ULCC Q4 2023 Earnings

Call Details

• Call Title: Frontier Group Holdings, Inc. Q4 2023 Earnings Call
• Date: 2024-02-06T16:00:00Z
• Management Team:
  • Barry Biffle (Chief Executive Officer)
  • Jimmy Dempsey (President)
  • Mark Mitchell (Chief Financial Officer)
  • David Erdman (Senior Director, Investor Relations)

Call Summary

Financial Performance

• Fourth quarter total revenue was $891 million and fourth quarter RASM was 8.9 cents.
• Fourth quarter GAAP pre-tax margin was 0.7% and adjusted pre-tax margin was 0.8%, producing a full-year adjusted pre-tax margin of 0.9%.
• Frontier carried a record 8.1 million passengers in the quarter while achieving a 99.5% completion factor and average system utilization of 11.3 hours.
• Adjusted non-fuel operating expenses were $590 million in the quarter, or 5.9 cents per ASM, which was 8% lower than the prior year quarter.
• Fuel expense reflected an average cost per gallon of $3.18 and fuel efficiency improved to 105 ASMs per gallon, which was a 3% improvement versus prior year.
• The quarter included a $36 million lease return cost benefit tied to extensions of four A320CEO leases that reduced adjusted non-fuel operating expense in Q4.

Guidance

• Full-year 2024 capacity growth is expected to be 12% to 15% on a system basis.
• Full-year 2024 adjusted CASM excluding fuel is expected to be down 1% to 3% on a stage-adjusted basis to 1,000 miles.
• Full-year 2024 pre-tax margin is guided to be in the range of 3% to 6%.
• First quarter 2024 guidance reflects seasonality and off-peak dynamics and is based on fuel pricing as of February 2, 2024.
• Frontier expects to implement $200 million of annual run-rate cost savings from the network simplification strategy by the end of 2024.
• Frontier expects 2025 pre-tax margins to be 10% to 14%, which includes anticipated new labor agreements for pilots and flight attendants.