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Frontier Airlines Reports Fiscal Year 2005 Results.

Article Excerpt
DENVER, May 26 /PRNewswire-FirstCall/ -- Frontier Airlines, Inc. today reported a net loss of $23.4 million, or $0.66 per diluted common share, for its fiscal year ended March 31, 2005. This compares to net income of $12.6 million, or $0.36 per diluted common share for the previous fiscal year. The Company's fiscal year 2005 net loss included the following items before the effect of income taxes: a write down of $5.1 million of the carrying value of Boeing rotable spare parts which was offset by an unrealized gain on fuel hedges of $2.8 million. These items, net of income taxes, increased the Company's net loss by $0.04 per diluted share. Included in the Company's net income for the prior fiscal year ended March 31, 2004 were the following items before the effect of profit sharing and income taxes: $15.0 million of compensation received under the Appropriations Act offset by the write-off of deferred loan costs of $9.8 million associated with the prepayment of all of the government guaranteed loan; a charge for Boeing aircraft and facility lease exit costs of $5.4 million; a loss of $1.8 million on the sale of one Airbus aircraft in a sale-leaseback transaction and from the sale of a spare engine; a write down of $3.6 million of the carrying value of spare engines and rotable parts that support the Boeing 737-300 aircraft; and $1.2 million of flight crew training expenses related to the start-up of our new Frontier JetExpress regional jet relationship with Horizon. These items, net of income taxes and profit sharing, reduced net income by $0.12 per diluted share.

For the airline's fiscal fourth quarter ended March 31, 2005, the airline reported a net loss of $3.7 million, or $0.10 per diluted common share, compared to a net loss of $5.8 million, or $0.16 per diluted common share, for the same period last year. The fiscal fourth quarter 2005 results, on a pre-tax basis, includes a $2.4 million unrealized fuel derivative gain and a $0.4 million gain from the sale of spare parts and inventory. These items, net of income taxes, reduced the Company's net loss by $.05 per diluted share.

Chief Executive Officer's Comments

Frontier President and CEO Jeff Potter said, "While we are disappointed with the losses in our fourth fiscal quarter, we are encouraged by some positive trends which have surfaced this quarter. For the quarter, our mainline cost per available seat mile (CASM), excluding fuel, declined by 1.5 percent on a year-over-year basis, our fourth consecutive quarter of year-over-year CASM decline. In addition, we made great progress with our mainline revenue per available seat mile (RASM) which increased 4.8 percent this quarter, reversing last quarter's decline. The strength in RASM, a trend we believe will continue into the foreseeable future, was fueled by two consecutive months of load factor increases -- a direct reflection of the consumer response to our product and our customer service.

"With mainline costs excluding fuel declining, and unit revenues increasing, we are certainly pleased with some of the underlying fundamentals at the close of our fiscal year 2005. However, there are two critical industry factors for which we do not anticipate a near-term solution -- low fares due to overcapacity and historically high fuel costs. Those two issues, which correlate directly to the losses we sustained in fiscal year 2005, continue to temper our enthusiasm of the significant strides we make as an airline.

"We approach fiscal year 2006 with cautious optimism and we are hopeful that our plan based on...

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