Frontier Airlines Fourth Quarter 2023 Results......

Frontier Group Holdings, parent company of Frontier Airlines, Inc. reported financial results for the fourth quarter and full year 2023  this week.

Frontier Airlines Fourth Quarter 2023 Key Highlights:

Pre-tax margin was 0.7 percent and adjusted (non-GAAP) pre-tax margin was 0.8 percent

Total operating revenues were $891 million, 2 percent lower than the comparable 2022 quarter

Cost per available seat mile (“CASM”) was 8.93 cents, 10 percent lower than the comparable 2022 quarter, and adjusted (non-GAAP) CASM (excluding fuel) was 5.90 cents, 8 percent lower than the comparable 2022 quarter

Achieved a 99.5 percent completion factor during the quarter, and the highest on-time arrivals and departures since 2015 (excluding pandemic-year 2020) in the month of December

Took delivery of four A321neo aircraft during the fourth quarter, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 79 percent as of December 31, 2023, the highest of all major U.S. carriers

Generated 105 available seat miles (“ASMs”) per gallon, approximately 3 percent higher than the comparable 2022 quarter, 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

Unveiled a reimagined Frontier Miles loyalty program for 2024 enabling customers to “Get it All for Less” and earn the highest rate in the industry on total eligible purchases

Announced new crew bases at Cleveland Hopkins, Cincinnati/Northern Kentucky International, Chicago O'Hare/Midway and San Juan, Puerto Rico (announced January 2024)

Announced new routes and expanded operations from 10 bases, consistent with the Company's strategy to focus growth on overpriced and underserved markets

“Fourth quarter results significantly outperformed guidance on strong operational performance and cost execution, providing a solid foundation as we enter 2024,” commented Barry Biffle, Chief Executive Officer. “Leveraging this momentum, we intend to expand profitability in 2024 by executing on our network simplification plan, focusing growth on overpriced and underserved markets, further diversifying our revenue stream, enhancing customer engagement, and further lowering our unit costs. I'm proud of Team Frontier for their outstanding performance and for their commitment to deliver Low Fares Done Right.”

Revenue Performance

Total operating revenue for the fourth quarter of 2023 was $891 million, reflecting a revenue per available seat mile (“RASM”) of 8.90 cents, on capacity growth of 15 percent compared to the 2022 quarter. The decrease in RASM from 10.45 cents in the 2022 quarter was driven by a 17 percent decrease in revenue per passenger to $110. Departures increased 20 percent compared to the 2022 quarter on a stage length which was 8 percent shorter.

Cost Performance

Total operating expenses for the fourth quarter of 2023 were $894 million, including $303 million of fuel expenses at an average cost of $3.18 per gallon. Total adjusted operating expenses (excluding fuel), a non-GAAP measure, were $590 million, including a $36 million benefit related to the extension during the quarter of four A320ceo aircraft leases that were otherwise scheduled to return in 2024.

CASM was 8.93 cents in the fourth quarter, 10 percent lower than the comparable 2022 quarter with fuel cost - comprising approximately 34 percent of total operating expenses - roughly in-line with the comparable 2022 quarter, and non-fuel expenses up 6 percent compared to the 2022 quarter on capacity growth of 15 percent. Fuel cost for the quarter reflects a 13 percent increase in consumption, net of a 3 percent improvement in fuel efficiency to 105 ASMs per gallon, offset by a 12 percent decrease in fuel cost per gallon, each compared to the 2022 quarter.

CASM (excluding fuel), a non-GAAP measure, was 5.91 cents, 8 percent lower than the comparable 2022 quarter. Adjusted (non-GAAP) CASM (excluding fuel) was 5.90 cents, also 8 percent lower than the comparable 2022 quarter.

Earnings

Pre-tax income for the fourth quarter of 2023 was $6 million, reflecting a pre-tax margin of 0.7 percent. Adjusted pre-tax income, a non-GAAP measure, was $7 million, reflecting an adjusted pre-tax margin of 0.8 percent.

Net loss for the fourth quarter of 2023 was $37 million, including the recognition of a $37 million non-cash valuation allowance against deferred tax assets. This allowance does not affect the Company's ability to utilize cumulative net operating losses against potential future income tax liabilities. Excluding special items, adjusted net income, a non-GAAP measure, was $1 million. Refer to “Reconciliations of Non-GAAP Financial Information” in the appendix of this release.

Cash and Liquidity

Unrestricted cash and cash equivalents as of December 31, 2023 was $609 million, or $139 million net of debt. The Company also has unencumbered loyalty and brand-related assets which it believes could generate significant additional liquidity, if desired.

Fleet

As of December 31, 2023, Frontier had a fleet of 136 Airbus single-aisle aircraft, as scheduled below, all financed through operating leases that expire between 2025 and 2035.

Frontier took delivery of four A321neo aircraft during the fourth quarter of 2023, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 79 percent as of December 31, 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 December 31, 2023, the Company had commitments for an additional 210 aircraft to be delivered through 2029, including purchase commitments for 67 A320neo aircraft and 143 A321neo aircraft, representing 68 percent of future committed deliveries.

Type Quantity Seats

A320ceo     8         180 or 186

A320neo     82 186

A321ceo     21 230

A321neo     25 240

Total fleet    136