Frontier Airlines lost $14.4 million in its third fiscal quarter, which ended in December, taking a hit from the blizzards that struck Denver. The loss, equivalent to 39 cents a share, is worse than the airline’s year-earlier loss of $10.3 million, or 28 cents a share.
The two major December snowstorms in Denver led Frontier to cancel 875 flights, affecting 105,000 passengers. That had a pretax financial impact of $11.9 million. Revenue for December was reduced by $13.2 million because of the storms.
The company paid an additional $1.2 million in glycol expenses for de-icing planes and $900,000 in wages for employees. Those expenses were offset by a $3.3 million reduction in costs for fuel, landing fees, maintenance and catering.
Without the snowstorms, Frontier would have lost about 14 cents a share, said chief financial officer Paul Tate.
The impact extended beyond December, with reservation agents busy rebooking passengers through early January instead of focusing on new bookings. Frontier also lost revenue from passengers who decided not to fly.
At the same time, Frontier is struggling with a 3 percent year-over- year reduction in average fares.
“It would have a positive impact on us if there was some large consolidation – even here in Denver – that would help us,” Tate said.
Frontier chief executive Jeff Potter expects Frontier’s partnership with AirTran, planned regional-carrier expansion and its new subsidiary Lynx Aviation to bring in more revenue.
Frontier had $900,000 in start- up costs for Lynx Aviation and $1 million in retroactive higher rent at Los Angeles International Airport. Airlines including Frontier are “exploring all our options” after three other carriers sued LAX, Tate said.
The December quarterly loss was reduced 2 cents a share by noncash hedging gains, which decreased fuel expense by $1.4 million. The company has been actively securing fuel hedges in recent weeks and now has hedges through March 2008, Tate said.
Frontier’s cash declined as of the end of 2006, with $191.6 million in unrestricted cash and $33.6 million in working capital.
Frontier’s loss comes after other airlines also reported disappointing results. United Airlines, the largest carrier in Denver, lost $61 million in the 2006 fourth quarter.Southwest Airlines’ fourth-quarter net income declined to $57 million, or 7 cents a share, from $70 million, or 9 cents a share, a year earlier.
Separately, Frontier’s Westminster-based Lynx Aviation has applied for federal certification from the U.S. Department of Transportation. Frontier Airlines Holdings Inc. will provide up to $40 million of startup capital to Lynx.
Lynx will fly Q400 turboprop planes with 74 seats during the summer and 70 seats during the winter when more space is used for skis and other luggage.
Lynx has reached an agreement with Lufthansa Technik A.E.R.O. for maintenance, repair and overhaul of aircraft engines. The company also filed its application for an air-carrier certificate with the Federal Aviation Administration.
Staff writer Kelly Yamanouchi can be reached at 303-954-1488 or kyamanouchi@denverpost.com.
