Frontier Airlines soared to record earnings in December and posted a narrow profit for the quarter, boosting the carrier’s hopes for emerging from bankruptcy protection.
Benefiting from deep cost cuts and a new fare system, Frontier reported Wednesday a net profit of $18.7 million for December, its largest ever for the month and its second straight month in the black.
The Denver-based airline posted a profit of $1.1 million for the quarter ended in December, which included special gains and charges such as proceeds from aircraft sales and losses from fuel hedges.
“For the first time in five years, we’ve actually recorded a profit for the December quarter,” Frontier chief executive Sean Menke said. “This is really big in light of what a number of companies, especially airlines, have been reporting.”
It’s also significant because Frontier, amid the souring economy and tight credit market, is seeking $125 million in financing to help it emerge from Chapter 11 bankruptcy. The airline filed for bankruptcy in April.
“Money is not easy to acquire right now, but when you book a profit and one of your major competitors has just booked a very large loss, that should be helpful,” said George Hamlin, president of Hamlin Transportation Consulting.
United Airlines this month reported a $1.3 billion loss for the fourth quarter. Southwest Airlines, which also competes with Frontier at Denver International Airport, reported a fourth-quarter loss of $56 million.
Frontier trimmed expenses by cutting 20 percent of its workforce and negotiating new, long-term deals with its unions. The company employs 4,500. Excluding fuel costs, Frontier has cut its unit cost — how much it spends to fly each seat 1 mile — by 4.2 percent.
In December, Frontier launched a tiered fare system, giving customers a choice of an “economy” fare, a “classic” fare that includes checked bags and in-flight television, and a “classic plus” fare that is refundable and offers free flight changes.
Menke said 40 percent of fliers are buying classic or classic plus.
Menke plans to meet with potential investors over the next couple of weeks. The carrier could exit bankruptcy four months after finding a “plan sponsor,” which isn’t a given.
Frontier has $69.1 million in cash on hand and doesn’t anticipate the need to sell additional aircraft. The company sold four planes in the quarter.
Andy Vuong: 303-954-1209 or avuong@denverpost.com
This article has been corrected in this online archive. Originally, due to a reporting error, it originally misstated Frontier’s net profit for the quarter ending in December. The airline posted a net profit of $1.1 million.
