Frontier Reports Fiscal Third Quarter

Frontier Airlines, Inc. today reported fiscal third quarter 2004 net
income of $5.5 million, or $0.14 per diluted common share, compared with a
net loss of $6.4 million, or $0.21 per common share for the airline`s
fiscal third quarter last year. The fiscal third quarter 2004 net income
includes the write-off of deferred loan costs of $1.1 million (pre-tax)
associated with the prepayment of the remaining $11.6 million balance of
the government guaranteed loan. This item, net of income taxes, totaled
approximately $.02 per diluted common share.


Chief Executive Officer`s Comments:

Frontier President and CEO Jeff Potter said, “In a quarter that has seen
very few airlines report profitable results, we are very pleased to report
our third consecutive profitable quarter. While the industry revenue and
fare environment continues to be challenging, we were able to produce an
industry leading year-over-year total revenue per available seat mile
(RASM) improvement of 14.2 percent. This tremendous achievement was
accomplished primarily through the increased customer acceptance of our
product, leading to a 13 point year-over-year load factor improvement for
the quarter to 72.5 percent despite adding significant year-over-year
capacity to our system. The culmination of these achievements not only
allowed us to report a profit for the quarter, but also led us to achieve
one of the industry`s highest operating margins for the quarter at 7.7
percent. As they always have, our employees met the challenges of record
system-wide load factors during the peak holiday seasons, with the
continued friendly and professional approach that our company has become
known for.
“During the quarter, we also achieved several significant milestones that
will become the foundation for our future growth. Specifically, we reached
a long-awaited agreement with the City and County of Denver and Denver
International Airport for the gate space we need to accommodate our hub
expansion plans and we also announced our first focus city with
point-to-point flights from Los Angeles International Airport to three
destinations.”
Operating Highlights

Total revenues for Frontier`s fiscal third quarter of 2004 increased 36
percent to $163.6 million from $120.3 million in the fiscal third quarter
of 2003, while operating expenses during the quarter increased 19.5
percent to $151.0 million from $126.4 million for the same quarter last
year.

Passenger revenue increased as revenue passenger miles (RPMs) grew at a
rate of 45.3 percent during the fiscal third quarter, far out-pacing
capacity growth as measured by available seat miles (ASMs), which
increased 19.1 percent from the same time last year. As a result, the
airline`s load factor was 72.5 percent for its fiscal third quarter of
2004, 13 load factor points greater than the airline`s load factor of 59.5
percent during the same quarter last year. The airline`s breakeven load
factor for the fiscal third quarter 2004 increased 4.1 load factor points
from 64.4 percent to 68.5 percent, which excludes the effect of one
special item. This item accounted for .5 load factor points of the
breakeven load factor increase.

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During fiscal third quarter 2004, the airline`s RASM increased 1.02 cents
or 13.3 percent to 8.71 cents from 7.69 cents for the same quarter last
year. The increase in RASM was due to the significant increase in load
factor, which more than offset a decrease in revenue per passenger mile
(yield) of 7.1 percent to 12.01 cents from 12.93 cents for the same period
last year.
The year-over-year increase in total revenues includes contributions from
other revenue sources associated with Frontier`s U.S. mail contracts,
LiveTV revenues and the positive contribution from Frontier`s JetExpress
service.

The airline`s cost per available seat mile (CASM) for the fiscal third
quarter increased slightly to 8.31 cents from 8.29 cents for the same
quarter last year. Fuel cost per gallon during the quarter, including
taxes and delivery charges, increased 7.3 percent to $1.03, compared to
..96 cents for the same period last year. CASM excluding fuel decreased 0.9
percent to 6.80 cents from the same period last year, when CASM excluding
fuel was 6.86 cents.
Senior Vice President and Chief Financial Officer Paul Tate discussed the
airline`s year-over-year unit cost comparatives stating, “While our CASM
excluding fuel was slightly lower during the quarter on a year-over-year
basis, our unit cost results were adversely affected primarily by an
increase in passenger related expenses caused by a disproportionate
increase in the number of passengers carried compared to the
year-over-year quarterly ASM growth. In addition, our CASM increased
year-over-year from the effects of the profit sharing accrual associated
with our return to profitability and an increase in health insurance
costs. We also incurred approximately $2 million of costs associated with
the return of five Boeing aircraft to their lessors and accelerated Airbus
pilot transitional training costs.”

Tate also described the airline`s current cash and working capital
position stating, “As of December 31, 2003, and on a year-over-year basis,
our cash position has increased from $31.5 million to $186.3 million. In
the same period, our working capital has increased from $.2 million to
$103.9 million. Our cash position remains near its all-time high despite
prepaying the remaining $11.6 million of the government-guaranteed loan in
December 2003.”
The airline`s fleet in service on December 31, 2003 consisted of 13 owned
Airbus A319 and A318 aircraft, 14 leased Airbus A319 aircraft and 12
leased Boeing 737 aircraft.

Business developments during the quarter included: * Resolved gate
expansion concerns with the City and County of Denver and DIA, securing
two to six mainline gates and four to five regional gates, pending final
approval of the expansion plan. * Announced plans for a new “focus” city
in Los Angeles, with Frontier`s first non-stop, point-to-point flights
outside of the Denver hub. Service will include two daily non-stops from
Los Angeles to Minneapolis/St. Paul, St. Louis, and Kansas City and will
begin April 11, 2004. * Announced plans to expand Denver service to
include non-stop flights to Dulles International Airport in Washington,
D.C. on April 11, 2004 and Anchorage International Airport in Anchorage,
Alaska on May 9, 2004. * Received permission to begin a third daily flight
to slot-controlled La Guardia Airport (LGA). * Filed for permission to add
up to two more daily flights into slot and perimeter controlled Reagan
National Airport (DCA). * Became the first, and currently only airline to
pay back the government guaranteed ATSB loan. * Launched a new Frontier
JetExpress regional jet relationship with Horizon Air on Jan. 1, 2004,
replacing Mesa Air Group. * Initiated service to Puerto Vallarta and Cabo
San Lucas, Frontier`s third and fourth Mexican destinations. * Began
service to Lambert-St. Louis International Airport. * Signed sponsorship
agreements with Kroenke Sports for the Colorado Avalanche, Denver Nuggets,
and the Pepsi Center, as well as with all of the major universities in
Colorado including Colorado State University, University of Colorado,
University of Northern Colorado, University of Denver, and Air Force
Academy. * Became the first airline to implement the use of pediatric pads
with the Automated External Defibrillator (AED). * Earned Flag Carrier
status, an FAA designation that allows Frontier to fly between two
international destinations, as well as to Alaska and Hawaii, and beyond
its previous limit of two hours from the U.S. border. * Launched the
successful “Quick Ascent” program, which allows elite members in other
airlines` frequent flyer programs to join Frontier`s EarlyReturns program
as an elite member without the standard 15,000-mile requirement. To date,
over 4,000 participants have become EarlyReturns members as a result of
this program. * Joined Operation Hero Miles, the innovative program that
helps troops on emergency leave or Rest and Relaxation (R & R) from Iraq
and Afghanistan, to fly home for free through the generous donations of
miles from members of airlines` frequent flyer programs. Frontier Airlines
donated 1.5 million miles to kick off its participation in the program.
Cash Comparisons

Cash, cash equivalents and short-term investments available for operations
and investing activities on December 31, 2003 were $186.3 million compared
to $31.5 million available on December 31, 2002. The increase in the
Company`s cash position is largely attributable to its net income for the
period and was substantially aided by our secondary offering of 5.05
million shares of common stock in September 2003. A portion of the
proceeds from the secondary offering were used to pre-pay $48.6 million of
our government guaranteed loan. The increase in our cash position also
enabled us to subsequently pay-off the remaining balance of $11.6 million
in December 2003 The airline reported working capital of $103.9 million as
of December 31, 2003, a substantial increase over the airline`s working
capital on December 31, 2002, when the airline reported working capital of
$.2 million.

Potter concluded, “The third quarter was a challenging one for the airline
industry as a whole, as many were looking to this quarter as evidence that
air travel had either returned, or that summer loads were merely a result
of seasonal travel. Given our traditional seasonality pattern, the
December quarter was a very strong quarter with several days of record
loads and great strides made with our operating margin. For Frontier, this
quarter we demonstrated that we have become a true carrier of choice, and
that consumers are responding to the product that we are offering. In
upcoming quarters, we`ll focus on continuing to enhance our product,
delivering on our promise to be “a whole different animal” and expanding
our footprint with new and differentiated service, including our new Los
Angeles point-to-point flights, and additional frequencies to our most
popular destinations.”
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