LRGT
Posts: 675
Joined: Thu Jul 22, 2004 12:29 pm

Frontier Profitability?

Tue Jul 27, 2004 2:36 am

F9 (Frontier) has recently finally been posting a profit (barely though). Does anyone know whether this will go on? Perhaps they will become even more profitable?

Any F9 employees seeing an improvement of profitability or perhaps a return to unprofitability?

Here is a operating cost comparison:
F9: Cost per ASM $0.0739, Load Factor 77%, Average Flight: 967 Mi
FL: Cost per ASM $0.0828, Load Factor 75%, Average Flight: 616 Mi
US: Cost per ASM $0.1343, Load Factor 82%, Average Flight: 754 Mi
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mariner
Posts: 18670
Joined: Fri Nov 23, 2001 7:29 am

RE: Frontier Profitability?

Tue Jul 27, 2004 2:43 am

Lrgt:

No. Like most other airlines, Frontier has been hard hit by the price of fuel. The CEO has stated that they will make a loss this quarter.

Whether or not they make a profit for the full financial year - as they were profitable last year - depends, largely, on the price of fuel.

cheers

mariner
aeternum nauta
 
alphascan
Posts: 795
Joined: Mon Nov 24, 2003 12:04 am

RE: Frontier Profitability?

Tue Jul 27, 2004 3:41 am

Lrgt:

The numbers you used for F9 above confused CASM with RASM. CASM is reported on a quarterly basis with the financial report. RASM is reported on both the financials and the monthly traffic report.

http://www.frontierairlines.com/news/articleDisplay.asp?article=/Financials/2004/pr_042004.news


The F9 CASM including fuel for the last reported quarter was $0.0848; $0.0831 for the fiscal year.

The F9 CASM excluding fuel for the last reported quarter and fiscal year was $0.0679.

Load Factor for the last reported quarter was 70.9% and 71.6% for the fiscal year.

Generally, FL has a lower CASM than F9.

"To he who only has a hammer in his toolbelt, every problem looks like a nail."
 
Airportguy1971
Posts: 150
Joined: Wed Aug 27, 2003 6:49 am

RE: Frontier Profitability?

Tue Jul 27, 2004 6:06 am

Mariner

When was it stated that there'd be a loss. Last I heard it was too close to call.
 
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mariner
Posts: 18670
Joined: Fri Nov 23, 2001 7:29 am

RE: Frontier Profitability?

Tue Jul 27, 2004 6:17 am

Airportguy:

During the conference call in May. The CEO said that Q1 (April/June '04) was likely to be a loss with the continued high oil prices.

However, he did say that whether the full year would be profit or loss was "too close to call."

cheers

mariner
aeternum nauta
 
Type-Rated
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Joined: Sun Sep 19, 1999 5:18 am

RE: Frontier Profitability?

Tue Jul 27, 2004 10:18 am

But with OPEC stating that they would step up production soon we can expect prices to start coming down slightly. What did F9 hedge vs FL hedge?
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mariner
Posts: 18670
Joined: Fri Nov 23, 2001 7:29 am

RE: Frontier Profitability?

Tue Jul 27, 2004 10:34 am

Type-rated:

I think that oil may come down slightly, but only slightly. Fear (Iraq, the oil confusion in Russia) is driving the market.

Frontier had only recently started hedging fuel - as CEO Potter said "we're new to this" - and had only small hedges in place, managed in-house.

Then, when oil prices got really out of hand, two things happened:

http://www.solarc.com/index2.asp?category=News&level2Entity=3990&contentID=727

That was June '04. Solarc is not a fuel hedger, but a fuel manager, which, presumably, includes some advice on hedging, such as when and how much.

Then this appeared:

http://money.excite.com/jsp/nw/nwdt_ge.jsp?news_id=dji-00088220040715&feed=dji&date=20040715

The 25% fuel hedge for six months is new, and, given the timing, must have been taken out when crude oil was about $35 bbl. Do I detect the hand of Solarc here?

Given that crude is trading over $41 bbl, it looks like a good move.

I remember that Continental took out a hedge in May at $40 bbl, and everyone said they were nuts.

Maybe. Maybe not.

cheers

mariner
aeternum nauta

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