Frontier Airlines Reports May Net Profit of $1.1 Million

by Jarkko on June 26, 2009

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DENVER, June 25 /PRNewswire-FirstCall/ — Frontier Airlines Holdings, Inc. (Pink Sheets: FRNTQ) today reported a net profit of $1.1 million for the month of May and its seventh consecutive monthly operating profit. The results were filed in the Company’s unaudited Monthly Operating Report for May 2009.

Frontier reported a consolidated operating profit of $11.7 million for the month of May 2009, compared to an operating loss of $16.5 million for the same period in 2008, and a total consolidated net income of $1.1 million compared to a net loss of $22.0 million for May 2008. Excluding special items, the Company would have reported net income of $5.6 million, or a net margin of 6.3 percent in May 2009, compared to a net loss of $4.9 million, or a negative margin of 4.1 percent in 2008. Excluding special items, the operating profit for the month was $7.6 million versus an operating loss of $2.5 million in May 2008.

Special items for the month of May 2009 included:
— Reorganization costs of $8.5 million, including a book loss of $7.5
million on an aircraft sale
— A charge of $0.2 million related to the retirement of debt for an
aircraft sold during the month

— An unrealized mark-to-market gain of $4.2 million on fuel hedge
contracts

Special items for the month of May 2008 included:
— Reorganization costs of $2.8 million, primarily related to
professional and other bankruptcy-related fees
— A book gain of $9.2 million on the sale of two aircraft
— A charge of $0.2 million related to the retirement of debt on the two
aircraft sold during the month

— An unrealized mark-to-market gain of $23.1 million on fuel hedge
contracts

Operational results for the month of May 2009 included:
— A 14.9 percent year-over-year mainline capacity reduction
— Mainline unit cost excluding fuel (CASM ex-fuel) was 5.70 cents,
compared to 5.41 cents in May 2008 (Note: excluding gains on aircraft
sales in May 2008, CASM ex-fuel was 6.32 cents, resulting in 9.1
percent reduction in May 2009)
— Mainline total unit cost (CASM) was 7.56 cents, a 30.8 percent
reduction compared to May 2008 (Note: excluding special items in 2009,
mainline CASM was 8.01 cents, a 16.8 percent reduction compared to
mainline CASM ex-items in May 2008)
— Mainline passenger revenue (PRASM) was 8.22 cents, down 12.3 percent
from the previous year

— Mainline total unit revenue (RASM) was 9.02 cents, an 8.7 percent
decrease from May 2008

“Despite continued capacity reductions and a year-over-year decline in passenger revenue, we have managed to produce an operating profit for seven consecutive months,” said Frontier President and CEO Sean Menke. “The positive results for the month of May are the result of the Company’s effort to be one of the lowest cost operators in North America. The dedication and efforts put forth by all employees has allowed us to achieve these results once again.”

On April 1, 2009, the beginning of the fiscal year, the Company adopted EITF 08-3, “Accounting by Lessees for Maintenance Deposits”, on the accounting for maintenance deposits under an arrangement accounted for as a lease. Prior to the implementation of EITF 08-03, the Company recorded its maintenance deposits paid, or supplemental monthly payments under aircraft lease agreements, as an expense when paid. The Company recorded a cumulative effect of a change in accounting principal in April 2009 of $125.1 million as an adjustment to retained earnings, and will record these payments as deposits on the balance sheet and expense maintenance as incurred. The results for April and May 2009 include the adoption of this accounting standard.

Companies in Chapter 11 bankruptcy protection are required to file monthly operating reports to the U.S. Trustee in addition to quarterly reports filed with the U.S. Securities and Exchange Commission.

A copy of the Monthly Operating Report is available at: FrontierAirlines.com/frontier/who-we-are/investor-relations/annual-reports-sec -filings.do