The latest results from Frontier Airlines have been released....

Frontier Group Holdings, the parent company of Frontier Airlines, has this week reported financial results for the second quarter of 2023 and issued guidance for the third quarter and full year 2023.

Second Quarter 2023 Summary:

Achieved total operating revenues of $967 million, six percent higher than the 2022 quarter

Cost per available seat mile ("CASM") improved 20 percent over the 2022 quarter

Adjusted CASM (excluding fuel), a non-GAAP measure, improved five percent over the 2022 quarter

Realized a pre-tax margin of 9.1 percent, a post-pandemic record

Generated ancillary revenue of $80 per passenger, $5 higher per passenger than the 2022 quarter

Utilization averaged 11.5 hours per day

Ended the quarter with $780 million of unrestricted cash and cash equivalents

Took delivery of three A321neo aircraft during the second quarter, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 75 percent as of June 30, 2023, the highest of all major U.S. carriers

Generated 103 available seat miles (“ASM”) per gallon, reaffirming Frontier's position as the most fuel-efficient of all major U.S. carriers and its ongoing commitment to being “America's Greenest Airline” as measured by ASMs per fuel gallon consumed

Executed an agreement with CleanJoule to purchase up to 30 million gallons of sustainable aviation fuel, further demonstrating the Company's commitment to reduce carbon emissions in air transportation

Launched 26 new routes during the quarter, including new routes from Atlanta, Baltimore, Chicago Midway, Cleveland, Detroit, Houston, Orlando, San Juan, St. Thomas and Tampa, giving customers greater access to Frontier's Low Fares Done Right

“Results this quarter reflect strong execution by Team Frontier. Our earnings before tax delivered our highest post-pandemic, pre-tax margin on 36 percent capacity growth and 35 additional aircraft compared to the 2019 quarter, and we delivered a five percent improvement in non-fuel adjusted unit costs over the prior year quarter," commented Barry Biffle, President and CEO. "I'm proud of the strong work ethic of Team Frontier employees as we managed through the challenging conditions presented by June weather. We are focused on delivering Low Fares Done Right, including sustaining our cost advantage over the industry as we grow the airline.”

Frontier took delivery of three A321neo aircraft during the second quarter of 2023, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 75 percent as of June 30, 2023, the highest of all major U.S. carriers. The A321neo is expected to unlock meaningful scale efficiencies by way of fuel savings and higher average seats per departure. As of June 30, 2023, approximately 70 percent of future committed aircraft deliveries, including direct leases, are for A321neo aircraft. As of June 30, 2023, the Company had commitments for an additional 222 aircraft to be delivered through 2029, including purchase commitments for 67 A320neo aircraft and 150 A321neo aircraft as well as commitments for another 5 A321neo aircraft through direct leases.

Air101: Frontier Airlines gets another new Airbus A321neo on lease from Aviation Capital Group.

Second Quarter 2023 Select Financial Highlights

The following is a summary of second quarter select financial results, 

(unaudited, in millions, except for percentages)
		Three Months Ended June 30,
			2023								2022
		As Reported (GAAP)				Adjusted (Non-GAAP)				As Reported (GAAP)				Adjusted (Non-GAAP)
Total operating revenues		$	967			$	967			$	909			$	909
Total operating expenses		$	888			$	888			$	902			$	885
Pre-tax income		$	88			$	88			$	8			$	25
Pre-tax income margin			9.1	%			9.1	%			0.9	%			2.8	%
Net income		$	71			$	71			$	13			$	20
Diluted earnings (loss) per share		$	0.31			$	0.31			$	0.06			$	0.09

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Fleet

As of June 30, 2023, Frontier had a fleet of 126 Airbus single-aisle aircraft, as scheduled below, all financed through operating leases that expire between 2023 and 2035.

Equipment	Quantity		Seats
A320neo	82		186
A320ceo	10		180 - 186
A321ceo	21		230
A321neo	13		240
Total fleet	126

Frontier Group Holdings, Inc. Condensed Consolidated Statements of Operations (unaudited, in millions, except share and per share amounts)
		Three Months Ended June 30,						Percent Change		Six Months Ended June 30, 2023						Percent Change
		2023			2022			2023 vs. 2022		2023			2022			2023 vs. 2022
Operating revenues:
Passenger		$	945		$	890		6%		$	1,775		$	1,478		20%
Other			22			19		16%			40			36		11%
Total operating revenues			967			909		6%			1,815			1,514		20%
Operating expenses:
Aircraft fuel			244			335		(27)%			536			550		(3)%
Salaries, wages and benefits			211			174		21%			414			346		20%
Aircraft rent			148			133		11%			279			261		7%
Station operations			124			120		3%			248			225		10%
Sales and marketing			44			46		(4)%			84			78		8%
Maintenance, materials and repairs			52			31		68%			97			65		49%
Depreciation and amortization			12			15		(20)%			23			28		(18)%
Transaction and merger-related costs			—			9		N/M			1			20		(95)%
Other operating			53			39		36%			79			87		(9)%
Total operating expenses			888			902		(2)%			1,761			1,660		6%
Operating income (loss)			79			7		1029%			54			(146)		N/M
Other income (expense):
Interest expense			(7)			(3)		133%			(13)			(12)		8%
Capitalized interest			6			2		200%			12			3		300%
Interest income and other			10			2		400%			18			2		800%
Total other income (expense)			9			1		800%			17			(7)		N/M
Income (loss) before income taxes			88			8		1000%			71			(153)		N/M
Income tax expense (benefit)			17			(5)		N/M			13			(45)		N/M
Net income (loss)		$	71		$	13		446%		$	58		$	(108)		N/M
Earnings (loss) per share:
Basic(a)		$	0.32		$	0.06		433%		$	0.26		$	(0.49)		N/M
Diluted(a)		$	0.31		$	0.06		417%		$	0.26		$	(0.49)		N/M
Weighted-average common shares outstanding:
Basic(a)			219,402,647			217,602,480		1%			218,792,850			217,438,904		1%
Diluted(a)			220,425,659			218,936,545		1%			220,223,273			217,438,904		1%
__________________ N/M = Not meaningful (a) In periods of net income, the dilutive impact of the 3.1 million warrants outstanding relating to funding provided pursuant to the CARES Act and related legislation, any non-participating options and unvested restricted stock units are included in the diluted earnings per share calculations. In addition, most of the Company's 5.3 million outstanding options are participating securities and are therefore not expected to be part of the Company's diluted share count under the two-class method until they are exercised, but, in periods of net income, are included as an adjustment to the numerator of the Company's earnings per share calculation as they are eligible to participate in the Company's earnings. The participating securities impact has been subtracted from periods presented with positive net income in the computation of basic and diluted earnings per share.

Frontier Group Holdings, Inc. Selected Operating Statistics (unaudited)
		Three Months Ended June 30,				Percent Change		Six Months Ended June 30,				Percent Change
		2023		2022		2023 vs. 2022		2023		2022		2023 vs. 2022
Available seat miles (ASMs) (millions)		9,337		7,594		23%		18,112		15,036		20%
Departures		45,408		40,829		11%		88,120		79,413		11%
Average stage length (miles)		1,038		960		8%		1,045		977		7%
Block hours		128,854		109,074		18%		251,824		215,611		17%
Average aircraft in service		123		110		12%		122		110		11%
Aircraft – end of period		126		114		11%		126		114		11%
Average daily aircraft utilization (hours)		11.5		10.9		6%		11.4		10.8		6%
Passengers (thousands)		7,596		6,518		17%		14,422		11,946		21%
Average seats per departure		198		193		3%		197		193		2%
Revenue passenger miles (RPMs) (millions)		7,964		6,388		25%		15,226		11,912		28%
Load Factor		85.3%		84.1%		1.2pts		84.1%		79.2%		4.9pts
Fare revenue per passenger ($)		47.59		64.44		(26)%		46.05		54.33		(15)%
Non-fare passenger revenue per passenger ($)		76.89		72.01		7%		77.06		69.36		11%
Other revenue per passenger ($)		2.75		2.95		(7)%		2.72		3.02		(10)%
Total ancillary revenue per passenger ($)		79.64		74.96		6%		79.78		72.38		10%
Total revenue per passenger ($)		127.23		139.40		(9)%		125.83		126.71		(1)%
Total revenue per available seat mile (RASM) (¢)		10.35		11.97		(14)%		10.02		10.07		—%
Cost per available seat mile (CASM) (¢)		9.51		11.87		(20)%		9.72		11.04		(12)%
CASM (excluding fuel) (¢)		6.90		7.46		(8)%		6.77		7.38		(8)%
CASM + net interest (¢)		9.41		11.87		(21)%		9.63		11.09		(13)%
Adjusted CASM (¢)		9.51		11.65		(18)%		9.71		10.85		(11)%
Adjusted CASM (excluding fuel) (¢)		6.90		7.24		(5)%		6.76		7.19		(6)%
Adjusted CASM + net interest (¢)		9.41		11.64		(19)%		9.62		10.85		(11)%
Fuel cost per gallon ($)		2.69		4.41		(39)%		3.06		3.72		(18)%
Fuel gallons consumed (thousands)		90,379		76,000		19%		174,966		147,993		18%
Full-time equivalent employees (FTEs)		6,692		5,712		17%		6,692		5,712		17%

Reconciliations of Non-GAAP Financial Information

The Company is providing below a reconciliation of GAAP financial information to the non-GAAP financial information provided. The non-GAAP financial information is included to provide supplemental disclosures because the Company believes they are useful additional indicators of, among other things, its operating and cost performance. These non-GAAP financial measures have limitations as analytical tools. Because of these limitations, determinations of the Company’s operating performance or CASM excluding unrealized gains and losses, special items or other items should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. These non-GAAP financial measures may be presented on a different basis than other companies using similarly titled non-GAAP financial measures.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted Pre-tax Income (Loss)
($ in millions) (unaudited)

		Three Months Ended June 30,								Six Months Ended June 30,
			2023				2022				2023				2022
Net income (loss), as reported		$	71			$	13			$	58			$	(108	)
Non-GAAP Adjustments:
Salaries, wages and benefits
Collective bargaining contract ratification(a)			—				1				—				1
Depreciation and amortization
Asset impairment(b)			—				7				—				7
Other operating expenses
Transaction and merger-related costs(c)			—				9				1				20
Interest expense
CARES Act – write-off of deferred financing costs due to paydown of loan(d)			—				—				—				7
Pre-tax impact			—				17				1				35
Tax benefit (expense), non-GAAP			—				(10	)			—				(16	)
Net income (loss) impact			—				7				1				19
Adjusted net income (loss), non-GAAP(e)		$	71			$	20			$	59			$	(89	)
Income (loss) before income taxes, as reported		$	88			$	8			$	71			$	(153	)
Pre-tax impact			—				17				1				35
Adjusted pre-tax income (loss), non-GAAP(e)		$	88			$	25			$	72			$	(118	)
__________________ (a) Represents $1 million of costs related to the collective bargaining contract ratification costs earned through May 2023 and committed to by us as part of an agreement with the union representing our aircraft technicians that was ratified and became effective in May 2022. (b) Represents a write-off of capitalized software development costs as a result of a termination of a vendor arrangement. (c) For the six months ended June 30, 2023, adjustments primarily represent $1 million in employee retention costs incurred in connection with the terminated merger with Spirit Airlines, Inc. For the three months ended June 30, 2022, adjustments represent $5 million in employee retention costs and $4 million in transaction costs, including banking, legal and accounting fees, incurred in connection with the terminated merger with Spirit. For the six months ended June 30, 2022, adjustments represent $12 million in transaction costs, including banking, legal and accounting fees, and $8 million in employee retention costs incurred in connection with the terminated merger with Spirit (d) On February 2, 2022, the Company repaid the loan under its facility with the U.S. Department of the Treasury, which resulted in a one-time write-off of the remaining $7 million in unamortized deferred financing costs. This amount is a component of interest expense. (e) Adjusted net income (loss) and adjusted pre-tax income (loss) are included as a supplemental disclosure because the Company believes they are useful indicators of its operating performance. Derivations of net income and pre-tax income are well-recognized performance measurements in the airline industry that are frequently used by the Company's management, as well as by investors, securities analysts and other interested parties, in comparing the operating performance of companies in the airline industry.

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