ULCC Q2 2022 Earnings

Call Details

• Call Title: Frontier Group Holdings, Inc. Q2 2022 Earnings Call
• Date: July 27, 2022 at 8:30 PM UTC
• Management Team:
  • David Erdman (Senior Director of Investor Relations)
  • Barry Biffle (President and CEO)
  • Jimmy Dempsey (EVP and CFO)
  • Daniel Shurz (Senior Vice President, Commercial)
  • Bradley Lambert (Vice President, Flight Operations)

Call Summary

Financial Performance

• Second quarter revenue was $909 million, which is 43% above the comparable 2019 quarter.
• Frontier achieved its first adjusted profit in over two years and reported an adjusted pre-tax margin of 3% in Q2.
• Total operating expense was approximately $900 million in Q2, which included $9 million of transaction and merger-related costs and $7 million of asset impairment.
• Fuel expense for the quarter was $335 million at an average fuel cost of $4.41 per gallon.
• Adjusted non-fuel operating expense was $550 million in Q2.
• Adjusted CASMX was 7.24 cents for the quarter.
• Ancillary revenue was a record $75 per passenger in Q2 and materially supported profit recovery.
• The company ended the quarter with $766 million of unrestricted cash and cash equivalents.

Demand & Capacity

• Capacity in Q2 was 10% higher versus the comparable 2019 quarter.
• Utilization averaged 10.9 hours per day in Q2, roughly in line with the prior quarter.
• Frontier expects ASM growth versus 2019 of 5% in July, 8% to 9% in August, and 14% to 16% in September.
• The company designed average stage length for Q2 and Q3 to be between 960 and 980 miles and expects to return to pre-pandemic average stages starting in Q4.
• For 2023 the company expects to grow approximately 30% versus 2022 as utilization normalizes.
• Longer-term fleet plan provides capacity growth of 15% to 20% per year after 2023, with ability to accelerate if opportunities arise.