LRGT
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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
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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
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alphascan
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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.

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Airportguy1971
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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
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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
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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
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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