||||||||
| CASM (excluding fuel) (¢) | 5.67 | 11.22 | 5.44 | (49 | )% | 4 | % | 5.83 | 7.13 | 5.72 | (18 | )% | 2 | % | |||||||||||||||
| CASM + net interest (¢) | 7.73 | 12.18 | 7.75 | (37 | )% | — | % | 7.98 | 9.61 | 7.98 | (17 | )% | — | % | |||||||||||||||
| Adjusted CASM (¢) | 8.85 | 18.36 | 7.83 | (52 | )% | 13 | % | 9.62 | 10.03 | 7.80 | (4 | )% | 23 | % | |||||||||||||||
| Adjusted CASM (excluding fuel) (¢) | 6.84 | 17.11 | 5.47 | (60 | )% | 25 | % | 7.68 | 8.10 | 5.49 | (5 | )% | 40 | % | |||||||||||||||
| Adjusted CASM + net interest (¢) | 8.87 | 18.37 | 7.78 | (52 | )% | 14 | % | 9.64 | 9.99 | 7.74 | (4 | )% | 25 | % | |||||||||||||||
| Fuel cost per gallon ($) | 2.03 | 1.06 | 2.29 | 92 | % | (11 | )% | 1.97 | 2.58 | 2.25 | (24 | )% | (12 | )% | |||||||||||||||
| Fuel gallons consumed (thousands) | 68,564 | 13,970 | 70,811 | 391 | % | (3 | )% | 113,065 | 84,933 | 134,876 | 33 | % | (16 | )% | |||||||||||||||
| Employees (FTE) | 5,154 | 5,071 | 4,582 | 2 | % | 12 | % | 5,154 | 5,071 | 4,582 | 2 | % | 12 | % | |||||||||||||||
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