Unexpectedly strong demand in September and a successful push to lure more connecting passengers fueled Frontier Airlines to its largest quarterly profit since 2000.
The Denver-based carrier on Thursday reported net income of $17.3 million in the July-September period, breaking its string of three unprofitable quarters and solidly beating analyst expectations.
The financial results mark "one of the best quarters in the history of this airline from every perspective possible," including operation performance, revenue, profitability and occupancy, Sean Menke, the company's chief executive officer, said in a news release.
"While we carried record-breaking numbers of passengers, our operations responded with a level of service that positioned us as one of the top on-time performers in the industry," Menke said.
The airline also said it hopes to get final approval from the Federal Aviation Administration by the end of the year for its new turboprop service. Frontier initially planned to launch it last summer, but the certification process has taken longer than expected.
An FAA spokesman said the two sides have agreed on a tentative schedule that could give Frontier approval in early December.
The FAA has essentially signed off on all the appropriate training manuals, procedural documents and other materials related to Lynx and has moved on to the demonstration phase.
"The simplest way to say this is that the airline now demonstrates to us that they can launch a flight on time, land on time and do it safely," said Allen Kenitzer of the FAA.
The carrier's Lynx Aviation subsidiary will operate turboprop planes to nearby smaller cities and mountain and resort destinations.
In Frontier's fiscal second quarter, which ended Sept. 30, the carrier made 39 cents per diluted share compared with net income of $509,000, or 1 cent a share, in the same period last year.
This year's numbers include $4.3 million in startup costs for Lynx and the carrier's move to replace the seats on its planes. It also includes $1.6 million in noncash derivative gains. Combined, those items reduced net income by 6 cents a share.
Revenue hit $373 million, up 19 percent from a year earlier.
Frontier chalked up the results to solid growth during the quarter, which historically is its strongest of the year. The carrier's load factor - how full its planes are - hit 84.7 percent, a sharp increase from 77.5 percent a year earlier.
"The month of September was a surprise," said Paul Tate, Frontier's chief financial officer. "That generally is a very unseasonable month for us. But we had very robust load factors, and that really carried the quarter."
Tate said the company benefitted from further capacity cutbacks by United Airlines, which is Denver's dominant carrier with about 55 percent of the market share. Frontier also held its own against discount giant Southwest Airlines, which has been growing rapidly and helped drive down fares.
The homegrown carrier saw more connecting traffic as well, the result of its moves to aggressively sell one-stop flights through Denver inside the 21-day purchase window.
But high fuel costs are taking a bite out of Frontier's bottom line, and the carrier expects to post a loss for the period that ends in December.
