DENVER , Aug. 8, 2024 /PRNewswire/ -- Frontier Group Holdings, Inc. (Nasdaq: ULCC ), parent company of Frontier Airlines, Inc.
, today reported financial results for the second quarter of 2024 and issued guidance for the third quarter and full-year 2024. Highlights: Total operating revenues were $973 million , 1 percent higher than the comparable 2023 quarter Achieved annual run rate cost savings of more than $100 million from the cost savings program launched in the third quarter of 2023 Cost per available seat mile ("CASM") was 8.98 cents , a reduction of 6 percent over the comparable 2023 quarter Adjusted CASM (excluding fuel), a non-GAAP measure, was 6.
24 cents , on a 13 percent shorter average stage length; adjusted CASM (excluding fuel) on a stage-length adjusted basis to 1,000 miles, a non-GAAP measure, was 16 percent lower than the comparable 2023 quarter Pre-tax income and adjusted (non-GAAP) pre-tax income were each $32 million ; pre-tax margin and adjusted (non-GAAP) pre-tax margin were each 3.3 percent Took delivery of six A321neo aircraft during the second quarter, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 80 percent as of June 30, 2024 , the highest of all major U.S.
carriers The Company's aircraft delivery schedule with Airbus was updated to defer 54 aircraft deliveries, with original delivery dates in 2025-2028 (based on the March 31, 2024 delivery schedule), out to 2029-2031 (refer to "Fleet" section for more detail) Frontier's fleet age is, on average, approximately 4 years, making it the youngest among all U.S.-based carriers Generated 104 available seat miles ("ASMs") per gallon, reaffirming Frontier's position as "America's Greenest Airline" as measured by fuel efficiency (ASMs per fuel gallon consumed during the second quarter; compared to all other major U.
S. carriers) Opened bases in Cincinnati , Chicago and San Juan , bringing the total to 13, and reached targeted levels of scheduled out-and-back flying in June 2024 , driving an improvement to on-time performance versus prior year Introduced ' The New Frontier ,' a significant transformation in the Company's product and customer service offerings reflecting a commitment to deliver an exceptional value and superior travel experience to customers "Despite industry oversupply across the United States , we effectively navigated the quarter due in part to our network and revenue diversification, combined with our industry-leading and improving cost advantage," commented Barry Biffle , Chief Executive Officer. "While consumer travel demand has remained resilient on peak days of the week, post-pandemic travel patterns have compelled us to concentrate our flying on peak days.
Coupled with the maturity of new revenue initiatives and our cost advantage, we believe we will drive margin improvement and be the clear low-cost winner in 2025 and beyond." Second Quarter 2024 Select Financial Highlights The following is a summary of second quarter select financial results, including both GAAP and adjusted (non-GAAP) metrics. Refer to "Reconciliations of Non-GAAP Financial Information" in the appendix of this release.
Revenue Performance Total operating revenue for the second quarter of 2024 increased 1 percent to $973 million on capacity growth of 13 percent, both compared to the corresponding 2023 quarter. Departures increased 26 percent over the corresponding 2023 quarter as average stage length decreased 13 percent to 899 miles. Total revenue per passenger was $109 and the flown load factor was 78.
1 percent. Revenue per available seat mile ("RASM") was 9.21 cents , 11 percent lower compared to the corresponding 2023 quarter, largely driven by the impact of domestic seat growth, which outpaced seasonal demand, trends.
RASM was also impacted by the effects from the above-average concentration of capacity in new markets and the launch of 'The New Frontier' during the quarter, which, among other things, eliminates change fees on certain product bundles, provides more transparent pricing and greatly expands customer benefits and support. With scheduled seat growth for both the industry and Frontier expected to decelerate beginning in the third quarter, coupled with the expected progression in the maturity of Frontier's network enhancements and new product and distribution offerings, including the 'The New Frontier,' year-over-year RASM is expected to inflect positive in the fourth quarter of 2024 and into 2025. Cost Performance Frontier's sustainable cost advantage delivered total operating expenses of $948 million in the second quarter, including $288 million of fuel expenses at an average cost of $2.
84 per gallon. Adjusted total operating expenses (excluding fuel), a non-GAAP measure, were $660 million , including benefits from the cost savings program launched in the third quarter of 2023 as well as the cost benefit from aircraft lease extensions executed during the quarter. Since the launch of the cost savings program, the Company has achieved annual run rate cost savings of more than $100 million , with more expected to come.
CASM was 8.98 cents in the second quarter of 2024, 6 percent lower than the comparable 2023 quarter. CASM (excluding fuel), a non-GAAP measure, was 6.
24 cents , 10 percent lower than the 2023 quarter. Adjusted CASM (excluding fuel) stage-length adjusted to 1,000 miles, a non-GAAP measure, was 16 percent lower than the comparable 2023 quarter due primarily to five additional aircraft sale-leaseback transactions in the quarter and the cost benefit from aircraft lease extensions, along with aggressive cost management across the organization that helped mitigate year-over-year inflationary impacts, supported by network simplification. Earnings Pre-tax income and adjusted (non-GAAP) pre-tax income for the second quarter of 2024 were both $32 million , reflecting a pre-tax margin of 3.
3 percent. Net income and adjusted (non-GAAP) net income for the second quarter of 2024 were both $31 million . Cash and Liquidity Unrestricted cash and cash equivalents as of June 30, 2024 was $658 million.
Cash net of debt was $206 million, $50 million higher than March 31, 2024 . Fleet As of June 30, 2024, Frontier had a fleet of 148 Airbus single-aisle aircraft, as scheduled below, all financed through operating leases that expire between 2025 and 2036. Frontier is "America's Greenest Airline" as measured by fuel efficiency (ASMs per fuel gallon consumed during the second quarter; compared to all other major U.
S. carriers). During the second quarter of 2024, Frontier generated 104 ASMs per gallon, similar to the corresponding 2023 quarter.
Frontier took delivery of six A321neo aircraft during the second quarter of 2024, all financed with sale-leaseback transactions, increasing the proportion of the fleet comprised of the more fuel-efficient A320neo family aircraft to 80 percent as of June 30, 2024, 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, 2024, the Company had commitments for an additional 198 aircraft to be delivered through 2029, including purchase commitments for 49 A320neo aircraft and 149 A321neo aircraft, the latter of which represents 75 percent of future committed deliveries. In August 2024 , the Company executed a binding term sheet with Airbus which defers aircraft deliveries with original delivery dates in 2025-2028, out to 2029-2031, lowering fleet inductions in each of the next four years, thereby reducing the Company's financing needs and PDP commitments in the coming years.
The expected remaining orderbook of 187 aircraft as of January 1, 2025 are now expected to be delivered as summarized in the following table: Forward Guidance The guidance provided below is based on the Company's current estimates and is not a guarantee of future performance. This guidance is subject to significant risks and uncertainties that could cause actual results to differ materially, including the risk factors discussed in the Company's reports on file with the Securities and Exchange Commission (the " SEC " ). Frontier undertakes no duty to update any forward-looking statements or estimates, except as required by applicable law.
Further, this guidance excludes special items and the reconciliation of non-GAAP measures to the comparable GAAP measures because such amounts cannot be determined at this time. The Company reached targeted levels of out-and-back flying in June 2024 and continues to make significant progress in allocating capacity growth to high-fare and underserved "VFR" (Visiting Friends and Relatives) markets. While these network enhancements, along with new product and distribution offerings, including 'The New Frontier ,' are expected to be key contributors to Frontier's success, the Company, along with other domestic carriers, is currently experiencing fare pressure caused by excess domestic capacity growth which is expected to begin to decelerate in the second half of 2024 and into early 2025.
The Company determined in June that off-peak demand was underperforming expectations, which led to an adjustment to scheduled capacity for late-August 2024 and beyond. Since this change, average selling fares for September 2024 have inflected positively compared to the prior year. Third Quarter 2024 Capacity is expected to grow by 4 to 6 percent over the comparable 2023 quarter.
Pursuant to the shift to high-fare, underserved markets, a significant portion of scheduled capacity in the third quarter of 2024 is allocated to new markets which the Company believes will drive higher RASM as they mature and industry capacity better aligns with demand. Fuel costs are expected to be $2.60 to $2.
70 per gallon based on the blended fuel curve on August 5, 2024 . Adjusted (non-GAAP) total operating expenses (excluding fuel) are expected to be $700 to $720 million . Adjusted (non-GAAP) pre-tax margin (excluding special items) is expected to be (3) to (6) percent, including an estimated 4 percentage point impact related to weather, including Hurricane Debby, and the July Microsoft/CrowdStrike outage.
Full Year 2024 Capacity is expected to increase 5 to 7 percent compared to 2023 and adjusted (non-GAAP) pre-tax margin is expected to be (1.5) to 1.5 percent (excluding special items).
Fuel costs are now expected to be $2.70 to $2.80 per gallon based on the blended fuel curve on August 5, 2024 .
Adjusted (non-GAAP) CASM (excluding fuel), stage-length adjusted to 1,000 miles, is expected to be down 1 to 2 percent over the prior year, despite significant capacity reductions implemented since the last guidance update on May 2, 2024 . Pre-delivery deposits, net of refunds, are expected to be $(20) to $0 million and other capital expenditures are expected to be $150 to $170 million . The current forward guidance estimates are presented in the following tables: Conference Call The Company will host a conference call to discuss second quarter 2024 results today, August 8, 2024, at 12:00 p.
m. Eastern Time ( USA ). Investors may listen to a live, listen-only webcast available on the investor relations section of the Company's website at https://ir.
flyfrontier.com/news-and-events/events . The call will also be archived and available for 90 days on the investor relations section of the Company's website.
About Frontier Airlines Frontier Airlines, Inc., a subsidiary of Frontier Group Holdings, Inc. (Nasdaq: ULCC ), is committed to " Low Fares Done Right.
" Headquartered in Denver, Colorado , the Company operates 148 A320 family aircraft and has the largest A320neo family fleet in the U.S. The use of these aircraft, along with Frontier's high-density seating configuration and weight-saving initiatives, have contributed to Frontier's continued ability to be the most fuel-efficient of all major U.
S. carriers when measured by ASMs per fuel gallon consumed. With nearly 200 new Airbus planes on order, Frontier will continue to grow to deliver on the mission of providing affordable travel across America.
Cautionary Statement Regarding Forward-Looking Statements and Information Certain statements in this release should be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the Company's current expectations and beliefs with respect to certain current and future events and anticipated financial and operating performance. Words such as "expects," "will," "plans," "intends," "anticipates," "indicates," "remains," "believes," "estimates," "forecast," "guidance," "outlook," "goals," "targets" and similar expressions are intended to identify forward-looking statements.
Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. All forward-looking statements in this release are based upon information available to the Company on the date of this release. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as required by applicable law.
Actual results could differ materially from these forward-looking statements due to numerous risks and uncertainties relating to the Company's operations and business environment including, without limitation, the following: unfavorable economic and political conditions in the states where the Company operates and globally, including an inflationary environment and potential recession, and the resulting impact on cost inputs and/or consumer demand for air travel; the highly competitive nature of the global airline industry and susceptibility of the industry to price discounting and changes in capacity; disruptions to the Company's flight operations, including due to factors beyond the Company's control, such as adverse weather events or air traffic controller staffing shortages; the Company's ability to attract and retain qualified personnel at reasonable costs; high and/or volatile fuel prices or significant disruptions in the supply of aircraft fuel, including as a result of the war between Russia and Ukraine and the conflict in the Middle East ; the Company's reliance on technology and automated systems to operate its business and the impact of any significant failure or disruption of, or failure to effectively integrate and implement, the technology or systems; the Company's reliance on third-party service providers and the impact of any failure of these parties to perform as expected, or interruptions in the Company's relationships with these providers or their provision of services; adverse publicity and/or harm to the Company's brand or reputation; reduced travel demand and potential tort liability as a result of an accident, catastrophe or incident involving the Company, its codeshare partners or another airline; terrorist attacks, international hostilities or other security events, or the fear of terrorist attacks or hostilities, even if not made directly on the airline industry; increasing privacy and data security obligations or a significant data breach; further changes to the airline industry with respect to alliances and joint business arrangements or due to consolidations; changes in the Company's network strategy or other factors outside its control resulting in less economic aircraft orders, costs related to modification or termination of aircraft orders or entry into less favorable aircraft orders; the Company's reliance on a single supplier for its aircraft and two suppliers for its engines, and the impact of any failure to obtain timely deliveries, additional equipment or support from any of these suppliers; the impacts of union disputes, employee strikes or slowdowns, and other labor-related disruptions on the Company's operations; extended interruptions or disruptions in service at major airports where the Company operates; the impacts of seasonality and other factors associated with the airline industry; the Company's failure to realize the full value of its intangible assets or its long-lived assets, causing the Company to record impairments; the costs of compliance with extensive government regulation of the airline industry; costs, liabilities and risks associated with environmental regulation and climate change; the Company's inability to accept or integrate new aircraft into the Company's fleet as planned; the impacts of the Company's significant amount of financial leverage from fixed obligations, the possibility the Company may seek material amounts of additional financial liquidity in the short-term and the impacts of insufficient liquidity on the Company's financial condition and business; failure to comply with the covenants in the Company's financing agreements or failure to comply with financial and other covenants governing the Company's other debt; changes in, or failure to retain, the Company's senior management team or other key employees; current or future litigation and regulatory actions, or failure to comply with the terms of any settlement, order or arrangement relating to these actions; increases in insurance costs or inadequate insurance coverage; and other risks and uncertainties set forth from time to time under sections captioned "Risk Factors" in the Company's reports and other documents filed with the SEC, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 20, 2024, the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, which was filed with the SEC on May 2, 2024 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 being filed at or around the date hereof. 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.
SOURCE Frontier Group Holdings, Inc..
