Other notes: Mainline avg stage length is up about 12% or so. Avg mainline seats/departure off a bit. Mainline utilization up about 12%, just like they said it would be. 1.98 million passengers carried systemwide last quarter, up about 23% or so. 233,000 pax on jetExpress, or about 11% of passengers. (Doing this math in my head, pardon my miscalculations. )
Overall, not a bad quarter for Frontier at all. Much, much better than I expected. Now, I want to hear how they've hedged for fuel going forward. Anyone know for sure? And, what routes get the ax when the 737s leave early?
Mariner From New Zealand, joined Nov 2001, 25693 posts, RR: 85
Reply 1, posted (10 years 1 month 3 weeks 4 days 14 hours ago) and read 1747 times:
The fuel hedge is both extremely simple and extremely sophisticated, all at the same time.
To put it in its simplest terms, Frontier took out a hedge for 25% of total fuel needs for (from memory) six months. It may have been nine months.
The average price was about $35 a barrel, but there is a price band. It is profitable (to Frontier) at over $38 per barrel and a loss maker if oil falls below (about) $32 a barrel.
It was taken out shortly after Frontier retained Solarc to manage their fuel. The drop in the price of oil (from about $40 to about $35) was unexpected and didn't last long. Since Frontier jumped in at that point, I have to assume it was Solarc's doing.
As to the quarter, even as a loyal Frontier supporter, I was very surprised at how small the loss was. Like the Wall Street analysts, I was expecting a bigger loss.