Frontier Airlines (NASDAQ: FRNT) today announced record earnings for the quarter ended Dec. 31, 1998 and fiscal year to date. The airline reported fiscal third quarter net income of $2.5 million, or $0.15 per fully diluted common share, an improvement from the same period last year when the airline reported a net loss of $11.5 million. Net income for the nine-month period ended Dec. 31, 1998 was $12.8 million, or $0.86 per fully diluted common share, compared to a loss of $15.7 million for the same period last year.
Operating revenues increased 53.2 percent to $50.7 million for fiscal third quarter 1999, compared to $33.1 million for fiscal third quarter 1998. The airline`s operating expenses during fiscal third quarter 1999 increased 8.4 percent to $48.5 million on increased capacity of 20.6 percent.
“These are important results because December is, from a seasonal standpoint, the most difficult for Frontier. This contrasts with our current quarter, which is traditionally our second strongest quarter in terms of financial performance,” said Frontier President Sam Addoms.
The airline`s traffic continued to outpace capacity during the third fiscal quarter, as evidenced by a 30.5 percent improvement in revenue passenger miles and a 4.1 point improvement in load factor, which resulted in a 53.5 percent load factor for the quarter. Total revenue per available seat mile (RASM) for the quarter increased to 8.01 cents from 6.31 cents for the same period last year. Total revenue per passenger mile (yield) for the quarter increased 17.4 percent to 14.97 cents from 12.75 cents. Cost per available seat mile for the quarter decreased to 7.66 cents from 8.52 cents for the same quarter last year.
Addoms continued, “Our growth plans in terms of aircraft for the next 12 to 15 months include replacing the five Basic 737-200 aircraft, which do not meet Stage 3 noise compliance. Subject to availability, we also plan to take delivery of three additional aircraft, which would bring our total fleet to 20 Boeing 737 aircraft.”
Revenue enhancements impacting the quarter included:
* Improving schedule connectivity from 4.9 to 5.3 connections per flight,
* Signing the 1200th corporate account,
* Increasing the size of Frontier`s fleet from 14 aircraft to 17 aircraft,
* Entering three new major markets: Atlanta, Dallas/Fort Worth and Las Vegas.
Cost reduction initiatives and other developments implemented during the quarter included:
* The first full quarter of operating in-house ground handling at Denver International Airport, which is expected to realize a cost savings of approximately $1 million annually,
* The selection of Hanifen, Imhoff Inc. as the airline`s key advisor to provide strategic counsel and investment banking advice,
Milestones celebrated during the quarter included:
* Completion of three years serving Los Angeles, November 3, 1998,
* Completion of three years serving Minneapolis/St. Paul and Salt Lake City, November 13, 1998,
* First anniversary serving Baltimore, November 16, 1998,
* Completion of three years serving San Francisco, November 17, 1998,
* Completion of one year serving New York/LaGuardia, December 3, 1998.
Addoms continued, “We are extremely pleased with our quarter and fiscal year to date results, but we also recognize that focusing on the future is key to continued positive results. To strengthen our balance sheet for the future, we recently prepaid the Wexford senior secured note, which enables the airline to be virtually debt-free. We also recently renewed our agreement with EDS on favorable economic terms. This will allow us to receive upgraded telecommunications and call center services. In addition, it will allow us to market our product more efficiently by allowing e-ticket services for travel agents and the utilization of EDS` SHARESwebSM product. On the cost side, we will begin performing our own ‘C` check level maintenance, effective March 5, and expect to realize a significant combination of scheduling efficiencies and cost savings.”
Cash and cash equivalents available for operations on Dec. 31, 1998 were $25.1 million.
” I would be remiss if I did not thank the 1,200 employees who comprise Frontier Airlines,” noted Addoms. “Their resilience is truly remarkable and I hope they will remember these events in 1998 for the collective personal achievements that they reflect.”