Frontier Reverses Loss in Second Quarter

Discount carrier Frontier Airlines Inc. swung to a profit in its fiscal second quarter, crediting a 22 percent surge in passenger revenue that offset rising fuel prices.

Still, the Denver-based carrier said Thursday night it expects to lose money in the current quarter because of fuel prices that spiked following two hurricanes that battered the Gulf Coast. Also, Frontier's service to Mexico was disrupted by Hurricane Wilma, Chief Executive Jeff Potter said.

Frontier, which released its results after the market closed, said net income for the quarter was $6.9 million, or 18 cents a share, compared with a net loss of $2.1 million, or 6 cents a share, in the second quarter of 2004.

The results widely topped the forecast of 2 cents per share among analysts surveyed by Thomson Financial.

Excluding special items of $300,000 in unrealized gains on fuel hedges and $600,000 in net gains related primarily to the sale of Boeing assets, the results would have been equal to 16 cents a share.

The year-ago comparable results reflected a $74,000 loss on the sale of assets, a $4.2 million writedown on Boeing 737s and an unrealized gain on fuel hedges of $4.1 million. Combined, they narrowed the net loss by about 1 cent per share.

Second-quarter revenue totaled $258.4 million, up from $214.4 million in the previous quarter.

"Fuel remains at historic highs and the market still suffers from overcapacity leading to general weakness in fares," Potter said in a statement. He said Frontier expects to lose more than the $7 million it earned in the September quarter.

The number of passengers increased by 16 percent while passenger revenue increased 21.9 percent. The load factor, or the percentage of seats filled, was 77.1 percent, compared with 72.9 percent in the previous quarter. The numbers excluded passengers who fly on regional jets operated by Frontier's partner.

At the same time, fuel prices were up 38.3 percent from the previous quarter, Chief Financial Officer Paul Tate said.

For the first six months, Frontier reported $4.2 million in net income, or 11 cents a share, compared with a net loss of $8.7 million, or 24 cents a share in the first six months of 2004. Revenue was $494.8 million, up from $406.9 million in the previous six-month period.

Frontier shares rose 16 cents to close at $8.41 on the Nasdaq Stock Market before the results were released.


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