Frontier Reports Fiscal Year 2003

DENVER (May 22, 2003) - Frontier Airlines (Nasdaq: FRNT) today announced a net loss of $22.8 million, or $0.77 per common share, for its fiscal year ended March 31, 2003. This compares to net income of $16.5 million, or $0.56 per diluted common share from the previous fiscal year. The Company`s fiscal year net loss included a $2.0 million after-tax credit for the cumulative effect of a change in accounting for major aircraft overhauls from the accrual method to the expense as incurred method. The loss before the cumulative effect of the change in accounting was $24.9 million, or $0.84 per common share.


For the airline`s fiscal fourth quarter ended March 31, 2003, the airline reported a net loss of $13.0 million, or $0.44 per common share, compared to net income of $623,000, or $0.02 per diluted common share, for the same period last year. The results of the fiscal fourth quarter 2003 include $0.08 per share (after tax) of losses associated with unrealized losses on financial derivatives, a write-down of Boeing spare parts inventory and the impact of reduced revenue sharing credits associated with Denver International Airport`s anticipated reserve for United Airlines` bad debt.
For the airline`s fiscal fourth quarter ended March 31, 2003, the airline reported a net loss of $13.0 million, or $0.44 per common share, compared to net income of $623,000, or $0.02 per diluted common share, for the same period last year. The results of the fiscal fourth quarter 2003 include $0.08 per share (after tax) of losses associated with unrealized losses on financial derivatives, a write-down of Boeing spare parts inventory and the impact of reduced revenue sharing credits associated with Denver International Airport`s anticipated reserve for United Airlines` bad debt.


Chief Executive Officer`s Comments:
“Reporting our first annual loss in five years is a disappointment and reflects many of the challenges faced by our industry during the past year, including a weakened economy and, in this latest quarter, the recent unrest in the Middle East that culminated in the Iraq war. In addition, our fiscal year 2003 loss was exacerbated by the severe winter blizzard in March 2003 that shut down the Denver metro area for two days,” said Frontier President and Chief Executive Officer Jeff Potter. ” However, we believe we are doing all of the right things to continue to build upon our cost reduction accomplishments, maximize revenue and improve our liquidity. During the past year we realized year over year unit cost reductions of 10.8 percent, posting what we believe are some of the greatest cost management improvements among our peers. With the recent simplified fare structure implemented during February 2003, and launch of our new branding campaign, `A Whole Different Animal,` we believe customer response will be favorable.”


Fourth Quarter Operating and Financial Highlights:
The airline`s total revenues during its fiscal fourth quarter 2003 increased 4.7 percent to $118.5 million from $113.2 million in the fourth quarter of the prior year. The airline`s capacity, as measured by available seat miles (ASMs), increased 26.5 percent during its fiscal fourth quarter 2003, while its traffic, as measured by revenue passenger miles (RPMs), increased 26.8 percent compared to fiscal fourth quarter 2002. This resulted in a load factor of 58.4 percent, an increase of 0.2 load factor points from fiscal fourth quarter 2002. During fiscal fourth quarter 2003, the airline`s break-even load factor increased 12.7 load factor points to 67.8 percent. The airline`s average fare during its fiscal fourth quarter 2003 decreased 15.6 percent to $108 from $128 for the fiscal fourth quarter 2002. Revenue per passenger mile (yield) for fiscal fourth quarter 2003 decreased 17.3 percent to 12.76 cents from 15.43 cents for fiscal fourth quarter 2002. The airline`s passenger revenue per available seat mile (RASM) for fiscal fourth quarter 2003 decreased 17.1 percent to 7.45 cents from 8.99 cents for fiscal fourth quarter 2002.


Cost per available seat mile (CASM) for fiscal fourth quarter 2003 increased 1.0 percent to 8.75 cents from 8.66 cents for fiscal fourth quarter 2002. CASM excluding the airline`s fuel costs decreased 4.8 percent to 7.14 cents, compared to 7.50 cents for fiscal fourth quarter 2002. During the fiscal fourth quarter 2003, the airline paid 44.2 percent more per gallon for fuel as compared to the same period last year, as the average cost per gallon of fuel during the fiscal fourth quarter was $1.11. The airline`s fiscal fourth quarter 2003 CASM was adversely affected by an estimated 0.39 cents as a result of the write-down of Boeing spare parts inventory and the impact of reduced revenue sharing credits associated with Denver International Airport`s anticipated reserve for United Airlines` bad debt. The airline`s year over year CASM reduction (excluding fuel) was achieved principally by continued efficiencies of the airline`s Airbus fleet that increased from six aircraft at the end of fiscal year 2002 to 17 aircraft as of March 31, 2003. Utilization for fiscal fourth quarter 2003 averaged 9.7 hours, an increase of 2.0 percent from fiscal fourth quarter 2002.
Year End Operating and Financial Highlights:
The airline`s total revenues during its fiscal year 2003 increased 5.6 percent to $470.0 million from $445.1 million for the prior year. The airline`s capacity, as measured by ASMs, increased 30.9 percent during fiscal year 2003, while its traffic, as measured by RPMs, increased 30.6 percent. This resulted in a load factor of 59.9 percent, a decrease of 0.1 points from fiscal year 2002. During fiscal year 2003, the airline`s break-even load factor increased 7.1 points to 64.7 percent. The airline`s average fare during its fiscal year 2003 decreased 17.4 percent to $109 from $132 from the prior year. The airline`s RASM for fiscal year 2003 decreased 19.4 percent to 7.63 cents from 9.47 cents for fiscal year 2002.

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CASM for the fiscal year 2003 decreased 10.8 percent to 8.32 cents from 9.33 cents for fiscal year 2002. CASM excluding the airline`s fuel costs decreased 13.8 percent to 6.90 cents during fiscal year 2003, compared to 8.00 cents during fiscal year 2002. During fiscal year 2003, the average cost per gallon of fuel was $0.96, a 10.3 percent increase from last year. Utilization for fiscal year 2003 averaged 9.8 hours, an increase of 7.7 percent from fiscal year 2002.


Fleet Update:
At the end of fiscal year 2003, the airline`s fleet consisted of 17 Airbus A319 aircraft, 16 Boeing 737-300s and three Boeing 737-200s. Frontier has firm orders to take delivery of 11 additional Airbus A319 and A318 aircraft during fiscal year 2004, and return nine Boeing aircraft to their lessors. This will result in two net additional aircraft to Frontier`s fleet by the end of its fiscal year 2004, bringing its total fleet to 38 aircraft, including 24 Airbus A319 aircraft, four Airbus A318 aircraft and 10 Boeing 737-300 aircraft.


The Company also announced it has extended its codeshare agreement with Mesa Air Group, Inc., operating as Frontier JetExpress, through Aug. 31, 2003.


Potter said, “We believe a regional jet operation is an important component to our business model, and we continue to discuss our long-term options with Mesa, as well as explore revenue opportunities with other regional jet operators.”
Full Details at www.FrontierAirlines.com
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