Frontier (ULCC) Q4 2023 earnings summary

Executive summary

• Q4 results significantly exceeded guidance, with 0.7% GAAP and 0.8% adjusted pre-tax margins; management cited operational performance and cost execution as a foundation for 2024.

• 2024 priorities include network simplification, growth in overpriced and underserved markets, revenue diversification, stronger customer engagement and lower unit costs.

Financial highlights

• Q4 operating revenue was $891M, down 2% YoY; operating expenses were $894M, versus $861M in Q4 2022.

• Q4 GAAP pre-tax income was $6M and net loss was $37M; adjusted pre-tax income was $7M and adjusted net income was $1M.

• FY2023 revenue rose 8% to $3.589B; GAAP pre-tax income was $32M versus a $45M loss, while net loss was $11M versus $37M.

• FY2023 adjusted pre-tax income was $34M versus a $19M loss; adjusted net income was $28M and adjusted diluted EPS was $0.12.

Outlook and guidance

• Q1 2024 capacity growth is forecast at 5%–7% YoY; adjusted operating expenses excluding fuel at $645M–$660M, fuel at $2.85–$2.95/gal and adjusted pre-tax margin at (4)%–(7)%.

• FY2024 capacity growth is forecast at 12%–15%; adjusted pre-tax margin at 3%–6%, fuel at $2.70–$2.80/gal and adjusted fuel-excluded CASM, stage-length adjusted to 1,000 miles, down 1%–3%.

• FY2024 pre-delivery deposits, net of refunds, are forecast at $20M–$50M; other capital expenditures at $160M–$180M, including capitalized heavy maintenance.

• Guidance excludes special items; capacity plans may change with demand, and actual results may differ materially from estimates.