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What changed in Frontier Group Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Frontier Group Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+494 added−483 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in Frontier Group Holdings, Inc.'s 2024 10-K

494 paragraphs added · 483 removed · 385 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

107 edited+29 added−23 removed76 unchanged
Biggest changeAll-You-Can-Fly Pass, our Discount Den membership program and our FRONTIER Miles frequent flyer program; • maintaining our focus on sustainability and environmental responsibility, including our position as “America's Greenest Airline” as measured by fuel efficiency (available seat miles (“ASMs”) per fuel gallon consumed during the year ended December 31, 2023; compared to all other major U.S. carriers); • modeling a carefully curated aesthetic for our livery, our website and mobile app, uniforms, seat design and on-board products, which are designed to look and feel more upscale than traditional ULCCs; • maintaining a strong online presence with a customer-friendly digital platform that includes our passenger reservation system, website and mobile app; • operating a modern fleet with amenities such as extra seat padding and premium seating options, which provide extra legroom as compared to our standard seating; and • providing our customers a dependable, reliable, on-time and friendly travel experience.
Biggest changeAll-You-Can-Fly Pass, our Discount Den membership program and our FRONTIER Miles frequent flyer program; • offering cost-effective programs for companies such as Biz Fare; • introducing new options such as UpFront Plus (which offers a guaranteed empty middle seat in certain rows for enhanced comfort and space), improvements to existing options such as no change/cancel fees on bundles, and expanded customer benefits and support; • enhancing The New Frontier , which establishes clear, upfront pricing, including First Class seating (available in late 2025), free seat upgrades for Elite Gold members and above (starting in early 2025), and unlimited free companion travel for Platinum and Diamond elite members (starting mid-2025); • maintaining our focus on sustainability and environmental responsibility, including our position as “America's Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 2024; compared to all other major U.S. carriers); • modeling a carefully curated aesthetic for our livery, our website and mobile app, uniforms, seat design and on-board products, which are designed to look and feel more upscale than traditional ULCCs; • maintaining a strong online presence with a customer-friendly digital platform that includes our passenger reservation system, website and mobile app; • operating a modern fleet with amenities such as extra seat padding and premium seating options, which provide extra legroom as compared to our standard seating; and • providing our customers a dependable, reliable, on-time and friendly travel experience.
Biffle, our Chief Executive Officer, previously served as Chief Executive Officer for VivaColombia, Executive Vice President and Chief Marketing Officer for Spirit Airlines, and held various management roles with US Airways and American Eagle Airlines, a regional airline subsidiary of American Airlines; • James G.
Biffle, our Chief Executive Officer, previously served as Chief Executive Officer for VivaColombia and Executive Vice President and Chief Marketing Officer for Spirit Airlines, and held various management roles with US Airways and American Eagle Airlines, a regional airline subsidiary of American Airlines; • James G.
Loyalty and Membership Programs Our FRONTIER Miles frequent flyer program includes a number of attractive customer benefits, including family pooling benefits and varying status tiers, allowing for priority boarding and waived bag and seat selection fees, among other things.
Loyalty and Membership Programs Our FRONTIER Miles frequent flyer program includes a number of attractive customer benefits, including varying status tiers, allowing for priority boarding and waived bag and seat selection fees, and family pooling benefits, among other things.
In order to enhance our brand and drive revenue growth, we aim to deliver a higher-quality flight experience than historically offered by ULCCs globally and generate customer loyalty by: • continuing to offer attractive low fares; • expanding our marketing efforts, including family-friendly elements that appeal to a large audience, such as an attentive staff, popular animals on our aircraft tails and novelty cards for children, particularly 4 highlighting endangered species, and certain offers tailored for families including our Kids Fly Free program to continue to position our brand as a family-friendly and environmentally-conscious ULCC; • continuing to improve penetration of our reasonably priced bundle options and further enhancing our GoWild!
In order to enhance our brand and drive revenue growth, we aim to deliver a higher-quality flight experience than historically offered by ULCCs globally and generate customer loyalty by: • continuing to offer attractive low fares; • expanding our marketing efforts, including family-friendly elements that appeal to a large audience, such as an attentive staff, popular animals on our aircraft tails and novelty cards for children, particularly highlighting endangered species, and certain offers tailored for families including our Kids Fly Free program to continue to position our brand as a family-friendly and environmentally-conscious ULCC; • continuing to improve penetration of our reasonably priced bundle options and further enhancing our GoWild!
If we decide to increase our routes to additional international destinations, we will be required to obtain necessary authority from the DOT, and/or approvals from the FAA, as well as any applicable foreign government entity. In addition, we are required to comply with overfly regulations in countries that lay along our routes but which we do not serve.
If we decide to increase our routes to additional international destinations, we will be required to obtain necessary authority from the DOT, and/or approvals from 16 the FAA, as well as any applicable foreign government entity. In addition, we are required to comply with overfly regulations in countries that lay along our routes but which we do not serve.
To monitor the profitability of each route, we analyze monthly profitability reports as well as actual and forecasted advanced bookings. We routinely make capacity adjustments 7 within our network based on the financial performance of our markets, and we discontinue service in markets where we determine that long-term profitability is not likely to meet our expectations.
To monitor the profitability of each route, we analyze monthly profitability reports as well as actual and forecasted advanced bookings. We routinely make capacity adjustments within our network based on the financial performance of our markets, and we discontinue service in markets where we determine that long-term profitability is not likely to meet our expectations.
Our F9 Pilot Cadet Program is intended to train the next generation of pilots in as little as 24 months with the direct pathway to become a First Officer. The program, operated in partnership with Airline Transport Pilot (“ATP”) Flight School, allows applicants to complete flight training at over 70 ATP Flight School locations nationwide.
Our F9 Pilot Cadet Program is intended to train the next generation of pilots in as little as 24 months with the direct pathway to become a First Officer. The program, operated in partnership with Airline Transport Pilot (“ATP”) Flight School, allows applicants 13 to complete flight training at over 70 ATP Flight School locations nationwide.
Although we currently believe our insurance coverage is adequate, we cannot assure that the amount of such coverage will not be changed or that we will not be forced to bear substantial losses from accidents. Foreign Ownership Under federal law and DOT policy, we must be owned and controlled by U.S. citizens.
Although we currently believe our insurance coverage is adequate, we cannot assure that the amount of such coverage will not be changed or that we will not be forced to bear substantial losses from accidents. 15 Foreign Ownership Under federal law and DOT policy, we must be owned and controlled by U.S. citizens.
We also offer the option to purchase tickets through third parties, such as travel agents who access us through Global Distribution Systems (“GDSs”), e.g., Amadeus, Galileo, Sabre and Worldspan, and select online travel agents (“OTAs”), e.g., Priceline and websites owned by Expedia, including Orbitz and Travelocity.
We also offer the option to purchase tickets through third parties, such as travel agents who access us through Global Distribution Systems (“GDSs”), e.g., Amadeus, Galileo, Sabre and Worldspan, and select online travel agents, e.g., Priceline and websites owned by Expedia, including Orbitz and Travelocity.
The CORSIA program will be implemented in three phases: A pilot phase that ran from 2021 through 2023, followed by a first phase of the program beginning in 2024 through 2026 and a second phase beginning in 2027 through 2035.
The CORSIA program will be implemented in three phases: A pilot phase that ran from 2021 through 2023, followed by the first phase of the program running from 2024 through 2026 and a second phase beginning in 2027 through 2035.
In pursuing these goals, we maintain an active aviation safety 14 program and all of our personnel are expected to participate in the program and take an active role in the identification, reduction and elimination of hazards.
In pursuing these goals, we maintain an active aviation safety program and all of our personnel are expected to participate in the program and take an active role in the identification, reduction and elimination of hazards.
We believe that fostering an inclusive and diverse culture can add value and lead to a more highly engaged workforce, allowing us to deliver better business results.
We believe that fostering an inclusive culture can add value and lead to a more highly engaged workforce, allowing us to deliver better business results.
Airport Access In the United States, the FAA currently regulates the allocation of landing and takeoff authority, slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms which limit takeoffs and landings at three U.S. airports: Ronald Reagan Washington National Airport (DCA), New York’s LaGuardia Airport (LGA) and JFK International Airport (JFK), two of which we serve (DCA and LGA).
Airport Access In the United States, the FAA currently regulates the allocation of landing and takeoff authority, slots, slot exemptions, operating authorizations or similar capacity allocation mechanisms which limit takeoffs and landings at three U.S. airports: Ronald Reagan Washington National Airport (DCA), New York’s LaGuardia Airport (LGA) and JFK International Airport (JFK), all of which we serve.
Department of Homeland Security, are responsible for certain civil aviation security matters, including passenger and baggage screening at U.S. airports, and international passenger prescreening prior to entry into or departure from the United States. International flights are subject to 17 customs, border, immigration and similar requirements of equivalent foreign governmental agencies.
Department of Homeland Security, are responsible for certain civil aviation security matters, including passenger and baggage screening at U.S. airports, and international passenger prescreening prior to entry into or departure from the United States. International flights are subject to 18 customs, border, immigration and similar requirements of equivalent foreign governmental agencies.
The privacy and security of passenger and employee data is regulated by various domestic and foreign laws and regulations. Future Regulations The U.S. government and foreign governments may consider and adopt new laws, regulations, interpretations and policies regarding a wide variety of matters that could directly or indirectly affect our results of operations.
The privacy and security of passenger and employee data is regulated by various domestic and foreign laws and regulations. Future Regulations The U.S. government and foreign governments may consider and adopt new laws, regulations, executive orders, interpretations and policies regarding a wide variety of matters that could directly or indirectly affect our results of operations.
As of December 31, 2023 and 2022, we had no fuel cash flow hedges for future fuel consumption, and fuel hedges had no material impact within our consolidated statements of operations for the years ended December 31, 2023 and 2022. Maintenance and Repairs We have an FAA mandated and approved maintenance program, which is administered by our technical operations department.
As of December 31, 2024 and 2023, we had no fuel cash flow hedges for future fuel consumption, and fuel hedges had no material impact within our consolidated statements of operations for the years ended December 31, 2024 and 2023. Maintenance and Repairs We have an FAA mandated and approved maintenance program, which is administered by our technical operations department.
For additional information, please see “Risk Factors — Risks Related to Our Industry — We are subject to extensive regulation by the FAA, the DOT, TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition,” “— We are subject to risks associated with climate change, including increased regulation of our CO 2 emissions, changing consumer preferences and the potential increased impacts of severe weather events on our operations and infrastructure,” “ — We are subject to various environmental and noise laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition” and “Risk Factors — Risks Related to Our Business — Changes in legislation, regulation and government policy have affected, and 20 may in the future have a material adverse effect on our business, results of operations, cash flows and financial condition.” Available Information Our website is located at www.flyfrontier.com .
For additional information, please see “Risk Factors — Risks Related to Our Industry — We are subject to extensive regulation by the FAA, the DOT, the TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition,” “— We are subject to risks associated with climate change, including increased regulation of our CO2 emissions, changing consumer preferences and the potential increased impacts of severe weather events on our operations and infrastructure,” “ — We are subject to various environmental and noise laws and regulations, which could have a material adverse effect on our business, results of operations and financial condition” and “Risk Factors — Risks Related to Our Business — Changes in legislation, regulation and government policy have 21 affected, and may in the future have a material adverse effect on, our business, results of operations, cash flows and financial condition.” Available Information Our website is located at www.flyfrontier.com .
The use of the A320neo family aircraft and our seating configuration, weight-saving tactics and baggage process have all contributed to our ability to continue to be the most fuel-efficient of all major U.S. carriers of significant size when measured by ASMs per fuel gallon consumed.
The use of the A320neo family aircraft and our seating configuration, weight-saving tactics and baggage process have all contributed to our ability to continue to be the most fuel-efficient of all major U.S. carriers when measured by ASMs per fuel gallon consumed.
We believe we are an attractive employer for pilots as a result of our strong growth, which provides our pilots with career progression opportunities and enables them to achieve substantial pay increases under the collective bargaining agreement.
We believe we are an attractive employer for pilots as a result of our strong growth, which provides our pilots with career progression opportunities and enables them to achieve substantial pay increases under their collective bargaining agreement.
We intend to maintain our pipeline through the continuation of the recruiting and selection of direct-entry First Officers from other carriers, but also by expanding our focus on pilot-recruiting channels that we more directly manage.
We intend to maintain our pipeline through the continuation of the recruiting and selection of direct-entry First Officers from other carriers, but also by our continued focus on pilot-recruiting channels that we more directly manage.
We cannot predict what laws, regulations, interpretations and policies might be considered in the future, nor can we judge what impact, if any, the implementation of any of these proposals or changes might have on our business.
We cannot predict what laws, regulations, executive orders, interpretations and policies might be considered in the future, nor can we judge what impact, if any, the implementation of any of these proposals or changes might have on our business.
The table below sets forth our employee groups and status of the collective bargaining agreements with each as of December 31, 2023: Percentage of Workforce Employee Group Representative Amendable Date (a) December 31, 2023 Pilots Air Line Pilots Association (ALPA) January 2024 (b) 29% Flight Attendants Association of Flight Attendants (AFA-CWA) May 2024 (c) 49% Aircraft Technicians International Brotherhood of Teamsters (IBT) May 2025 6% Aircraft Appearance Agents IBT October 2023 (d) 1% Dispatchers Transport Workers Union (TWU) August 2028 (e) 1% Material Specialists IBT March 2022 (d) Maintenance Controllers IBT October 2023 (d) __________________ (a) Subject to standard early opener provisions.
The table below sets forth our employee groups and status of the collective bargaining agreements with each as of December 31, 2024: Percentage of Workforce Employee Group Representative Amendable Date (a) December 31, 2024 Pilots Air Line Pilots Association (ALPA) January 2024 (b) 28% Flight Attendants Association of Flight Attendants (AFA-CWA) May 2024 (c) 51% Aircraft Technicians International Brotherhood of Teamsters (IBT) May 2025 6% Aircraft Appearance Agents IBT October 2023 (d) 1% Dispatchers Transport Workers Union (TWU) August 2028 1% Material Specialists IBT March 2022 (d) Maintenance Controllers IBT October 2023 (d) __________________ (a) Subject to standard early opener provisions.
We categorize our line maintenance into four classes of stations, with each class categorized by the scope and complexity of work performed. The majority of and the most extensive line maintenance we and our specialist partners perform is conducted in Mobile, Tampa, Puerto Rico, Atlanta, Cleveland, Denver, Las Vegas, Orlando, Philadelphia, and Phoenix.
We categorize our line maintenance into four classes of stations, with each class categorized by the scope and 12 complexity of work performed. The majority of, and the most extensive, line maintenance we and our specialist partners perform is conducted in Puerto Rico, Tampa, Atlanta, Cleveland, Denver, Dallas, Las Vegas, Orlando, Philadelphia and Phoenix.
U.S. commitments announced during the Biden Administration’s April 2021 Leaders’ Summit on Climate include working with other countries on a vision toward reducing the aviation sector’s emissions in a manner consistent with the Biden Administration’s 2050 net-zero emissions goal, continued participation in CORSIA and 19 development of sustainable aviation fuels (“SAF”).
U.S. commitments announced during the April 2021 Leaders’ Summit on Climate include working with other countries on a vision toward reducing the aviation sector’s emissions in a manner consistent with the 2050 net-zero emissions goal, continued participation in CORSIA and development of sustainable aviation fuels (“SAF”).
From the perspective of our customers, our business model provides a product offering that combines low base fares with dependable customer service, a customer-friendly digital platform, a rewarding frequent flyer program, a modern fleet, comfortable cabin seating, flexible optional services and operational integrity.
From the perspective of our customers, our business model provides a product offering that combines low-cost fares with dependable customer service, a customer-friendly digital platform, a rewarding frequent flyer program, a modern fleet, comfortable cabin seating, flexible optional and bundled services and operational integrity.
In addition, our headquarters is located in a LEED-certified building, which certification indicates buildings designed to achieve energy savings, water efficiency and lower carbon dioxide (“CO 2 ”) emissions. We spent approximately 5% of total revenues on marketing, brand and distribution for each of the years ended December 31, 2023 and 2022.
In addition, our headquarters is located in a LEED-certified building, which certification indicates buildings designed to achieve energy savings, water efficiency and lower carbon dioxide (“CO 2 ”) emissions. We spent approximately 5% of total revenue on marketing, brand and distribution for each of the years ended December 31, 2024 and 2023.
We also contract with third-party specialists for our heavy airframe maintenance. These contracts cover the majority of our aircraft component inventory acquisition, replacement and repairs, thereby eliminating the need to carry expensive spare parts inventory. We currently have a firm obligation to purchase 210 A320neo family aircraft by the end of 2029.
We also contract with third-party specialists for our heavy airframe maintenance. These contracts cover the majority of our aircraft component inventory acquisition, replacement and repairs, thereby eliminating the need to carry expensive spare parts inventory. We currently have a firm obligation to purchase 187 A320neo family aircraft by the end of 2031.
Our maintenance technicians undergo extensive initial and recurrent training. Aircraft 11 maintenance and repair consists of routine and non-routine maintenance, and work performed is divided into three general categories: line maintenance, heavy maintenance and component service. Line maintenance consists of routine daily and weekly scheduled maintenance checks on our aircraft.
Our maintenance technicians undergo extensive initial and recurring training. Aircraft maintenance and repair consists of routine and non-routine maintenance, and work performed is divided into three general categories: line maintenance, heavy maintenance and component service. Line maintenance consists of routine daily and weekly scheduled maintenance checks on our aircraft.
The information on our website is not part of, and is not incorporated by reference in, this Annual Report on Form 10-K. 21
The information on our website is not part of, and is not incorporated by reference in, this Annual Report on Form 10-K. 22
The DOT also regulates slot transactions between airlines. 16 Consumer Protection Regulation The DOT also has jurisdiction over certain economic issues affecting air transportation and consumer protection matters, including unfair or deceptive practices and unfair methods of competition including undisclosed display bias, lengthy tarmac delays, chronically delayed flights, airline advertising and marketing practices, codeshare disclosure, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
Consumer Protection Regulation The DOT also has jurisdiction over certain economic issues affecting air transportation and consumer protection matters, including unfair or deceptive practices and unfair methods of competition including undisclosed display bias, lengthy tarmac delays, chronically delayed flights, airline advertising and marketing practices, codeshare disclosure, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
Under the RLA, after receipt of such notice, the parties must meet for direct negotiations, and if no agreement is reached, either party may request the National Mediation Board (the “NMB”) to appoint a federal mediator. The RLA prescribes no set timetable for the direct negotiation and mediation process.
Under the RLA, after receipt of such notice, the parties must meet for direct negotiations, and if no agreement is reached, either party may request the NMB to appoint a federal mediator. The RLA prescribes no set timetable for the direct negotiation and mediation process.
We intend to continue to utilize our disciplined and methodical approach to expand our network in an efficient manner, including by: • strategically deploying our capacity where demand is highest; • continuing to take advantage of opportunities in overpriced and/or underserved markets across the United States and select international destinations in the Americas; • leveraging our diverse geographic footprint and existing crew and maintenance base infrastructure to take advantage of lower-risk network growth opportunities while maintaining high operational standards; • utilizing our low-cost structure to offer low fares which organically drive growth through market stimulation; • enhancing our out-and-back scheduling approach, which we believe will help drive improved efficiencies and operational recoverability, as well as reducing crew travel costs; • continuing to rebalance our network to mitigate seasonal fluctuations in our results and discontinue underperforming routes; and • focusing on what we believe are the most profitable opportunities where our cost differential drives the largest competitive advantage.
We intend to continue to utilize our disciplined and methodical approach to expand our network in an efficient manner, including by: • strategically deploying our capacity where demand is highest; • reducing off-peak flights to focus on higher demand and more profitable demand days; • continuing to take advantage of opportunities in overpriced and/or underserved markets across the United States and select international destinations in the Americas; • leveraging our diverse geographic footprint and existing crew and maintenance base infrastructure to take advantage of lower-risk network growth opportunities while maintaining high operational standards; • utilizing our low-cost structure to offer low fares which organically drive growth through market stimulation; • enhancing our out-and-back scheduling approach, which we believe will help drive improved efficiencies and operational recoverability, as well as reducing crew travel costs; • continuing to rebalance our network to mitigate seasonal fluctuations in our results and discontinue underperforming routes; and • focusing on what we believe are the most profitable opportunities where our cost differential drives the largest competitive advantage. 5 Our Talented ULCC Leadership Team.
ITEM 1. BUSINESS Overview Frontier Airlines, Inc. (“Frontier”) is an ultra low-cost carrier whose business strategy is focused on Low Fares Done Right . We are headquartered in Denver, Colorado and offer flights throughout the United States and to select near international destinations in the Americas.
ITEM 1. BUSINESS Overview Frontier Group Holdings, Inc. is the parent company of Frontier Airlines, Inc. (“Frontier”), an ultra low-cost carrier whose business strategy is focused on Low Fares Done Right . We are headquartered in Denver, Colorado and offer flights throughout the United States and to select near international destinations in the Americas.
With the continued transition to the higher seat density aircraft as we introduce more A320neo family aircraft into our fleet, we increased our average seats per departure from 193 during the year ended December 31, 2022, to 199 during the year ended December 31, 2023.
With the continued transition to the higher seat density aircraft as we introduce more A320neo family aircraft into our fleet, we increased our average seats per departure from 199 during the year ended December 31, 2023, to 205 during the year ended December 31, 2024.
We intend to strengthen and maintain our low unit costs, including by: • maintaining high utilization levels; • utilizing new generation, fuel-efficient aircraft that deliver lower operating costs compared to prior generation aircraft; • increasing the average size and seat capacity of the aircraft in our fleet through the continued introduction and operation of 186-seat A320neo aircraft and 240-seat A321neo aircraft; • utilizing a low-cost distribution model, with our services primarily sold through direct distribution channels including our website, mobile app and contact centers; • maintaining a highly productive workforce and third-party specialist providers; • outsourcing non-core functions, including customer contact centers, lost bag services, ground handling services and catering services; and • taking a disciplined approach to our operational performance in order to reduce disruption.
We intend to strengthen and maintain our low unit costs, including by: • maintaining high utilization levels, particularly on peak travel days; • utilizing new generation, fuel-efficient aircraft that deliver lower operating costs compared to prior generation aircraft; • increasing the average size and seat capacity of the aircraft in our fleet through the continued introduction and operation of 186-seat A320neo aircraft and 240-seat A321neo aircraft; • utilizing a low-cost distribution model, with our services primarily sold through direct distribution channels including our website, mobile app and contact centers; • maintaining a highly productive workforce and third-party specialist providers; • outsourcing certain functions, including customer contact centers, lost bag services, ground handling services and catering services; and • taking a disciplined approach to our operational performance in order to reduce disruption. 4 A Superior Low-Fare Brand.
Consistent with our ULCC business model, we use a simple marketing message to keep marketing costs low and we offer promotional one-way base fares of $19. 8 Our principal marketing tools are our proprietary email distribution list, our FRONTIER Miles frequent flyer program, our Discount Den subscription service and our GoWild!
Consistent with our ULCC business model, we use a simple marketing message to keep marketing costs low and we offer occasional promotional one-way base fares of less than $20. Our principal marketing tools are our proprietary email distribution list, our FRONTIER Miles frequent flyer program, our Discount Den subscription service and our GoWild!
As of December 31, 2023, we had a fleet of 136 Airbus single-aisle aircraft, consisting of 8 A320ceos, 82 A320neos, 21 A321ceos and 25 A321neos. Our unique strategy is underpinned by our low-cost structure and superior low-fare brand. Our Business Model Our business model is based on our unique Low Fares Done Right strategy.
As of December 31, 2024, we had a fleet of 159 Airbus single-aisle aircraft, consisting of 8 A320ceos, 82 A320neos, 21 A321ceos and 48 A321neos. Our unique strategy is underpinned by our low-cost structure and superior low-fare brand. Our Business Model Our business model is based on our unique Low Fares Done Right strategy.
Third-party channels represented approximately 28% and 30% of sales for the years ended December 31, 2023 and 2022, respectively. We maintain a zero percent standard commission policy for travel agency bookings worldwide unless local regulations mandate that we pay a commission. We also have agreements with all the leading GDSs.
Third-party channels represented approximately 28% of bookings for each of the years ended December 31, 2024 and 2023. We maintain a zero percent standard commission policy for travel agency bookings worldwide unless local regulations mandate that we pay a commission. We also have agreements with all the leading GDSs.
Our fuel consumption and costs were as follows: Year Ended December 31, 2023 2022 Gallons consumed (millions) 365 312 Average price per gallon (a) $ 3.10 $ 3.72 __________________ (a) Average price per gallon includes related fuel fees and taxes. We have historically maintained an active hedging program designed to reduce our exposure to sudden, sharp increases in fuel prices.
Our fuel consumption and costs were as follows: Year Ended December 31, 2024 2023 Gallons consumed (millions) 381 365 Average price per gallon (a) $ 2.73 $ 3.10 __________________ (a) Average price per gallon includes related fuel fees and taxes. We have historically maintained an active hedging program designed to reduce our exposure to sudden, sharp increases in fuel prices.
With respect to the Big Four and Middle Three carriers, our principal competitive advantage is our low-cost structure, low base fares and our focus on the leisure traveler. We believe our low-cost structure allows us to price our fares at levels where we can be profitable while the Big Four and Middle Three airlines cannot.
With respect to the Big Four and Middle Three carriers, our principal competitive advantage is our low-cost structure, low-cost fares and primary focus on the leisure and visiting friends and relatives (“VFR”) traveler. We believe our low-cost structure allows us to price our fares at levels where we can be profitable while the Big Four and Middle Three airlines cannot.
Stedke, our Senior Vice President, Operations, previously served as Vice President, Aircraft Technical Operations for Southwest Airlines; • Steve Schuller, our Senior Vice President, Human Resources, previously served as our Vice President, Human Resources, and prior to that, served as Vice President of Talent and Chief Learning Officer for Catapult Health; and • Alex Clerc, our Senior Vice President, Customers, previously worked as a Senior Expert with McKinsey & Company in their Transport and Travel Practice, served as Chief Operating Officer for Interjet Airlines, and has worked in leadership positions for multiple other airlines.
Schuller, our Senior Vice President, Human Resources, previously served as our Vice President, Human Resources, and prior to that, served as Vice President of Talent and Chief Learning Officer for Catapult Health; and • Alex Clerc, our Senior Vice President, Customers, previously worked as a Senior Expert with McKinsey & Company in their Transport and Travel Practice, served as Chief Operating Officer for Interjet Airlines and worked in leadership positions for multiple other airlines.
Aircraft Fuel Aircraft fuel is one of our largest expenses, representing 31% and 34% of our total operating costs for the years ended December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, we had the most fuel-efficient fleet of all U.S. carriers of significant size when measured by ASMs per fuel gallon consumed.
Aircraft Fuel Aircraft fuel is one of our largest expenses, representing 28% and 31% of our total operating costs for the years ended December 31, 2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, we had the most fuel-efficient fleet of all major U.S. carriers when measured by ASMs per fuel gallon consumed.
Our Talented ULCC Leadership Team. Our management team has extensive day-to-day experience operating ULCCs and other airlines. • Barry L.
Our management team has extensive day-to-day experience operating ULCCs and other airlines. • Barry L.
The table below illustrates our employee diversity based on self-identification across all U.S. employees as of December 31, 2023: Male Female Minority 55% 45% 40% Compensation and Benefits We design our compensation and benefits with the goal of supporting the financial, mental, and physical well-being of our employees and their families.
The table below illustrates our employee diversity based on self-identification across all U.S. employees as of December 31, 2024: Male Female Minority 54% 46% 43% Compensation and Benefits We design our compensation and benefits with the goal of supporting the financial, mental, and physical well-being of our employees and their families.
Dempsey, our President, previously served as our Executive Vice President and Chief Financial Officer, and as Treasurer and Head of Investor Relations for Ryanair; • Mark Mitchell, our Senior Vice President and Chief Financial Officer, previously served as our Vice President, Finance and Investor Relations as well as our Chief Accounting Officer, and prior to that, served in various leadership capacities for Starwood Hotels and Resorts Worldwide and Starwood Vacation Ownership; • Howard M.
Mitchell, our Senior Vice President and Chief Financial Officer, previously served as our Vice President, Finance and Investor Relations, as well as our Chief Accounting Officer, and prior to that, served in various leadership capacities for Starwood Hotels and Resorts Worldwide and Starwood Vacation Ownership; • Howard M.
After the consideration of planned aircraft returns, we expect to operate a fleet of 272 A320neo family 10 aircraft by the end of 2029, nearly all powered by new engine technology.
After the consideration of planned aircraft returns, we expect to operate a fleet of 280 A320neo family aircraft by the end of 2031, nearly all powered by new engine technology.
During the year ended December 31, 2023, we served approximately 90 airports throughout the United States and international destinations in the Americas.
During the year ended December 31, 2024, we served approximately 100 airports throughout the United States and international destinations in the Americas.
Our ability to retain slots or operating authorizations is subject to “use-or-lose” provisions of the governing regulations, and our ability to expand service at slot-controlled airports similarly is limited.
Our ability to retain slots or operating authorizations is subject to “use-or-lose” provisions of the governing regulations, and our ability to expand service at slot-controlled airports similarly is limited. The DOT also regulates slot transactions between airlines.
On September 9, 2021, the Biden Administration launched the Sustainable Aviation Fuel Grand Challenge, built upon by the FAA’s Aviation Climate Action Plan published November 9, 2021, which outlines plans to scale up the production of SAF, which aims to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditional aviation fuel with SAF by 2050.
In September 2021, the Sustainable Aviation Fuel Grand Challenge was launched, built upon by the FAA’s Aviation Climate Action Plan published in 2021 and updated in 2024, which outlines plans to scale up the production of SAF, which aims to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditional aviation fuel with SAF by 2050.
Approximately 72% and 70% of our total tickets sold for the years ended December 31, 2023 and 2022, respectively, were sold directly to our customers through these distribution channels. Sales through our website and mobile app represent our low-cost distribution channels.
Approximately 71.7% and 71.6% of our total tickets sold for the years ended December 31, 2024 and 2023, respectively, were sold directly to our customers through these distribution channels. Sales through our website and mobile app represent our low-cost distribution channels.
The following table represents our revenue, on a per-passenger basis for the periods presented: Year Ended December 31, 2023 2022 Fare revenue per passenger $ 42.26 $ 54.22 Ancillary revenue per passenger: Non-fare passenger revenue per passenger 73.85 73.21 Other revenue per passenger 2.66 3.07 Total ancillary revenue per passenger 76.51 76.28 Total revenue per passenger $ 118.77 $ 130.50 6 Route Network The low unit cost, high quality of service and dependability that make Low Fares Done Right successful have enabled us to diversify our network across a wide range of leisure destinations as well as implement a network strategy that primarily targets high demand or underserved markets, where our low fares stimulate new traffic flows.
The following table represents our revenue, on a per-passenger basis for the periods presented: Year Ended December 31, 2024 2023 Fare revenue per passenger $ 43.09 $ 42.26 Ancillary revenue per passenger: Non-fare passenger revenue per passenger 67.50 73.85 Other revenue per passenger 2.79 2.66 Total ancillary revenue per passenger 70.29 76.51 Total revenue per passenger $ 113.38 $ 118.77 Route Network The low unit cost, high quality of service and dependability that make Low Fares Done Right successful have enabled us to diversify our network across a wide range of leisure destinations, as well as implement a network strategy that primarily targets high demand or underserved markets where our low fares stimulate new traffic flows.
As of December 31, 2023 and 2022, 79% and 72% of our total fleet, respectively, was comprised of A320neo family aircraft, which are more fuel-efficient than the prior generation of A320ceo family aircraft.
As of December 31, 2024 and 2023, 82% and 79% of our total fleet, respectively, was composed of A320neo family aircraft, which are more fuel-efficient than the prior generation of A320ceo family aircraft.
These laws require specific disclosures on the amount of Scope 1, 2 and 3 GHG emissions created by or associated with an organization for any company doing business in California with annual revenue in excess of $1 billion, as well as disclosures around climate-related risks and the associated response to those risks, for any company doing business in California with annual revenue in excess of $500 million.
SB 253 requires specific disclosures on the amount of Scope 1, 2 and 3 GHG emissions created by or 20 associated with an organization for any company doing business in California with annual revenue in excess of $1 billion, and SB 261 requires disclosures around climate-related risks and the associated response to those risks, for any company doing business in California with annual revenue in excess of $500 million.
We intend to replace retired aircraft with A320neo family aircraft. As of December 31, 2023, we had a firm purchase commitment with Airbus to acquire 210 A320neo family aircraft. Additionally, we had commitments with Pratt & Whitney for 15 additional spare aircraft engines by the end of 2029.
We intend to replace retired aircraft with A320neo family aircraft. 11 As of December 31, 2024, we had a firm purchase commitment with Airbus to acquire 187 A320neo family aircraft. Additionally, we had commitments with Pratt & Whitney for 11 additional spare aircraft engines by the end of 2031.
We have seen strong demand for these programs, with over 8,400 applicants across all of our company-managed programs during the year ended December 31, 2023.
We have seen strong demand for these programs, with over 5,700 applicants across all of our company-managed programs during the year ended December 31, 2024.
The final rule also adopted the expanded lavatory size requirement for new single-aisle aircraft with 125 seats or more, which applies to aircraft that are ordered within 10 years of or delivered 12 years after the rule’s October 2023 effective date. Security Regulation The TSA and the CBP, each a division of the U.S.
The final rule also adopted the expanded lavatory size requirement for new single-aisle aircraft with 125 seats or more, which applies to aircraft that are ordered within 10 years of, or delivered 12 years after, the rule’s October 2023 effective date.
In October 2022, the DOT issued a NPRM which would require airlines to increase disclosure of bag fees, change and cancellation fees and family seating policies during the ticket purchase process in an effort to improve the transparency of airline pricing.
In October 2022, the DOT issued a NPRM which would require airlines and travel agents to increase disclosure of bag fees, change and cancellation fees and family seating fees during the ticket purchase process in an effort to improve the transparency of airline pricing. The final rule was published in April 2024.
All-You-Can-Fly Pass, which allows members unlimited travel for a specified period of time for a base fare of $0.01 per flight, subject to certain restrictions. In addition to enhancing the customer experience, these offerings have helped increase our ancillary revenues from $12.80 per passenger in 2013 to $76.51 in 2023.
All-You-Can-Fly Pass, which allows members unlimited travel for a specified period of time for a base fare of $0.01 per flight, subject to certain restrictions. In addition to enhancing the customer experience, these offerings have helped increase our ancillary revenues from $60.55 per passenger in 2021 to $70.29 in 2024.
We offer a convenient onboard payment system that enables customers to bundle products together to save money, make multiple purchases with a single credit card transaction and provide gratuities to our flight attendants.
We also 6 promote and sell products in-flight to enhance the customer experience. We offer a convenient onboard payment system that enables customers to bundle products together to save money, make multiple purchases with a single credit card transaction and provide gratuities to our flight attendants.
See “Risk Factors — Risk Related to Our Business — Our maintenance costs will increase over the near term; we will periodically incur substantial maintenance costs due to the maintenance schedules of our aircraft fleet and obligations to the lessors and we could incur significant maintenance expenses outside of such maintenance schedules in the future.” Human Capital Resources Employees and Labor Relations As of December 31, 2023, we had 7,235 total employees, consisting of 2,112 pilots, 3,513 flight attendants, 433 aircraft technicians, 57 aircraft appearance agents, 54 flight dispatchers, 28 material specialists, 28 maintenance controllers and 1,010 employees in administrative roles.
See “Risk Factors — Risk Related to Our Business — Our maintenance costs will increase over the near term, we will periodically incur substantial maintenance costs due to the maintenance schedules of our aircraft fleet and obligations to the lessors and we could incur significant maintenance expenses outside of such maintenance schedules in the future.” Human Capital Resources Employees and Labor Relations As of December 31, 2024, we had 7,938 total employees, consisting of 2,202 pilots, 4,060 flight attendants, 503 aircraft technicians, 51 aircraft appearance agents, 47 flight dispatchers, 24 material specialists, 24 maintenance controllers and 1,027 employees in administrative roles.
As of December 31, 2023, all 136 aircraft in our fleet were financed under operating leases, and the operating leases for 0, 8, 20, 19 and 14 aircraft in our fleet were scheduled to terminate during 2024, 2025, 2026, 2027 and 2028, respectively. In certain circumstances, such operating leases may be extended.
As of December 31, 2024, all 159 aircraft in our fleet were financed under operating leases, and the operating leases for 2, 9, 14, 14 and 13 aircraft in our fleet were scheduled to terminate during 2025, 2026, 2027, 2028 and 2029, respectively. In certain circumstances, such operating leases may be extended.
Member countries can voluntarily participate in the pilot and first phases, while participation in the second phase is mandatory for certain countries, including the United States. The U.S. government has not yet enacted legislation to mandate that U.S. operators participate in CORSIA. ICAO originally defined the baseline as the average emissions from covered flights in 2019 and 2020.
Member countries can voluntarily participate in the pilot and first phases, while participation in the second phase is mandatory for certain countries, including the United States. The U.S. government has not yet enacted legislation to mandate that U.S. operators participate in CORSIA.
We focus on hiring highly productive employees and, where feasible, designing systems and processes around automation and the utilization of third-party specialists in order to maintain our low-cost base.
We focus on hiring highly productive employees and, where feasible, designing systems and processes around automation and the utilization of third-party specialists in order to maintain our low-cost base. One of our operational priorities is to maintain a robust pipeline of qualified pilot candidates.
Depending on the final outcome of this rulemaking and the introduction of any additional state or federal regulations, we may incur costs in connection with reporting obligations and costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of PFAS-containing waste or remediating any residual environmental impacts.
We may incur costs in connection with reporting obligations and costs related to historic usage of PFAS-containing materials, transitioning away from the usage of PFAS-containing products, disposing of PFAS-containing waste or remediating any residual environmental impacts.
During that period (or after), a Presidential Emergency Board (“PEB”), may be established, which examines the parties’ positions and recommends a solution. 13 The PEB process lasts for 30 days and is followed by another “cooling off” period of 30 days.
Either party may decline to submit to arbitration. If arbitration is rejected by either party, a 30-day “cooling off” period commences. During (or after) that period, a Presidential Emergency Board (“PEB”) may be established, which examines the parties’ positions and recommends a solution. The PEB process lasts for 30 days and is followed by another 30-day “cooling off” period.
Congress and the President have the authority to prevent “self-help” by enacting legislation that, among other things, imposes a settlement on the parties. Diversity, Equity and Inclusion We seek to provide equal employment opportunities for all persons and seek to prohibit discrimination in all aspects of our operations.
Congress and the President 14 have the authority to prevent “self-help” by enacting legislation that, among other things, imposes a settlement on the parties. Human Capital Management We seek to provide equal employment opportunities and seek to prohibit discrimination in our operations.
In addition, we believe our product is particularly attractive to families, featuring popular animals on our aircraft tails, novelty cards for children and certain offers tailored for families including our Kids Fly Free program and a staff that understands our goal of providing excellent customer service. 9 Overall, our business model is designed to deliver what we believe our customers want: low fares and a high-quality flight experience.
In addition, we believe our product is particularly attractive to families, featuring popular animals on our aircraft tails, novelty cards for children and certain offers tailored for families including our Kids Fly Free program and a staff that understands our goal of providing excellent customer service.
We believe we are “America’s Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 2023; compared to all other major U.S. carriers).
We believe we are “America’s Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 2024; compared to all other major U.S. carriers), generating over 100 ASMs per gallon during the year ended December 31, 2024, representing our continued focus on fuel efficiency as we grow.
Under certain laws, generators of waste materials, and current and former owners or operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring response actions.
We are also subject to environmental laws and regulations that require us to investigate and remediate soil or groundwater to meet certain remediation standards. Under certain laws, generators of waste materials, and current and former owners or operators of facilities, can be subject to liability for investigation and remediation costs at locations that have been identified as requiring response actions.
FRONTIER Miles offers award travel on every flight without blackout dates, and miles never expire as long as there is qualifying activity at least annually. In October 2023, we unveiled a reimagined FRONTIER Miles loyalty program for 2024 that enables our customers to “Get It All For Less” .
FRONTIER Miles offers earn on all aspects of your travel and award travel on every flight without blackout dates, and miles never expire as long as there is qualifying activity at least annually. In December 2024, we unveiled enhancements to the FRONTIER Miles loyalty program for 2025 that further enable our customers to “Get It All For Less”.
Our flights to the Dominican Republic are governed by a bilateral air transport agreement between the United States and the Dominican Republic. Changes in U.S. aviation policies could result in the alteration or termination of the corresponding air transport agreement, diminish the value of our international route authorities or otherwise affect our operations to/from these countries.
Changes in U.S. aviation policies could result in the alteration or termination of the corresponding air transport agreement, diminish the value of our international route authorities or otherwise affect our operations to/from these countries.
With certain other countries, however, the United States has a restricted air transportation agreement. Our international flights to Mexico are governed by a liberalized bilateral air transport agreement which the DOT has determined has all of the attributes of an “open skies” agreement.
Our international flights to Mexico are governed by a liberalized bilateral air transport agreement which the DOT has determined has all of the attributes of an “open skies” agreement. Our flights to the Dominican Republic are governed by a bilateral air transport agreement between the United States and the Dominican Republic.
As part of our efforts to decarbonize air transportation, in May 2023, we along with a consortium of other airlines, executed an agreement with CleanJoule, Inc., with a potential right to purchase SAF from CleanJoule once it achieves commercial production. In October 2023, the state of California passed two climate disclosure laws that will impact the Company in the future.
As part of our efforts to decarbonize air transportation, in May 2023, we along with a consortium of other airlines, executed an agreement with CleanJoule, Inc., with a potential right to purchase SAF from CleanJoule once it achieves commercial production.
Our principal competitors on domestic routes are American Airlines, Delta Air Lines, United Airlines and Southwest Airlines (which classifies itself as an LCC), which are commonly referred to as the “Big Four” carriers, and Alaska Airlines and Hawaiian Airlines, which together with JetBlue Airways Corporation (“JetBlue”) (which classifies itself as an LCC), are commonly referred to as the “Middle Three” carriers.
Our competitors and potential competitors include legacy network carriers, LCCs, ULCCs, regional airlines and new entrant airlines. 8 Our principal competitors on domestic routes are American Airlines, Delta Air Lines, United Airlines and Southwest Airlines (which classifies itself as an LCC), which are commonly referred to as the “Big Four” carriers, and Alaska Airlines and Hawaiian Airlines, who recently completed their merger, which together with JetBlue Airways Corporation (which classifies itself as an LCC), are commonly referred to as the “Middle Three” carriers.
We utilize these animals in several of our online marketing campaigns and on the novelty cards we distribute to children onboard, particularly highlighting endangered species. Our brand includes our focus on sustainability and environmental responsibility efforts.
Each of our aircraft features one of our widely-recognized animals on its tail and is named after such animal. We utilize these animals in several of our online marketing campaigns and on the novelty cards we distribute to children onboard, particularly highlighting endangered species. 9 Our brand includes our focus on sustainability and environmental responsibility efforts.
For example, as a result of our continuing fleet expansion, First Officers hired since late-2013 have been eligible for upgrade to Captain within 24 to 48 months of joining us. As of December 31, 2023, approximately 86% of our employees were represented by labor unions under collective bargaining agreements.
For example, as a result of our continuing fleet expansion, most First Officers are eligible for upgrade to Captain within an average of 24 to 36 months of joining us. As of December 31, 2024, approximately 87% of our employees were represented by labor unions under collective bargaining agreements.
All-You-Can-Fly Pass membership offering, as well as advertisements in online, radio and other channels. Our objective is to use our low prices, superior customer service, price-based promotions and creativity to produce viral marketing programs that are cost effective. Each of our aircraft features one of our widely-recognized animals on its tail and is named after such animal.
All-You-Can-Fly Pass membership offering, our Biz Fare program, as well as advertisements in online, radio and other channels. Our objective is to use our low prices, superior customer service, price-based promotions and creativity to produce viral marketing programs that are cost effective.
A U.S. airline’s ability to operate flights to and from international destinations is subject to the air transport agreements between the United States and the foreign country and the carrier’s ability to obtain the necessary authority from the DOT and the applicable foreign government. 15 The U.S. government has negotiated “open skies” agreements with many countries, which allow unrestricted access between the United States and the applicable foreign country and to points beyond the foreign country on flights serving the foreign country.
A U.S. airline’s ability to operate flights to and from international destinations is subject to the air transport agreements between the United States and the foreign country and the carrier’s ability to obtain the necessary authority from the DOT and the applicable foreign government.
Our firm fleet and spare engine commitments as of December 31, 2023 were comprised of the following aircraft: A320neo A321neo Total Aircraft (a) Engines Year Ending 2024 — 23 23 2 2025 17 25 42 4 2026 19 22 41 4 2027 21 21 42 3 2028 10 30 40 2 Thereafter — 22 22 — Total 67 143 210 15 __________________ (a) While the commitments presented above reflect the agreed-upon delivery dates as of December 31, 2023, we have recently experienced delays in the deliveries of Airbus aircraft which may persist in future periods.
Our firm fleet and spare engine commitments as of December 31, 2024 were composed of the following aircraft: A320neo A321neo Total Aircraft (a) Engines Year Ending 2025 8 13 21 2 2026 7 15 22 4 2027 8 26 34 3 2028 4 30 34 2 2029 — 36 36 — Thereafter — 40 40 — Total 27 160 187 11 __________________ (a) While the schedule presented above reflects the contractual delivery dates as of December 31, 2024, we have recently experienced delays in the deliveries of Airbus aircraft which may persist in future periods.
As of December 31, 2023, we had a fleet of 136 Airbus single-aisle aircraft, consisting of 8 A320ceos, 82 A320neos, 21 A321ceos and 25 A321neos. In January 2024, we were recognized by ch-aviation as having the third youngest fleet in North America, and as of December 31, 2023, the average aircraft age of our fleet was approximately four years.
As of December 31, 2024, we had a fleet of 159 Airbus single-aisle aircraft, consisting of 8 A320ceos, 82 A320neos, 21 A321ceos and 48 A321neos. As of December 31, 2024, the average aircraft age of our fleet was approximately five years.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese provisions include, among others: • our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting; • no cumulative voting in the election of directors, which prevents the minority stockholders from electing director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; 50 • from and after such time as Indigo and its affiliates no longer hold a majority of the voting rights of our common stock, actions to be taken by our stockholders may only be affected at an annual or special meeting of our stockholders and not by written consent; • from and after such time as Indigo and its affiliates no longer hold a majority of the voting rights of our common stock, special meetings of our stockholders may be called only by the Chairman of our board of directors or by our corporate secretary at the direction of our board of directors; • advance notice procedures that stockholders, other than Indigo for so long as it and its affiliates hold a majority of the voting rights of our common stock, must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; • from and after such time as Indigo and its affiliates hold less than a majority of the voting rights of our common stock, a majority stockholder vote is required for removal of a director only for cause (and a director may only be removed for cause), and a 66 2⁄3% stockholder vote is required for the amendment, repeal or modification of certain provisions of our certificate of incorporation and bylaws; and • our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.
Biggest changeThese provisions include, among others: • our board of directors is divided into three classes, with each class serving for a staggered three-year term, which prevents stockholders from electing an entirely new board of directors at an annual meeting; 51 • no cumulative voting in the election of directors, which prevents the minority stockholders from electing director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • actions to be taken by our stockholders may only be affected at an annual or special meeting of our stockholders and not by written consent; • special meetings of our stockholders may be called only by the Chair of our board of directors or by our corporate secretary at the direction of our board of directors; • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors and propose matters to be brought before an annual meeting of our stockholders may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; • a majority stockholder vote is required for removal of a director only for cause (and a director may only be removed for cause), and a 66 2⁄3% stockholder vote is required for the amendment, repeal or modification of certain provisions of our certificate of incorporation and bylaws; and • our board of directors may, without stockholder approval, issue series of preferred stock, or rights to acquire preferred stock, that could dilute the interest of, or impair the voting power of, holders of our common stock or could also be used as a method of discouraging, delaying or preventing a change of control.
DOT has rules governing many facets of the airline-consumer relationship including, for instance, unfair or deceptive practices and unfair methods of competition including undisclosed display bias, lengthy tarmac delays, chronically delayed flights, airline advertising and marketing practices, codeshare disclosure, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
The DOT has rules governing many facets of the airline-consumer relationship including, for instance, unfair or deceptive practices and unfair methods of competition including undisclosed display bias, lengthy tarmac delays, chronically delayed flights, airline advertising and marketing practices, codeshare disclosure, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.
The amount of our aircraft-related fixed obligations and our obligations under other debt arrangements could have a material adverse effect on our business, results of operations and financial condition and could: • require a substantial portion of cash flows from operations be used for operating lease and maintenance deposit payments, thereby reducing the availability of our cash flows to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to make required PDPs, including those payable to our aircraft and engine manufacturers for our aircraft and spare engines on order; • limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all; • make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues or increase in costs could cause us to not have sufficient cash flows from operations to make our scheduled payments; • reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with lower fixed payment obligations; and • cause us to lose access to one or more aircraft and forfeit our maintenance and other deposits if we are unable to make our required aircraft lease rental payments and our lessors exercise their remedies under the lease agreement including cross default provisions in certain of our leases.
The amount of our aircraft-related fixed obligations and our obligations under other debt arrangements could have a material adverse effect on our business, results of operations and financial condition and could: • require a substantial portion of cash flows from operations be used for operating lease payments, thereby reducing the availability of our cash flows to fund working capital, capital expenditures and other general corporate purposes; • limit our ability to make required PDPs, including those payable to our aircraft and engine manufacturers for our aircraft and spare engines on order; • limit our ability to obtain additional financing to support our expansion plans and for working capital and other purposes on acceptable terms or at all; • make it more difficult for us to pay our other obligations as they become due during adverse general economic and market industry conditions because any related decrease in revenues or increase in costs could cause us to not have sufficient cash flows from operations to make our scheduled payments; • reduce our flexibility in planning for, or reacting to, changes in our business and the airline industry and, consequently, place us at a competitive disadvantage to our competitors with lower fixed payment obligations; and • cause us to lose access to one or more aircraft and forfeit our deposits if we are unable to make our required aircraft lease rental payments and our lessors exercise their remedies under the lease agreement including cross default provisions in certain of our leases.
The DOT has also published final rules regarding traveling by air with service animals, defining unfair or deceptive practices, clarifying that the maximum amount of denied boarding compensation that a carrier may provide to a passenger denied boarding involuntarily is not limited, prohibiting airlines from involuntarily denying boarding to a passenger after the passenger’s boarding pass has been collected or scanned and the passenger has 26 boarded (subject to safety and security exceptions), raising the liability limits for denied boarding compensation and raising the liability limit for mishandled baggage in domestic air transportation.
The DOT has also published final rules regarding traveling by air with service animals, defining unfair or deceptive practices, clarifying that the maximum amount of denied boarding compensation that a carrier may provide to a passenger denied boarding involuntarily is not limited, prohibiting airlines from involuntarily denying boarding to a passenger after the passenger’s boarding pass has been collected or scanned and the passenger has boarded (subject to safety and security exceptions), raising the liability limits for denied boarding compensation and raising the liability limit for mishandled baggage in domestic air transportation.
While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and which could in turn adversely affect our business, results of operations and financial condition.
While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of employee absence or attrition and we may suffer reputational harm 39 which could make it more difficult to attract and retain employees, and which could in turn adversely affect our business, results of operations and financial condition.
The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including, but not limited to: • announcements concerning our competitors, suppliers, the airline industry or the economy in general; • strategic actions by us or our competitors, such as acquisitions or restructurings; • media reports and publications about the safety of our aircraft or engines or the type of aircraft we operate; • new regulatory pronouncements and changes in regulatory guidelines; • the impact of pandemics and other public health threats on air travel and any related government restrictions impacting air travel; • changes in the price or availability of aircraft fuel; • announcements concerning the availability of the type of aircraft we operate; • general and industry-specific economic conditions; • general market, political and other economic conditions, including economic slowdowns, recessions, inflationary pressures, rising interest rates, financial market fluctuations and reduced credit availability; • regional and global conflicts; • changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations; • sales of our common stock or other actions by investors with significant shareholdings, including sales by our principal stockholder; and • trading strategies related to changes in fuel or oil prices.
The market price of our common stock may fluctuate substantially due to a variety of factors, many of which are beyond our control, including, but not limited to: • announcements concerning our competitors, suppliers, the airline industry or the economy in general; • strategic actions by us or our competitors, such as acquisitions or restructurings; • media reports and publications about the safety of our aircraft or engines or the type of aircraft we operate; • new regulatory pronouncements and changes in regulatory guidelines; • the impact of pandemics and other public health threats on air travel and any related government restrictions impacting air travel; • changes in the price or availability of aircraft fuel; • announcements concerning the availability of the type of aircraft we operate; • general and industry-specific economic conditions; • general market, political and other economic conditions, including economic slowdowns, recessions, inflationary pressures, rising interest rates, financial market fluctuations and reduced credit availability; • regional and global conflicts; • changes in financial estimates or recommendations by securities analysts or failure to meet analysts’ performance expectations; • sales of our common stock or other actions by investors with significant shareholdings; and • trading strategies related to changes in fuel or oil prices.
Risks Related to Our Industry The demand for airline services is highly sensitive to changes in economic conditions, and a recession or similar economic downturn in the United States or globally would further weaken demand for our services and have a material adverse effect on our business, results of operations and financial condition, particularly since a substantial portion of our customers travel for leisure or other non-essential purposes.
Risks Related to Our Industry The demand for airline services is highly sensitive to changes in economic conditions, and a recession or similar economic downturn in the United States or globally would weaken demand for our services and have a material adverse effect on our business, results of operations and financial condition, particularly since a substantial portion of our customers travel for leisure or other non-essential purposes.
For most cost-conscious leisure travelers, travel is a discretionary expense, and though we believe ULCCs are best suited to attract travelers during periods of unfavorable economic conditions as a result of such carriers’ low base fares, travelers have often elected to replace air travel at such times with various other forms of ground transportation or have opted not to travel at all.
For most cost-conscious leisure travelers, travel is a discretionary expense, and though we believe ULCCs are best suited to attract travelers during periods of unfavorable economic conditions as a result of such carriers’ low-cost fares, travelers have often elected to replace air travel at such times with various other forms of ground transportation or have opted not to travel at all.
See “— Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial condition.” Further, in an inflationary environment that also exhibits worker and fuel shortages, depending on airline industry and other economic conditions, we may be unable to manage through the resulting increases in our operating costs.
See “— Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial condition.” Further, in an inflationary environment that also exhibits worker and fuel shortages, depending on airline 35 industry and other economic conditions, we may be unable to manage through the resulting increases in our operating costs.
While we have elected not to be subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”) in our amended and restated certificate of incorporation, such certificate of incorporation provides that in the event Indigo and its affiliates cease to beneficially own at least 15% of the then-outstanding shares of our voting common stock, we will automatically become subject to Section 203 of the DGCL to the extent applicable.
While we have elected not to be subject to the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”) in our amended and restated certificate of incorporation, such certificate of incorporation provides that in the event Indigo Partners and its affiliates cease to beneficially own at least 15% of the then-outstanding shares of our voting common stock, we will automatically become subject to Section 203 of the DGCL to the extent applicable.
All such climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or otherwise incur additional costs related to our emissions, either due to direct regulation on us, regulation on our suppliers or others in our value chain, or otherwise.
All such climate change-related regulatory activity and developments may adversely affect our business and financial results by requiring us to reduce our emissions, make capital investments to purchase specific types of equipment or technologies, purchase carbon offset credits or otherwise incur additional costs related to our 30 emissions, either due to direct regulation on us, regulation on our suppliers or others in our value chain, or otherwise.
Flight delays caused by these factors may frustrate passengers and may increase costs and 30 decrease revenues which, in turn, could adversely affect our profitability. The federal government controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient and affordable manner. The federal government also controls airport security.
Flight delays caused by these factors may frustrate passengers and may increase costs and decrease revenues which, in turn, could adversely affect our profitability. The federal government controls all U.S. airspace, and airlines are completely dependent on the FAA to operate that airspace in a safe, efficient and affordable manner. The federal government also controls airport security.
Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully assess its impact or remediate the 44 underlying issue. Efforts to comply with such reporting requirements could divert management’s attention from our incident response and could potentially reveal system vulnerabilities to threat actors.
Certain of these rules and regulations may require us to report a cybersecurity incident before we have been able to fully assess its impact or remediate the underlying issue. Efforts to comply with such reporting requirements could divert management’s attention from our incident response and could potentially reveal system vulnerabilities to threat actors.
These alliances, such as Oneworld, SkyTeam and Star Alliance, generally provide for 47 codesharing, frequent flyer program reciprocity, coordinated scheduling of flights to permit convenient connections and other joint marketing activities. In addition, certain of these alliances involve highly integrated antitrust immunized joint ventures. Such arrangements permit an airline to market flights operated by other alliance members as its own.
These alliances, such as Oneworld, SkyTeam and Star Alliance, generally provide for codesharing, frequent flyer program reciprocity, coordinated scheduling of flights to permit convenient connections and other joint marketing activities. In addition, certain of these alliances involve highly integrated antitrust immunized joint ventures. Such arrangements permit an airline to market flights operated by other alliance members as its own.
Aircraft utilization is reduced by delays and cancellations caused by various factors, many of which are beyond our control, including air traffic congestion at airports or other air traffic control problems or outages, labor availability, adverse weather conditions, increased security measures or breaches in security, international or domestic conflicts, terrorist activity or other changes in business conditions.
Aircraft utilization is reduced by delays and cancellations caused by various factors, many of which are beyond our control, including air 41 traffic congestion at airports or other air traffic control problems or outages, labor availability, adverse weather conditions, increased security measures or breaches in security, international or domestic conflicts, terrorist activity or other changes in business conditions.
Any similar litigation against us could result in substantial costs, divert management’s attention and resources and have a material adverse effect on our business, results of operations and financial condition. If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our stock price and trading volume could decline.
Any similar litigation against us could result in substantial costs, divert management’s attention and resources and have a material adverse effect on our business, results of operations and financial condition. 50 If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our stock price and trading volume could decline.
One or more of our 36 competitors may also significantly reduce their labor costs, thereby providing them with a competitive advantage over us. Our labor costs may also increase in connection with our growth and we could also become subject to additional collective bargaining agreements in the future as non-unionized workers may unionize.
One or more of our competitors may also significantly reduce their labor costs, thereby providing them with a competitive advantage over us. Our labor costs may also increase in connection with our growth and we could also become subject to additional collective bargaining agreements in the future as non-unionized workers may unionize.
In addition, pulling aircraft out of service for unscheduled and scheduled maintenance, such as may be required with respect to PW1100 GTF engines, may materially reduce our average fleet utilization and require that we re-accommodate passengers or seek short-term substitute capacity at increased costs.
In addition, pulling aircraft out of service for unscheduled and scheduled maintenance, such as required with respect to PW1100 GTF engines, may materially reduce our average fleet utilization and require that we re-accommodate passengers or seek short-term substitute capacity at increased costs.
Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), terrorism, wars (including the war between Russia and Ukraine and the conflict in the Middle East), supply chain disruptions, political disruption or instability involving oil-producing countries, changes in production levels of individual nations or associations of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related government policy, the strength of the U.S. dollar against foreign currencies, labor strikes, cyberattacks or other events affecting refinery production, transportation, taxes, marketing, environmental concerns, market manipulation, price speculation and other unpredictable events may drive actual or perceived fuel supply shortages.
Southeast and on the Gulf Coast where a significant portion of domestic refining capacity is located), terrorism, wars (including the war between Russia and Ukraine and the conflict in the Middle East), supply chain disruptions, political disruption or instability involving oil-producing countries, changes in production levels of individual nations or associations of oil-producing states, economic sanctions imposed against oil-producing countries or specific industry participants, changes in fuel-related government policy, the imposition of tariffs, the strength of the U.S. dollar against foreign currencies, labor strikes, cyberattacks or other events affecting refinery production, transportation, taxes, marketing, environmental concerns, market manipulation, price speculation and other unpredictable events may drive actual or perceived fuel supply shortages.
Certain of the products and services that we purchase, including our aircraft and related parts, are sourced from suppliers located in foreign countries, and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government on the importation of such products or services could materially increase the amounts we pay for 46 them.
Certain of the products and services that we purchase, including our aircraft and related parts, are sourced from suppliers located in foreign countries, and the imposition of new tariffs, or any increase in existing tariffs, by the U.S. government on the importation of such products or services could materially increase the amounts we pay for them.
Future agreements governing the indebtedness of our subsidiaries, similar to the CARES Act, could impose restrictions on our subsidiaries’ ability to pay dividend distributions or other transfers to us. Each of our subsidiaries is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from 53 them.
Future agreements governing the indebtedness of our subsidiaries, similar to the CARES Act, could impose restrictions on our subsidiaries’ ability to pay dividend distributions or other transfers to us. Each of our subsidiaries is a distinct legal entity, and under certain circumstances legal and contractual restrictions may limit our ability to obtain cash from them.
Conversely, prolonged periods of low fuel prices could limit our ability to differentiate our product and low fares from those of the legacy network airlines and LCCs, as prolonged periods of low fuel prices could enable such carriers to, among other things, substantially decrease their costs, fly longer stages or utilize older aircraft.
Conversely, prolonged periods of low fuel prices could limit our ability to differentiate our product and low-cost fares from those of the legacy network airlines and LCCs, as prolonged periods of low fuel prices could enable such carriers to, among other things, substantially decrease their costs, fly longer stages or utilize older aircraft.
If the FCCR Test is not maintained, we are required to test the loan to collateral ratio for the underlying aircraft in the PDP Financing Facility that are subject to financing (the “LTV Test”) and make any pre-payments or post additional collateral required in order to reduce the loan to value on each aircraft in the PDP Financing Facility that are subject to financing below a ratio threshold.
If the FCCR Test is not maintained, we are required to test the loan to collateral ratio for the underlying aircraft in the PDP Financing Facility and the Second PDP Financing Facility that are subject to financing (the “LTV Test”) and make any pre-payments or post additional collateral required in order to reduce the loan to value on each aircraft in the PDP Financing Facility and the Second PDP Financing Facility that are subject to financing below a ratio threshold.
Furthermore, we cannot predict what policies we may elect to or be required to implement in the future, or the effect thereof on our business, which could cause us to lose or experience difficulties hiring qualified personnel. If we are unable to hire, train and retain qualified employees, our business could be harmed.
Furthermore, we cannot predict what policies we may 23 elect to or be required to implement in the future, or the effect thereof on our business, which could cause us to lose or experience difficulties hiring qualified personnel. If we are unable to hire, train and retain qualified employees, our business could be harmed.
If we are unable to obtain sufficient insurance (including aviation hull and liability insurance, property and business interruption coverage and cybersecurity incident coverage) to cover such liabilities or losses, whether due to 32 insurance market conditions or otherwise, our business, results of operations and financial condition could be materially adversely affected.
If we are unable to obtain sufficient insurance (including aviation hull and liability insurance, property and business interruption coverage and cybersecurity incident coverage) to cover such liabilities or losses, whether due to insurance market conditions or otherwise, our business, results of operations and financial condition could be materially adversely affected.
In early October 2019, the World Trade Organization ruled that the United States could impose $7.5 billion in retaliatory tariffs in response to illegal European Union subsidies to Airbus. On October 18, 2019, the United States imposed these tariffs on certain imports from the European Union, including a 10% tariff on new commercial aircraft.
In early October 2019, the World Trade Organization ruled that the United States could impose $7.5 billion in 48 retaliatory tariffs in response to illegal European Union subsidies to Airbus. On October 18, 2019, the United States imposed these tariffs on certain imports from the European Union, including a 10% tariff on new commercial aircraft.
In addition, we will not directly control our CORSIA compliance costs through 2032 because those obligations are based on the growth in emissions of the global aviation sector and begin to incorporate a factor for 28 individual airline operator emissions growth beginning in 2033.
In addition, we will not directly control our CORSIA compliance costs through 2032 because those obligations are based on the growth in emissions of the global aviation sector and begin to incorporate a factor for individual airline operator emissions growth beginning in 2033.
In addition, seasonality may cause our quarterly and monthly results to fluctuate since passengers tend to fly more during the summer months and less in the winter months, apart from the holiday season. We cannot assure you that we will find profitable markets in which to operate during the winter season.
In addition, seasonality may cause our quarterly and monthly results to fluctuate since passengers tend to fly more during the summer months and less in the winter months, apart from the holiday season. We cannot assure you that we will find 49 profitable markets in which to operate during the winter season.
A significant portion of our operations are concentrated in markets such as Denver, the Southeast, the Northeast and Northern Midwest regions of the United States, which are 39 particularly vulnerable to weather, airport traffic constraints and other delays, particularly in the winter months and during hurricane season.
A significant portion of our operations are concentrated in markets such as Denver, the Southeast, the Northeast and Northern Midwest regions of the United States, which are particularly vulnerable to weather, airport traffic constraints and other delays, particularly in the winter months and during hurricane season.
In addition, we have sought, and may continue to seek, financing from other available sources to fund our operations, which includes PDP payments. Under the terms of the PDP Financing Facility, we are subject to a fixed charge coverage ratio requirement (the “FCCR Test”).
In addition, we have sought, and may continue to seek, financing from other available sources to fund our operations, which includes PDP payments. Under the terms of the PDP Financing Facility and the Second PDP Financing Facility, we are subject to a fixed charge coverage ratio requirement (the “FCCR Test”).
We have experienced an increase in flight delays and cancellations at these airports due to airport congestion, which has adversely affected our operating performance and results of operations. We have also experienced increased competition at Denver International Airport and Orlando International Airport from carriers adding flights to and from Denver and Orlando, respectively.
We have experienced an increase in flight delays and cancellations at these airports due to airport congestion, which have adversely affected our operating performance and results of operations. We have also experienced increased competition at Denver International Airport and Orlando International Airport from carriers adding flights to and from Denver and Orlando, respectively.
We also expect that new work patterns and the growth of remote work will lead to increasing numbers of employees choosing to live remotely from their office location, which has and could continue to alter the historical demand levels on the routes we serve.
We also expect that new work patterns and the growth of remote work will lead to increasing numbers of employees choosing to live remotely from their office location, which has altered, and could continue to alter, the historical demand levels on the routes we serve.
See also “—We may be subject to competitive risks due to the long-term nature of our fleet and order book which commits us to 35 Airbus aircraft and the engines available for such aircraft for a substantial period of time into the future.” We may be subject to competitive risks due to the long-term nature of our fleet and order book which commits us to Airbus aircraft and the engines available for such aircraft for a substantial period of time into the future.
See also “—We may be subject to competitive risks due to the long-term nature of our fleet and order book which commits us to Airbus aircraft and the engines available for such aircraft for a substantial period of time into the future.” We may be subject to competitive risks due to the long-term nature of our fleet and order book which commits us to Airbus aircraft and the engines available for such aircraft for a substantial period of time into the future.
We cannot assure you that we will be able to source external financing for our planned aircraft acquisitions or for other significant capital needs, and if we are unable to source financing on acceptable terms, or unable to source financing at all, our business could be materially adversely affected.
We cannot assure 42 you that we will be able to source external financing for our planned aircraft acquisitions or for other significant capital needs, and if we are unable to source financing on acceptable terms, or unable to source financing at all, our business could be materially adversely affected.
Unfavorable economic conditions, such as those resulting from an inflationary economic environment and the responses by monetary authorities to control such inflation, rising interest rates, debt and equity market fluctuations, diminished liquidity and credit availability, increased unemployment rates, decreased investor and consumer confidence, political turmoil, supply chain challenges, natural catastrophes and the effects of climate change, regional and global conflicts and terrorist attacks and/or reactions to pandemics or other health threats, such as COVID-19, including measures to reduce the spread of any such disease, have historically impaired airline economics.
Unfavorable economic conditions, such as those resulting from an inflationary economic environment and the responses by monetary authorities to control such inflation, rising interest rates, debt and equity market fluctuations, diminished liquidity and credit availability, increased unemployment rates, decreased investor and consumer confidence, political turmoil, supply chain challenges, natural catastrophes and the effects of climate change, regional and global conflicts and terrorist attacks and/or reactions to pandemics or other health threats, including measures to reduce the spread of any such disease, have historically impaired airline economics.
We cannot assure you that our labor costs going forward will remain competitive or that any new agreements into which we enter will not have terms with higher labor costs or that the negotiations of such labor agreements will not result in any work stoppages.
We cannot assure you that our labor costs going forward will 37 remain competitive or that any new agreements into which we enter will not have terms with higher labor costs or that the negotiations of such labor agreements will not result in any work stoppages.
If one or more of these analysts ceases to cover our company or fails to publish reports on us 48 regularly, demand for our stock could decrease, which may cause the trading price of our common stock and the trading volume of our common stock to decline.
If one or more of these analysts ceases to cover our company or fails to publish reports on us regularly, demand for our stock could decrease, which may cause the trading price of our common stock and the trading volume of our common stock to decline.
As a result of the foregoing, there can be no assurance that we will be able to attract or retain qualified personnel and we may be 22 required to increase wages and/or benefits in order to do so.
As a result of the foregoing, there can be no assurance that we will be able to attract or retain qualified personnel and we may be required to increase wages and/or benefits in order to do so.
We routinely participate with other airlines in fuel consortia and fuel committees at our airports. The related agreements generally include cost-sharing provisions and environmental indemnities that are generally joint and several among the participating airlines.
We routinely participate with other airlines in fuel consortia and fuel committees at our airports. The related agreements generally include cost-sharing provisions and environmental indemnities that are generally joint and 31 several among the participating airlines.
The occurrence of any of these events in markets served by us now or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.
The occurrence of any of these events in markets served by us now 33 or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.
Such claims could involve discrimination (for example, based on gender, age, race or religious affiliation), sexual harassment, privacy, patent, commercial, product liability, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings.
Such claims could involve discrimination (for example, based 54 on gender, age, race or religious affiliation), sexual harassment, privacy, patent, commercial, product liability, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings.
In addition, up to 49% of our outstanding stock may be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens but only if those non-U.S. citizens are from countries that have entered into “open skies” air transport agreements 52 with the United States which allow unrestricted access between the United States and the applicable foreign country and to points beyond the foreign country on flights serving the foreign country.
In addition, up to 49% of our outstanding stock may be owned or controlled, directly or indirectly, by persons or entities who are not U.S. citizens 53 but only if those non-U.S. citizens are from countries that have entered into “open skies” air transport agreements with the United States which allow unrestricted access between the United States and the applicable foreign country and to points beyond the foreign country on flights serving the foreign country.
The outbreak and global spread of COVID-19 resulted in a severe decline in demand for air travel, and measures to reduce the spread of COVID-19 adversely impacted our business, results of operations, financial 31 condition and liquidity.
The outbreak and global spread of COVID-19 resulted in a severe decline in demand for air travel, and measures to reduce the spread of COVID-19 adversely impacted our business, results of operations, financial condition and liquidity.
Our access to new international markets may be limited by the applicable air transport agreements between the United States and foreign governments and our ability to obtain the necessary authority from the United States and foreign governments to fly the international routes.
Our access to new international markets may be limited by the applicable air transport agreements between the United States and 28 foreign governments and our ability to obtain the necessary authority from the United States and foreign governments to fly the international routes.
To the 40 extent we finance our activities with additional debt, we may become subject to financial and other covenants that may restrict our ability to pursue our business strategy or otherwise constrain our growth and operations.
To the extent we finance our activities with additional debt, we may become subject to financial and other covenants that may restrict our ability to pursue our business strategy or otherwise constrain our growth and operations.
The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, or the exercise of warrants issued to the Treasury as part of the funding provided under the CARES Act, could depress the trading price of our common stock.
The issuance or sale of shares of our common stock, or rights to acquire shares of our common stock, or the exercise of warrants issued as part of the funding provided under the CARES Act, could depress the trading price of our common stock.
We expect the legacy airlines to continue to match LCC and ULCC pricing on portions of their networks including through the selective deployment of so-called “basic economy” fares.
We expect the legacy airlines to continue to match LCC and ULCC pricing on portions of their networks including through the deployment of so-called “basic economy” fares.
We select target markets and routes where we believe we can achieve profitability within a reasonable timeframe, and we only continue operating on routes where we believe we can achieve and maintain our desired level of profitability.
We select target markets and routes where we believe we can achieve profitability within a reasonable timeframe, 34 and we only continue operating on routes where we believe we can achieve and maintain our desired level of profitability.
In addition, replacement technologies and systems for any service we currently utilize that experiences 43 failures or interruptions may not be readily available on a timely basis, at competitive rates or at all. Furthermore, our current technologies and systems are heavily integrated with our day-to-day operations and any transition to a new technology or system could be complex and time-consuming.
In addition, replacement technologies and systems for any service we currently utilize that experiences failures or interruptions may not be readily 45 available on a timely basis, at competitive rates or at all. Furthermore, our current technologies and systems are heavily integrated with our day-to-day operations and any transition to a new technology or system could be complex and time-consuming.
As of December 31, 2023, we were not subject to any credit card holdbacks, although if we fail to maintain certain liquidity and other financial covenants, our credit card processors have the right to hold back credit card remittances to cover our obligations to them, which would result in a reduction of unrestricted cash that could be material.
As of December 31, 2024, we were not subject to any credit card holdbacks, although if we fail to maintain certain liquidity and other financial covenants, our credit card processors have the right to hold back credit card remittances to cover our obligations to them, which would result in a reduction of unrestricted cash that could be material.
This provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint and any other professional entity whose profession gives authority to a statement made by that person or entity and who has prepared or 51 certified any part of the documents underlying the offering.
This provision is intended to benefit and may be enforced by us, our officers and directors, the underwriters to any offering giving rise to such complaint and any other professional 52 entity whose profession gives authority to a statement made by that person or entity and who has prepared or certified any part of the documents underlying the offering.
In addition, the terms and conditions of our future collective bargaining agreements may be affected by the results of collective bargaining negotiations at other airlines that may have a greater ability, due to larger scale, greater efficiency, superior profitability or other factors, to bear higher costs than we can.
In addition, the terms and conditions of our future collective bargaining agreements may be affected by the results of collective bargaining negotiations at other U.S. airlines that may have a greater ability, due to larger scale, greater efficiency, superior profitability or other factors, to bear higher costs than we can.
Some of our customers may still prefer to speak with a live agent and could develop a negative perception of our self-service model.
Some of our customers may prefer to speak with a live agent and could develop a negative perception of our self-service model.
We cannot guarantee that, as a result of the ongoing, or future, supply chain disruptions or 42 staffing shortages, we or our third-party service providers will be able to timely source all of the products and services we require in the course of our business, or that we will be successful in procuring suitable alternatives.
We cannot guarantee that, as a result of the ongoing, or future, supply chain disruptions or 44 staffing shortages, we or our third-party service providers will be able to timely source all of the products and services we require in the course of our business, or that we will be successful in procuring suitable alternatives.
If we fail to establish ourselves in such new markets, our business, results of operations and financial condition could be materially adversely affected. 23 Our growth and the success of our ULCC business model could stimulate competition in our markets through our competitors’ development of their own ULCC strategies or through new market entrants.
If we fail to establish ourselves in such new markets, our business, results of operations and financial condition could be materially adversely affected. 24 Our growth and the success of our ULCC business model could stimulate competition in our markets through our competitors’ development of their own ULCC strategies or through new market entrants.
Any inability to stimulate demand for air travel with our low base fares or to adjust rapidly in the event that the basis of competition in our markets changes could have a material adverse effect on our business, results of operations and financial condition.
Any inability to stimulate demand for air travel with our low-cost fares or to adjust rapidly in the event that the basis of competition in our markets changes could have a material adverse effect on our business, results of operations and financial condition.
The DOT may also impose additional consumer protection requirements, including adding requirements to modify our websites and computer reservations system, which could have a material adverse effect on our business, results of operations and financial condition.
The DOT may also impose additional consumer protection requirements, including adding requirements to modify our websites and computer reservations system, which could have a material adverse effect on our business, results of operations and financial condition. The U.S.
The LTV Test is largely dependent on the appraised fair value of the underlying aircraft subject to financing. LTV Tests performed recently have not resulted in any required pre-payment of the PDP Financing Facility or posting of additional collateral.
The LTV Test is largely dependent on the appraised fair value of the underlying aircraft subject to financing. LTV Tests performed recently have not resulted in any required pre-payment of either the PDP Financing Facility or the Second PDP Financing Facility or the posting of additional collateral.
If we fail to generate sufficient funds from operations to meet our operating cash requirements or do not obtain a line of credit, other borrowing facility or equity financing, we could default on our operating leases and fixed obligations.
If we fail to generate sufficient funds from operations to meet our operating cash requirements or do not obtain another line of credit, other borrowing facility or equity financing, we could default on our operating leases and fixed obligations.
ULCCs, our market share could decline, which could have a material adverse effect on our business, results of operations and financial condition. We may also not be successful 34 in leveraging our brand and product to stimulate new demand with low base fares or gain market share from the legacy airlines, particularly if we experience significant excess capacity.
ULCCs, our market share could decline, which could have a material adverse effect on our business, results of operations and financial condition. We may also not be successful in leveraging our brand and product to stimulate new demand with low-cost fares or gain market share from the legacy airlines, particularly if we experience significant excess capacity.
These factors have caused us recently to maintain a larger workforce than is immediately necessary for our planned operations in order to maintain network reliability and support planned growth in light of the challenges of hiring and retaining employees under current economic conditions, including the current worker shortage impacting certain sectors of the U.S. labor market.
These factors, as well as our network seasonality, have caused us recently to maintain a larger workforce than is immediately necessary for our planned operations in order to maintain network reliability and support planned growth in light of the challenges of hiring and retaining employees under current economic conditions, including the current worker shortage impacting certain sectors of the U.S. labor market.
To the extent that any such changes have a negative impact on 45 us or the airline industry in general, including as a result of related uncertainty, these changes may materially impact our business, results of operations, cash flows and financial condition. New U.S. tax legislation may adversely affect our business, results of operations, cash flows and financial condition.
To the extent that any such changes have a negative impact on 47 us or the airline industry in general, including as a result of related uncertainty, these changes may materially impact our business, results of operations, cash flows and financial condition. U.S. tax legislation may adversely affect our business, results of operations, cash flows and financial condition.
Any general reduction in airline passenger traffic could have a material adverse effect on our business, results of operations and financial condition. We face competition from air travel substitutes. In addition to airline competition from legacy network airlines, LCCs and other ULCCs, we also face competition from air travel substitutes.
Any general reduction in airline passenger traffic could have a material adverse effect on our business, results of operations and financial condition. 32 We face competition from air travel substitutes and technology advancements. In addition to airline competition from legacy network airlines, LCCs and other ULCCs, we also face competition from air travel substitutes.
Our state NOLs may expire, if not utilized, from one year to having no expiration depending on the state the NOL is attributed to, and our foreign NOLs expire in seven years.
Our state NOLs may expire, if not utilized, from one year to having no expiration depending on the state the NOL is attributed to, and our foreign NOLs expire in 20 years.
Other states and jurisdictions in which we operate may adopt similar laws. Certain airports have adopted, and others could in the future adopt, GHG emission or climate-related goals that could impact our operations or require us to make changes or investments in our infrastructure.
Other states and jurisdictions in which we operate may adopt similar, divergent, or more stringent laws. Certain airports have adopted, and others could in the future adopt, GHG emission or climate-related goals that could impact our operations or require us to make changes or investments in our infrastructure.
Our fuel hedge contracts may contain margin funding requirements that could require us to post collateral to counterparties in the event of a significant drop in fuel prices in the future.
Future fuel hedge contracts could contain margin funding requirements that could require us to post collateral to counterparties in the event of a significant drop in fuel prices in the future.
We intend to continue to differentiate our brand and product in order to expand our loyal customer base and grow or maintain our unit revenues and maintain our non-fare revenues. The rising cost of aircraft and engine maintenance may impair our ability to offer low-cost fares, resulting in reduced revenues.
We intend to continue to differentiate our brand and product in order to expand our loyal customer base and grow or maintain our unit revenues and maintain our non-fare revenues. The rising cost of aircraft and engine maintenance may impair our ability to offer low-cost fares, which may result in reduced revenues.
In addition, we are subject to an increasing number of reporting obligations in respect of material cybersecurity incidents. These reporting requirements have been proposed or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting requirements.
In addition, we are subject to an increasing number of reporting 46 obligations in respect of certain cybersecurity incidents. These reporting requirements have been proposed or implemented by a number of regulators in different jurisdictions, may vary in their scope and application, and could contain conflicting requirements.
Sustainable Aviation Fuel Grand Challenge launched by the Biden Administration on September 9, 2021 and the Aviation Climate Action Plan published by the FAA on November 9, 2021, which outlines plans to scale up the production of SAF and aims to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditional aviation fuel with SAF by 2050, industry demand for SAF had grown.
Sustainable Aviation Fuel Grand Challenge launched in 2021 and the Aviation Climate Action Plan published by the FAA on November 9, 2021, which outlines plans to scale up the production of SAF and aims to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditional aviation fuel with SAF by 2050, industry demand for SAF had grown.
We rely on maintaining a high daily aircraft utilization rate to implement our low-cost structure, which makes us especially vulnerable to flight delays, flight cancellations, aircraft unavailability or unplanned reductions in demand. Our average daily aircraft utilization was 11.3 hours and 11.1 hours for the years ended December 31, 2023 and 2022, respectively.
We rely on maintaining a high daily aircraft utilization rate to implement our low-cost structure, which makes us especially vulnerable to flight delays, flight cancellations, aircraft unavailability or unplanned reductions in demand. Our average daily aircraft utilization was 10.3 hours and 11.3 hours for the years ended December 31, 2024 and 2023, respectively.
Our collateral to secure loans, in the form of aircraft, spare parts and airport slots, could lose value as customer demand shifts and economies move to low-carbon alternatives, which may increase our financing costs.
Our collateral to secure loans, in the form of aircraft, spare parts, airport slots and loyalty and brand assets, could lose value as customer demand shifts and economies move to low-carbon alternatives, which may increase our financing costs.
In addition, in order to successfully implement our growth strategy, which includes the planned growth of our fleet size and a firm commitment to purchase 210 A320neo family aircraft by the end of 2029, we will require access to a large number of gates and other services at airports we currently serve or may seek to serve.
In addition, in order to successfully implement our growth strategy, which includes the planned growth of our fleet size and a firm commitment to purchase 187 A320neo family aircraft by the end of 2031, we will require access to a large number of gates and other services at airports we currently serve or may seek to serve.
Our reputation or brand image could be adversely impacted by, among other things, any failure to adopt or maintain high ethical, social and environmental sustainability practices for our operations and activities; our impact on the environment; any inability to maintain our position as “America’s Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 2023; compared to all other major U.S. carriers) including, for example, if another major U.S. airline experiences more average fuel savings than us based on ASMs per fuel gallon consumed or if consumers perceive us to be less “green” than other airlines based on different factors or metrics or by attributing the sustainability practices of our vendors, suppliers and other third parties to us; public pressure from investors or policy groups to change our policies, such as movements to institute a “living wage;” customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs; customer perceptions of our use of social media; or customer perceptions of statements made by us, our employees and executives, agents or other third parties.
Our reputation or brand image could be adversely impacted by, among other things, any failure to adopt or maintain high ethical, social and environmental sustainability practices for our operations and activities; our impact on the environment; any inability to maintain our position as “America’s Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 2024; compared to all other major U.S. carriers) including, for example, if another major U.S. airline experiences more average fuel savings than us based on ASMs per fuel gallon consumed 38 or if consumers perceive us to be less “green” than other airlines based on different factors or metrics or by attributing the sustainability practices of our vendors, suppliers and other third parties to us; public pressure from investors or policy groups to change our policies; customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs; customer perceptions of our use of social media; or customer perceptions of statements made by us, our employees and executives, agents or other third parties.
In October 2022, the FAA issued a final rule mandating rest periods of at least 10 consecutive hours for flight attendants who are scheduled for a duty period of 14 hours or less and prohibiting the reduction of the rest period under any circumstances, which will impact our scheduling flexibility.
In October 2022, the FAA issued a final rule mandating rest periods of at least 10 consecutive hours for flight attendants who are scheduled for a duty period of 14 hours or less and prohibiting the reduction of the rest period under any circumstances, which have impacted and will continue to impact our scheduling flexibility.
As of December 31, 2023, we had deferred tax assets of approximately $53 million, $11 million and $11 million related to NOLs available to reduce future federal, state and foreign taxable income, respectively. Under current tax law, our federal NOL carryforwards do not expire, but the deductibility of such NOL carryforwards is limited to 80% of our taxable income.
As of December 31, 2024, we had deferred tax assets of approximately $45 million, $11 million and $11 million related to NOLs available to reduce future federal, state and foreign taxable income, respectively. Under current tax law, our federal NOL carryforwards do not expire, but the deductibility of such NOL carryforwards is limited to 80% of our taxable income.
As a result of our assessment over the future realizability of these NOLs, as of December 31, 2023, we have an $11 million valuation allowance related to our foreign deferred tax assets and a $37 million valuation allowance related to certain federal and state deferred tax assets, with a portion considered realizable due to the future reversals of existing taxable temporary liabilities.
As a result of our assessment over the future realizability of these NOLs, as of December 31, 2024, we have an $11 million valuation allowance related to our foreign deferred tax assets and a $19 million valuation allowance related to certain federal and state deferred tax assets, with a portion considered realizable due to the future reversals of existing taxable temporary liabilities.
U.S. commitments announced during President Biden’s April 2021 Leaders’ Summit on Climate include working with other countries on a vision toward reducing the aviation sector’s emissions in a manner consistent with the Biden Administration’s 2050 net-zero emissions goal, continued participation in CORSIA and development of SAF.
U.S. commitments announced during the April 2021 Leaders’ Summit on Climate include working with other countries on a vision toward reducing the aviation sector’s emissions in a manner consistent with the 2050 net-zero emissions goal, continued participation in CORSIA and development of SAF.
Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial condition. Our business is labor intensive, with labor costs representing approximately 24% and 21% of our total operating costs for the years ended December 31, 2023 and 2022, respectively.
Increased labor costs, union disputes, employee strikes and other labor-related disruption may adversely affect our business, results of operations and financial condition. Our business is labor intensive, with labor costs representing approximately 26% and 24% of our total operating costs for the years ended December 31, 2024 and 2023, respectively.
For a discussion of DOT regulations and rulemaking efforts, please see “—We are subject to extensive regulations by the FAA, the DOT, the TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which would cause us to incur increased costs and adversely affect our business, results of operations and financial condition.” The U.S.
For a discussion of DOT regulations and rulemaking efforts, please see “—We are subject to extensive regulations by the FAA, the DOT, the TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which would cause us to incur increased costs and adversely affect our business, results of operations and financial condition.” We are also subject to the examination of our tax returns and other tax matters by the U.S.
Concerns over climate change are likely to result in continued attempts by municipal, state, regional and federal agencies to adopt requirements or change business environments related to aviation that, if successful, may result in increased costs to the airline industry and us.
Concerns over climate change are likely to result in continued attempts by municipal, state, regional and federal agencies, as well as international bodies, to adopt requirements or change business environments related to aviation that, if successful, may result in increased costs to the airline industry and us.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe use the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”) as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business. This does not imply that we meet any particular technical standards, specifications or requirements, only that we use the NIST CSF.
Biggest changeThis does not imply that we meet any particular technical standards, specifications or requirements, only that we use the NIST CSF and other security standards, guidelines and best practices within our own framework to help us identify, assess and manage cybersecurity risks relevant to our business.
Our Director of Cybersecurity earned a Bachelor of Business Administration in Management Information Systems (MIS) from Florida International University and a Master of Business Administration (MBA) in Management from Nova Southeastern University and also holds active cybersecurity certifications including the GIAC Certified Incident Handler (GCIH), Certified Information Security Manager (CISM), and Certified Information Systems Security Professional (CISSP).
Our Director of Cybersecurity earned a Bachelor of Business Administration in Management Information Systems (MIS) from Florida International University and a Master of Business Administration (MBA) in Management from Nova Southeastern University and also holds active cybersecurity certifications including the GIAC Certified Incident Handler (GCIH), Certified Information Security Manager (CISM), and Certified Information Systems Security Professional (CISSP). 56
We did not identify a material security breach during the year ended December 31, 2023, nor have we identified risks from any known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
We did not identify a material security breach during the year ended December 31, 2024, nor have we identified risks from any known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition.
Our cybersecurity risk management program shares common methodologies, reporting channels and governance processes that apply across our overall enterprise risk assessment to other legal, compliance, strategic, operational, and financial risk areas. 54 Our cybersecurity risk management program includes: • risk assessments and rating platforms that are leveraged to help identify material cybersecurity risks to our critical systems, information, products, services, and our broader enterprise information technology environment; • a security team principally responsible for managing our cybersecurity risk assessment processes and our response to cybersecurity incidents through monitoring and identification activities; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • annual cybersecurity awareness training for employees and web and mobile developers, including responsible information security, data security and cybersecurity practices; • a computer incident response team (“CIRT”) that leverage our cybersecurity incident response plan which includes procedures for responding to cybersecurity incidents, escalating notifications, and reporting requirements to regulatory bodies; and • a third-party risk management process for service providers, suppliers, and vendors.
Our cybersecurity risk management program includes: • risk assessments and rating platforms that are leveraged to help identify material cybersecurity risks to our critical systems, information, services and our broader enterprise information technology environment; • a cybersecurity team principally responsible for managing our cybersecurity risk assessment processes and our response to cybersecurity incidents through monitoring and identification activities; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; 55 • annual cybersecurity awareness training for employees and web and mobile developers, including responsible information security, data security and cybersecurity practices; • a computer incident response team (“CIRT”) that leverage our cybersecurity incident response plan which includes procedures for responding to cybersecurity incidents, escalating notifications and reporting requirements to regulatory bodies; and • a third-party risk management process for service providers, suppliers and vendors.
Cybersecurity Governance Our board of directors is responsible for risk oversight, including cybersecurity risks, which occurs at the board of directors level and through the audit committee’s (the “Audit Committee”) oversight of cybersecurity and other information technology risks.
Cybersecurity Governance Our board of directors is responsible for risk oversight, including cybersecurity risks, which occurs at the board of directors level and through the Audit Committee’s oversight of cybersecurity and other information technology risks. Additionally, we have a Cybersecurity Disclosure Committee (“CDC”), which includes representation from our Information Technology, Legal, Internal Audit and Accounting and Reporting teams.
Our Director of Cybersecurity has served in various cybersecurity roles for over 20 years at numerous organizations and consulting firms.
Our Director of Cybersecurity heads the division and is responsible for aspects of cybersecurity across our infrastructure, which includes cybersecurity architecture and engineering, cybersecurity operations, identity governance and IT governance, risk and compliance. Our Director of Cybersecurity has served in various cybersecurity roles for over 20 years at numerous organizations and consulting firms.
The team has primary responsibility for implementing our overall cybersecurity risk management program, including ongoing monitoring, and supervises both our internal 55 cybersecurity personnel and our retained external cybersecurity consultants. Our CIO and Director of Cybersecurity have extensive cybersecurity experience as noted below. • Our Senior Vice President, CIO leads our information technology department and oversees our cybersecurity division.
Management’s Role Our cybersecurity management team is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for implementing our overall cybersecurity risk management program, including ongoing monitoring, and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants and professional services providers.
Removed
Additionally, we have a Cybersecurity Disclosure Committee (“CDC”), which includes representation from our Information Technology, Legal, Internal Audit, and Accounting and Reporting teams.
Added
We have developed an internal cybersecurity risk management framework which utilizes industry frameworks and standards, such as the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”).
Removed
Management’s Role Our cybersecurity management team, which is led by our Chief Information Officer (“CIO”) and Director of Cybersecurity, consists of members who have extensive experience in cybersecurity and is responsible for assessing and managing our material risks from cybersecurity threats.
Added
Our cybersecurity risk management program shares common methodologies, reporting channels and governance processes that apply across our overall enterprise risk assessment to other legal, compliance, strategic, operational and financial risk areas.
Removed
Our CIO holds a Bachelor of Engineering in Computer Science and Engineering from Maharshi Dayanand University and a Master of Science in Computer Science from the University of Texas at Arlington.
Added
Prior to the resignation of our Chief Information Officer (“CIO”) in November 2024, the cybersecurity management team was co-led by our CIO and Director of Cybersecurity. Our Director of Cybersecurity currently leads the team and, once we hire a new CIO, we expect that individual will serve as a co-leader.
Removed
Our CIO has served in various roles in information technology for over 20 years, including as vice president of the Canadian division of a major home improvement retailer, where he directly oversaw the cybersecurity function, and in various vice president and IT director roles at a large U.S. based retailer and aircraft operator, as well as in the energy and online ticket distribution industries. • Our Director of Cybersecurity heads the division and is responsible for aspects of cybersecurity across our infrastructure, which includes cybersecurity architecture and engineering, cybersecurity operations and IT governance risk and compliance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn May 2022, we entered into a 10-year airport use and lease agreement with the City and County of Denver which includes a new ground-level boarding facility and 14 accompanying gates. We typically use 11 gates within Concourse A, with preferential access to nine specified gates and common use access to the remaining gates.
Biggest changeWe primarily operate out of Concourse A at Denver International Airport, including the ground-level boarding facility and accompanying gates. We typically use 14 gates within Concourse A, with access to 9 gates at the ground-level boarding facility and common use access to the remaining gates.
We also lease a hangar, consisting of approximately 154,900 square feet, which includes office space and is where we provide certain maintenance on our aircraft. Other airports through which we conduct significant operations include Orlando 56 International Airport (MCO), McCarran International Airport (LAS), Hartsfield-Jackson Atlanta International Airport (ATL) and Philadelphia International Airport (PHL).
We also lease a hangar, consisting of approximately 154,900 square feet, which includes office space and is where we provide certain maintenance on our aircraft. Other airports through which we conduct significant operations include Orlando International Airport (MCO), McCarran International Airport (LAS), Hartsfield-Jackson Atlanta International Airport (ATL) and Philadelphia International Airport (PHL).
For these leases, the contractual term is used as the lease term. As of December 31, 2023, the remaining lease terms vary from one month to eleven years. At the majority of the U.S. airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually.
For these leases, the contractual term is used as the lease term. As of December 31, 2024, the remaining lease terms vary from one month to ten years. At the majority of the U.S. airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually.
PROPERTIES Aircraft As of December 31, 2023, we operated a fleet of 136 aircraft as detailed in the following table: Aircraft Type Seats Average Age (Years) Number of Aircraft Number Owned Number Leased A320ceo 180 or 186 8 8 — 8 A320neo 186 4 82 — 82 A321ceo 230 7 21 — 21 A321neo 240 1 25 — 25 4 136 — 136 Ground Facilities Our facility leases are primarily for space at approximately 90 airports that are primarily located in the United States.
PROPERTIES Aircraft As of December 31, 2024, we operated a fleet of 159 aircraft as detailed in the following table: Aircraft Type Seats Average Age (Years) Number of Aircraft Number Owned Number Leased A320ceo 180 or 186 9 8 — 8 A320neo 186 5 82 — 82 A321ceo 230 8 21 — 21 A321neo 240 1 48 — 48 159 — 159 Ground Facilities Our facility leases are primarily for space at approximately 100 airports that are primarily located in the United States.
Because of the variable nature of the rates, these leases are not recorded on the consolidated balance sheets as right-of-use assets and lease liabilities. During the year ended December 31, 2023, 24% of our flights had Denver International Airport as either their origin or destination. We primarily operate out of Concourse A at Denver International Airport.
Because of the variable nature of the rates, these leases are not recorded on our consolidated balance sheets as right-of-use assets and lease liabilities. During the year ended December 31, 2024, 23% of our flights had Denver International Airport as either their origin or destination.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe believe the ultimate outcome of such lawsuits, proceedings and reviews is not reasonably likely, individually or in the aggregate, to have a material adverse effect on our business, results of operations and financial condition. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeWe believe the ultimate outcome of such lawsuits, proceedings and reviews is not reasonably likely, individually or in the aggregate, to have a material adverse effect on our business, results of operations and financial condition. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 57 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees. This number of holders also does not include stockholders whose shares may be held in trust by other entities.
Biggest changeHowever, because many of our shares are held by brokers and other institutions on behalf of stockholders, we believe there are substantially more beneficial holders of our common stock than record holders. The number of record holders also does not include stockholders whose shares may be held in trust by other entities.
The comparison assumes $100 was invested on April 1, 2021 in each of our common stock and the indices and assumes that all dividends were reinvested. The stock 57 performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. Cumulative Total Returns Recent Sales of Unregistered Securities None.
The comparison assumes $100 was invested on April 1, 2021 in each of our common stock and the indices and assumes that all dividends were reinvested. The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. 58 Cumulative Total Returns Recent Sales of Unregistered Securities None.
The following graph compares the cumulative total returns during the period from April 1, 2021 (the date our common stock commenced trading on Nasdaq) through December 31, 2023 of our common stock to the NYSE ARCA Airline Index and the Standard & Poor’s 500 Index.
The following graph compares the cumulative total returns during the period from April 1, 2021 (the date our common stock commenced trading on Nasdaq) through December 31, 2024 of our common stock to the NYSE ARCA Airline Index and the Standard & Poor’s 500 Index.
Dividend Policy There were no cash dividend declarations or payments during the year ended December 31, 2023 and we do not expect to pay cash dividends in the foreseeable future.
Dividend Policy There were no cash dividend declarations or payments during the year ended December 31, 2024 and we do not expect to pay cash dividends in the foreseeable future.
Issuer Purchases of Equity Securities We do not have a share repurchase program and no shares were repurchased during the fourth quarter of 2023. ITEM 6. [RESERVED] 58
Issuer Purchases of Equity Securities We do not have a share repurchase program and no shares were repurchased during the fourth quarter of 2024. ITEM 6. [RESERVED] 59
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed and traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “ULCC.” Holders As of February 16, 2024, there were two holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is listed and traded on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “ULCC.” Holders As of February 14, 2025, there were approximately 17 holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDuring the year ended December 31, 2022, net cash used in operating activities totaled $78 million, which was driven by a $37 million net loss, $14 million of outflows from changes in operating assets and liabilities and non-cash adjustments totaling $27 million. 72 The $14 million of outflows from changes in operating assets and liabilities includes: • $94 million in increases in other long-term assets driven by increases in prepaid maintenance and capitalized maintenance; • $40 million in increases in supplies from increased consumable and fuel inventory balances as well as increases to other current assets driven by swaption derivative premiums; • $28 million in increases in accounts receivable; • $18 million in increases in aircraft maintenance deposits; and • $4 million in decreases in accounts payable; partially offset by • $130 million in increases in other liabilities driven by growth in the business primarily through increased leased aircraft return costs, aircraft maintenance costs, and other related accruals; and • $40 million in increases in our air traffic liability as a result of increased bookings.
Biggest changeCash Flows The following table presents information regarding our cash flows in the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (in millions) Net cash used in operating activities $ (82) $ (261) Net cash used in investing activities (75) (90) Net cash provided by financing activities 288 199 Net increase (decrease) in cash, cash equivalents and restricted cash 131 (152) Cash, cash equivalents and restricted cash at beginning of period 609 761 Cash, cash equivalents and restricted cash at end of period $ 740 $ 609 Operating Activities During the year ended December 31, 2024, net cash used in operating activities totaled $82 million, which was driven by non-cash adjustments of $204 million, partially offset by $85 million of net income and $37 million of inflows from changes in operating assets and liabilities. 74 The $37 million of inflows from changes in operating assets and liabilities included: • $82 million in decreases in our aircraft maintenance deposits; • $77 million in increases in other liabilities driven primarily by leased aircraft return accruals, passenger taxes payable and other operational related accruals; • $41 million in increases in our air traffic liability driven by increased booking and related fares; • $22 million in decreases in accounts receivable; and • $20 million in decreases in supplies and other current assets; partially offset by • $190 million in increases in other long-term assets primarily driven by increases in capitalized maintenance, prepaid maintenance and deferred purchase incentives; and • $15 million in decreases in accounts payable.
The amount of 76 the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.
The amount of the deferred tax assets considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth.
Given that the accounting for the arrangement will follow our heavy maintenance accounting and is dependent on many projected factors such as flight hours, shop visit timing and scope, and the stand-alone value of certain maintenance services, there are significant estimates that impact the accounting of our per-flight-hour maintenance agreements including amounts capitalized, expensed and treated as capitalized maintenance as well as the timing of each.
Given that the accounting for the arrangement will follow our heavy maintenance accounting and is dependent on many projected factors such as flight hours, shop visit timing and scope, and the stand-alone value of 79 certain maintenance services, there are significant estimates that impact the accounting of our per-flight-hour maintenance agreements including amounts capitalized, expensed and treated as capitalized maintenance as well as the timing of each.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.
The $211 million of outflows from changes in operating assets and liabilities includes: • $163 million in increases in other long-term assets driven by increases in capitalized maintenance, prepaid maintenance, capitalized interest and forgivable loans, partially offset by a decreased deferred tax asset; • $60 million in decreases in our air traffic liability; • $45 million in decreases in other liabilities driven by leased aircraft return payments, partially offset by an increase in other operational related accruals; • $16 million in increases in aircraft maintenance deposits; and • $7 million in increases in supplies and other current assets; partially offset by • $47 million in increases in accounts payable; and • $33 million in decreases in accounts receivable.
The $211 million of outflows from changes in operating assets and liabilities included: • $163 million in increases in other long-term assets driven by increases in capitalized maintenance, prepaid maintenance, capitalized interest and forgivable loans, partially offset by a decreased deferred tax asset; • $60 million in decreases in our air traffic liability; • $45 million in decreases in other liabilities driven by leased aircraft return payments, partially offset by an increase in other operational related accruals; • $16 million in increases in aircraft maintenance deposits; and • $7 million in increases in supplies and other current assets; partially offset by • $47 million in increases in accounts payable; and • $33 million in decreases in accounts receivable.
We expect that these new aircraft will require less maintenance when they are first placed in service (sometimes called a “maintenance holiday”) because the aircraft will benefit from manufacturer warranties and also will be able to operate for a significant period of time, generally measured in years, before the most expensive scheduled maintenance obligations, known as heavy maintenance, are required.
We expect that these new aircraft will require less maintenance when they are first placed into service (sometimes called a “maintenance holiday”) because the aircraft will benefit from manufacturer warranties and also will be able to operate for a significant period of time, generally measured in years, before the most expensive scheduled maintenance 62 obligations, known as heavy maintenance, are required.
Summary of Significant Accounting Policies” included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements. 77 GLOSSARY OF AIRLINE TERMS Set forth below is a glossary of industry terms: “A320 family” means, collectively, the Airbus series of single-aisle aircraft, including the A320ceo, A320neo, A321ceo and A321neo aircraft.
Summary of Significant Accounting Policies” included in Part II, Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements. 80 GLOSSARY OF AIRLINE TERMS Set forth below is a glossary of industry terms: “A320 family” means, collectively, the Airbus series of single-aisle aircraft, including the A320ceo, A320neo, A321ceo and A321neo aircraft.
(g) Adjusted CASM is included as supplemental disclosure because we believe it is a useful metric to properly compare our cost management and performance to other peers, as derivations of Adjusted CASM are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry.
(f) Adjusted CASM is included as supplemental disclosure because we believe it is a useful metric to properly compare our cost management and performance to other peers, as derivations of Adjusted CASM are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry.
We believe that we are well positioned to 60 maintain our low unit operating costs relative to our competitors through on-going strategic initiatives, including continuing our cost optimization efforts and further realizing economies of scale. To the extent that we are unable to maintain our low-cost structure, our ability to compete effectively may be impaired.
We believe that we are well positioned to 61 maintain our low unit operating costs relative to our competitors through on-going strategic initiatives, including continuing our cost optimization efforts and further realizing economies of scale. To the extent that we are unable to maintain our low-cost structure, our ability to compete effectively may be impaired.
We determined the best estimate of the selling prices by considering discounted cash flow analysis using multiple inputs and assumptions, including: (1) the expected number of miles awarded and number of miles redeemed, (2) equivalent ticket value (“ETV”) for the award travel obligation, (3) licensing of brand and access to member lists and (4) advertising and marketing efforts.
We determined the best estimate of the selling prices by considering discounted cash flow analysis using multiple inputs and assumptions, including: (1) the expected number of miles awarded and number of miles redeemed, (2) equivalent ticket value (“ETV”) for the award travel obligation, (3) licensing of brand and access to member lists, (4) advertising and marketing efforts and (5) airline benefits.
Adjusted CASM including net interest and CASM including net interest are not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. Aircraft Fuel .
Adjusted CASM including net interest and CASM including net interest are not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
These deferred tax assets are comprised of $53 million, $11 million and $11 million related to NOLs available to reduce future federal, state and foreign taxable income, respectively.
These deferred tax assets are comprised of $45 million, $11 million and $11 million related to NOLs available to reduce future federal, state and foreign taxable income, respectively.
While we have, over recent years, reduced our concentration in Denver to decrease the impact of seasonality in our business, 24% of our flights during the year ended December 31, 2023 had Denver International Airport as either their origin or destination, as compared to 26% of our flights during the year ended December 31, 2022. Labor .
While we have, over recent years, reduced our concentration in Denver to decrease the impact of seasonality in our business, 23% of our flights during the year ended December 31, 2024 had Denver International Airport as either their origin or destination, as compared to 24% of our flights during the year ended December 31, 2023. Labor.
Miles are accumulated as a result of travel, purchases using the co-branded credit card and purchases from other participating partners. As of each of December 31, 2023 and 2022, our total frequent flyer liability was $45 million. The contract to sell miles under the co-branded credit card partnership has multiple performance obligations.
Miles are accumulated as a result of travel, purchases using the co-branded credit card and purchases from other participating partners. As of December 31, 2024 and 2023, our total frequent flyer liability was $49 million and $45 million, respectively. The contract to sell miles under the co-branded credit card partnership has multiple performance obligations.
“Ancillary revenue” means the sum of non-fare passenger revenue and other revenue. “Available seat miles” or “ASMs” means the number of seats available for passengers multiplied by the number of miles the seats are flown. “Average aircraft in service” means the average number of aircraft used in flight operations, as calculated on a daily basis.
“Ancillary revenue” means the sum of non-fare passenger revenue and other revenue. “Available seat miles” or “ASMs” means seats (empty or full) multiplied by miles the seats are flown. “Average aircraft in service” means the average number of aircraft used in flight operations, as calculated on a daily basis.
This amount is a component of interest expense. 64 (i) Adjusted CASM including net interest and CASM including net interest are included as supplemental disclosures because we believe they are useful metrics to properly compare our cost management and performance to other peers that may have different capital structures and financing strategies, particularly as it relates to financing primary operating assets such as aircraft and engines.
This amount is a component of interest expense within our consolidated statements of operations. 67 (h) Adjusted CASM including net interest and CASM including net interest are included as supplemental disclosures because we believe they are useful metrics to properly compare our cost management and performance to other peers that may have different capital structures and financing strategies, particularly as it relates to financing primary operating assets such as aircraft and engines.
Our discussion and analysis of fiscal year 2023 compared to fiscal year 2022 is included herein. For discussion of results for the fiscal year 2021 and analysis of year-to-year comparisons between 2022 and 2021, please refer to “Item 7.
Our discussion and analysis of fiscal year 2024 compared to fiscal year 2023 is included herein. For a discussion of the results of operations for fiscal year 2022 and comparisons between fiscal year 2023 and fiscal year 2022, please refer to “Item 7.
Derivations of pre-tax income (loss), net income and EBITDA are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry. 66 Adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA have limitations as analytical tools.
Derivations of pre-tax income (loss), net income (loss) and EBITDA are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry.
“Fare revenue” consists of base fares for air travel, including miles redeemed under our frequent flyer program, unused and expired passenger credits, other redeemed or expired travel credits and revenue derived from charter flights. “Fare revenue per passenger” means fare revenue divided by passengers.
“EPA” means the United States Environmental Protection Agency. “Fare revenue” consists of base fares for air travel, including miles redeemed under our frequent flyer program, unused and expired passenger credits, other redeemed or expired travel credits and revenue derived from charter flights. “Fare revenue per passenger” means fare revenue divided by passengers.
We believe that fare discounts, along with unbundled product offerings, have and will continue to stimulate demand for Frontier due to our Low Fares Done Right strategy.
We believe that fare discounts, along with more customer optionality over product offerings, have and will continue to stimulate demand for Frontier due to our Low Fares Done Right strategy.
Financing Activities During the year ended December 31, 2023, net cash provided by financing activities was $199 million, primarily driven by: • $163 million in net proceeds received from sale-leaseback transactions; • $171 million in cash proceeds from debt issuances, consisting of $162 million in draws on our PDP Financing Facility, net of issuance costs, and a $9 million draw on our Barclays facility; and • $1 million in proceeds from the exercise of stock options; partially offset by • $131 million in cash outflows from principal repayments on debt, which include $130 million in PDP Financing Facility payments and $1 million in payments pursuant to our floating rate building note; and • $5 million cash outflows for payments related to tax withholdings of share-based awards. 73 During the year ended December 31, 2022, net cash provided by financing activities was $75 million, primarily driven by: • $273 million in cash proceeds from debt issuances, consisting of $217 million in draws on our PDP Financing Facility, net of issuance costs, and $56 million draw on our Barclays facility; • $71 million in net proceeds received from sale-leaseback transactions; and • $1 million in proceeds from the exercise of stock options; partially offset by • $266 million in cash outflows from principal repayments on debt, which include the paydown of the $150 million Treasury Loan, $115 million in PDP Financing Facility payments and $1 million in payments pursuant to our floating rate building note; and • $4 million of payments for tax withholdings related to vesting of share-based awards.
During the year ended December 31, 2023, net cash provided by financing activities was $199 million, primarily driven by: • $163 million in net proceeds received from sale-leaseback transactions; • $171 million in cash proceeds from debt issuances, consisting of $162 million in draws on our PDP Financing Facility, net of issuance costs, and a $9 million draw on our Barclays facility; and • $1 million in proceeds from the exercise of stock options; partially offset by • $131 million in cash outflows from principal repayments on debt, which include $130 million in PDP Financing Facility payments and $1 million in payments pursuant to our floating rate building note; and • $5 million cash outflows for payments related to tax withholdings of share-based awards.
The airline industry is currently experiencing certain shortages of qualified personnel. The airline industry is also heavily unionized. The wages, benefits and work rules of unionized airline industry employees are determined by collective bargaining agreements (“CBAs”). Relations between air carriers and labor unions in the United States are governed by the United States Railway Labor Act (“RLA”).
The airline industry is heavily unionized. The wages, benefits and work rules of unionized airline industry employees are determined by collective bargaining agreements (“CBAs”). Relations between air carriers and labor unions in the United States are governed by the United States Railway Labor Act (“RLA”).
“NMB” means the National Mediation Board. “Non-fare passenger revenue” consists of fees related to certain ancillary items such as baggage, service fees, seat selection, and other passenger-related revenue that is not included as part of base fares for travel. “Non-fare passenger revenue per passenger” means non-fare passenger revenue divided by passengers. “OTA” means Online Travel Agent.
“Non-fare passenger revenue” consists of fees related to certain ancillary items such as baggage, service fees, seat selection, and other passenger-related revenue that is not included as part of base fares for travel. “Non-fare passenger revenue per passenger” means non-fare passenger revenue divided by passengers.
Investing Activities During the year ended December 31, 2023, net cash used in investing activities totaled $90 million, driven by: • $51 million in cash outflows for capital expenditures; • $36 million in net outflows for PDP activity; and • $3 million in cash outflows relating to other investing activity.
Investing Activities During the year ended December 31, 2024, net cash used in investing activities totaled $75 million, driven by: • $76 million in cash outflows for capital expenditures; and • $2 million in cash outflows relating to other investing activity; partially offset by • $3 million in net proceeds for PDP activity. 75 During the year ended December 31, 2023, net cash used in investing activities totaled $90 million, driven by: • $51 million in cash outflows for capital expenditures; • $36 million in net outflows for PDP activity; and • $3 million in cash outflows relating to other investing activity.
As of December 31, 2023, we had capitalized $141 million of rate per hour payments which are probable to be recovered via future shop visits. Recently Adopted Accounting Pronouncements See “Notes to Consolidated Financial Statements — 1.
As of December 31, 2024, we had capitalized $209 million of rate per hour payments which are probable to be recovered via future shop visits. Recent Accounting Pronouncements See “Notes to Consolidated Financial Statements — 1.
The following table presents our distribution channel mix: Year Ended December 31, Change Distribution Channel 2023 2022 Our website, mobile app and other direct channels 72 % 70 % 2 pts Third-party channels 28 % 30 % (2) pts Depreciation and Amortization .
The following table presents our distribution channel mix: Year Ended December 31, Change Distribution Channel 2024 2023 Our website, mobile app and other direct channels 72 % 72 % — pt Third-party channels 28 % 28 % — pt Depreciation and Amortization .
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss) and Net Income to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR Year Ended December 31, 2023 2022 (in millions) Non-GAAP financial data (unaudited): Adjusted pre-tax income (loss) (a) $ 34 $ (19) Adjusted net income (loss) (a) $ 28 $ (17) EBITDA (a) $ 47 $ — EBITDAR (b) $ 601 $ 556 Adjusted EBITDA (a) $ 49 $ 12 Adjusted EBITDAR (b) $ 603 $ 568 __________________ (a) Adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA are included as supplemental disclosures because we believe they are useful indicators of our operating performance.
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss) and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR Year Ended December 31, 2024 2023 (in millions) Non-GAAP financial data (unaudited): Adjusted pre-tax income (loss) (a) $ 49 $ 34 Adjusted net income (loss) (a) $ 53 $ 28 EBITDA (a) $ 130 $ 47 EBITDAR (b) $ 805 $ 601 Adjusted EBITDA (a) $ 92 $ 49 Adjusted EBITDAR (b) $ 767 $ 603 __________________ (a) Adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA are included as supplemental disclosures because we believe they are useful indicators of our operating performance.
We have seven union-represented employee groups comprising approximately 86% of our employees as of December 31, 2023.
We have seven union-represented employee groups comprising approximately 87% of our employees as of December 31, 2024.
We refer to accounting estimates of this type as critical accounting estimates, which we discuss below. For a detailed discussion of our significant accounting policies, please refer to “Notes to Consolidated Financial Statements — 1. Summary of Significant Accounting Policies.” Frequent Flyer Program Our FRONTIER Miles program provides frequent flyer travel awards to program members based on accumulated miles.
For a detailed discussion of our significant accounting policies, please refer to “Notes to Consolidated Financial Statements — 1. Summary of Significant Accounting Policies.” Frequent Flyer Program Our FRONTIER Miles program provides frequent flyer travel awards to program members based on accumulated miles.
Aircraft fuel expense decreased by $30 million, or 3%, during the year ended December 31, 2023, as compared to the year ended December 31, 2022. The decrease was primarily due to a 17% decrease in fuel cost per gallon, substantially offset by the 17% increase in gallons consumed, driven by higher capacity. Salaries, Wages and Benefits .
Aircraft fuel expense decreased by $89 million, or 8%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023. The decrease was primarily due to a 12% decrease in fuel cost per gallon, partially offset by the 5% increase in gallons consumed, driven by higher capacity. Salaries, Wages and Benefits .
In addition, EBITDAR and adjusted EBITDAR should not be viewed as a measure of overall performance since they exclude aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. Accordingly, you are cautioned not to place undue reliance on this information.
In addition, EBITDAR and adjusted EBITDAR should not be viewed as a measure of overall performance since they exclude aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business.
See “Notes to Consolidated Financial Statements — 8. Debt”. (b) Represents interest on debt obligations. (c) Represents gross cash payments related to our operating lease obligations that are not subject to discount as compared to the obligations measured on our consolidated balance sheets. See “Notes to Consolidated Financial Statements — 9. Operating Leases”.
See “Notes to Consolidated Financial Statements — 8. Debt”. (b) Represents interest and commitment fees on debt obligations and our undrawn Revolving Loan Facility. (c) Represents gross cash payments related to our operating fixed lease obligations that are not subject to discount as compared to the obligations measured on our consolidated balance sheets.
We continue to monitor our covenant compliance with various parties, including, but not limited to, our lenders and credit card processors. As of the date of this report, we are in compliance with all of our covenants.
No warrants have been exercised as of December 31, 2024. 72 We continue to monitor our covenant compliance with various parties, including, but not limited to, our lenders and credit card processors. As of the date of this report, we are in compliance with all of our covenants.
Our net loss of $37 million was also adjusted by the following non-cash items to arrive at cash used in operating activities: • $87 million in gains recognized on sale-leaseback transactions; • $8 million in deferred tax benefits; partially offset by • $45 million in depreciation and amortization; • $15 million in stock-based compensation expense; • $7 million in losses on extinguishment of debt; and • $1 million in amortization of cash flow hedges, net of tax.
Our net income of $85 million was also adjusted by the following non-cash items to arrive at cash used in operating activities: • $294 million in gains recognized on sale-leaseback transactions; partially offset by • $72 million in depreciation and amortization; • $16 million in stock-based compensation expense; • $1 million loss on extinguishment of debt; and • $1 million in amortization of cash flow hedges, net of tax.
We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered and the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time.
We cannot reasonably estimate our potential future payments under the indemnities and related provisions described above because we cannot predict when and under what circumstances these provisions may be triggered and the amount that would be payable if the provisions were triggered because the amounts would be based on facts and circumstances existing at such time. 77 Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP.
As a result of the six aircraft and five engine extension events, for the year ended December 31, 2023, we recorded a benefit of $53 million to aircraft rent in our consolidated statement of operations related to previously accrued lease return costs that were variable in nature and associated with the anticipated utilization and condition of the airframes and engines at the original return date.
For the years ended December 31, 2024 and 2023, we 78 recorded a benefit of $14 million and $53 million, respectively, to aircraft rent in our consolidated statement of operations related to previously accrued lease return costs that were variable in nature and associated with the anticipated utilization and condition of the airframes at the original return date.
(b) In December 2023, we recorded a $37 million non-cash valuation allowance against our U.S. federal and state net operating loss deferred tax assets, which largely don't expire, mainly as a result of being in a three-year cumulative pre-tax loss position, which has no impact on cash taxes and is not reflective of our effective tax rate for deductible net operating losses generated or actual cash tax obligations created. 68 Comparative Operating Statistics The following table sets forth our operating statistics for the years ended December 31, 2023 and 2022.
(b) During the years ended December 31, 2024 and 2023, we recorded $5 million and $37 million non-cash valuation allowances, respectively, against our U.S. federal and state NOL deferred tax assets, which largely do not expire, mainly as a result of being in a three-year cumulative pre-tax loss position, which has no impact on cash taxes and is not reflective of our effective tax rate for deductible NOLs generated or actual cash tax obligations created.
“CASM (excluding fuel)” is a non-GAAP measure and means operating expenses less aircraft fuel expense, divided by ASMs. 78 “CASM including net interest” or “CASM + net interest” is a non-GAAP measure and means the sum of CASM and net interest expense (income) divided by ASMs. “CBA” means a collective bargaining agreement.
“CASM (excluding fuel)” is a non-GAAP measure and means operating expenses less aircraft fuel expense, divided by ASMs. “CASM including net interest” or “CASM + net interest” is a non-GAAP measure and means the sum of CASM and net interest expense (income) divided by ASMs. 81 “DOT” means the United States Department of Transportation.
Our non-fuel expenses increased by 11% during the year ended December 31, 2023, as compared to the corresponding prior year period, driven primarily by higher capacity and a larger fleet size and the resulting increase in operations during the same period, partly offset by increased sale-leaseback gains.
Our non-fuel expenses increased by 9% during the year ended December 31, 2024, as compared to the corresponding prior year period, driven primarily by higher capacity and a larger fleet size and the resulting increase in operations during the same period, partially offset by an increase in sale-leaseback gains, the cost benefit from our network simplification, and a legal settlement.
Our Low Fares Done Right strategy is underpinned by our low-cost structure, and has significantly reduced our cost base by increasing aircraft utilization, transitioning to larger and more fuel-efficient aircraft, maximizing seat density, renegotiating the majority of our distribution agreements, realigning our network, migrating to a self-service customer service model, enhancing our website and mobile app, boosting employee productivity and contracting with leading specialists to provide us with select operating and other services.
Our Low Fares Done Right strategy is underpinned by our low-cost structure, and has significantly reduced our cost base by optimizing aircraft utilization with disciplined capacity deployment across peak and off peak periods to align capacity with expected travel demand patterns, transitioning to larger and more fuel-efficient aircraft, maximizing seat density, renegotiating the majority of our distribution agreements, realigning and simplifying our network, enhancing our website and mobile app, boosting employee productivity and contracting with leading specialists to provide us with select operating and other services.
As of December 31, 2023, we did not have any other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our results of operations, financial condition or cash flows.
As of December 31, 2024, we did not have any other off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our results of operations, financial condition or cash flows. 76 Commitments and Contractual Obligations As of December 31, 2024, our contractual purchase commitments include future aircraft and spare engine acquisitions.
The following table presents the major indicators of our financial condition and liquidity: December 31, 2023 2022 ($ in millions) Cash and cash equivalents $ 609 $ 761 Total current assets, excluding cash and cash equivalents $ 262 $ 259 Total current liabilities, excluding current maturities of long-term debt and operating leases $ 858 $ 933 Current maturities of long-term debt, net $ 251 $ 157 Long-term debt, net $ 219 $ 272 Stockholders’ equity $ 507 $ 509 Debt to capital ratio 48 % 46 % Debt to capital ratio, including operating lease obligations 87 % 85 % Use of Cash and Future Obligations We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our PDP Financing Facility and cash flows from operating activities.
The following table presents the major indicators of our financial condition and liquidity as of: December 31, 2024 2023 ($ in millions) Cash and cash equivalents $ 740 $ 609 Total current assets, excluding cash and cash equivalents $ 250 $ 262 Total current liabilities, excluding current maturities of long-term debt and operating leases $ 927 $ 858 Current maturities of long-term debt, net $ 261 $ 251 Long-term debt, net $ 241 $ 219 Stockholders’ equity $ 604 $ 507 Debt to capital ratio 45 % 48 % Debt to capital ratio, including operating lease obligations 88 % 87 % Use of Cash and Future Obligations We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our Pre-delivery Credit Facilities, and cash flows from operating activities.
Commitments and Contractual Obligations Our contractual purchase commitments as of December 31, 2023 include future aircraft and spare engine acquisitions. Except to the extent set forth in the applicable notes to our consolidated financial statements, the table below does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time.
Except to the extent set forth in the applicable notes to our consolidated financial statements, the table below does not include commitments that are contingent on events or other factors that are uncertain or unknown at this time.
A320neo A321neo Total Aircraft (a) Engines Year Ending 2024 — 23 23 2 2025 17 25 42 4 2026 19 22 41 4 2027 21 21 42 3 2028 10 30 40 2 Thereafter — 22 22 — Total 67 143 210 15 __________________ (a) While the commitments presented above reflect the agreed-upon delivery dates as of December 31, 2023, we have recently experienced delays in the deliveries of Airbus aircraft which may persist in future periods.
A320neo A321neo Total Aircraft (a) Engines Year Ending 2025 8 13 21 2 2026 7 15 22 4 2027 8 26 34 3 2028 4 30 34 2 2029 — 36 36 — Thereafter — 40 40 — Total 27 160 187 11 __________________ (a) While the commitments presented above reflect the agreed-upon delivery dates as of December 31, 2024, we have recently experienced delays in the deliveries of Airbus aircraft which may persist in future periods.
For the year ended December 31, 2023, Adjusted (non-GAAP) CASM (excluding fuel) excludes the impact of $1 million in net transaction and merger-related costs incurred in connection with our terminated merger with Spirit Airlines, Inc. (“Spirit”) and $1 million in other operating costs associated 59 with legal fees incurred due to the U.S.
For the year ended December 31, 2024, Adjusted CASM (excluding fuel) excludes the impact of $38 million related to the legal settlement, and for the year ended December 31, 2023, Adjusted CASM 60 (excluding fuel) excludes $1 million in net transaction and merger-related costs incurred in connection with our terminated merger with Spirit Airlines, Inc.
Maintenance, Materials and Repairs and Maintenance Reserve Obligations . The amount of total maintenance costs and related depreciation of heavy maintenance expense is subject to variables such as estimated usage, government regulations, the size, age and makeup of the fleet in future periods, and the level of unscheduled maintenance events and their actual costs.
The amount of total maintenance costs and related depreciation of heavy maintenance expense is subject to variables such as estimated usage, government regulations, the size, age and makeup of the fleet in future periods, and the level of unscheduled maintenance events and their actual costs. Accordingly, we cannot reliably quantify future maintenance-related expenses for any significant period of time.
As part of our assessment of whether a valuation allowance is warranted, we consider all available positive and negative evidence in conjunction with evaluating the source and availability of taxable income to utilize such deferred tax assets. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2023.
As part of our assessment of whether a valuation allowance is warranted, we consider all available positive and negative evidence in conjunction with evaluating the source and availability of taxable income to utilize such deferred tax assets.
The following table provides select financial and operational information for the years ended December 31, 2023 and 2022 (in millions): Year Ended December 31, Change 2023 2022 Total operating revenues $ 3,589 $ 3,326 8 % Total operating expenses $ 3,592 $ 3,371 7 % Income (loss) before income taxes $ 32 $ (45) N/M Available seat miles (“ASMs”) 37,822 31,746 19 % Total operating revenues for the year ended December 31, 2023 totaled $3,589 million, an increase of 8% compared to the year ended December 31, 2022.
Overview The following table provides select financial and operational information for the years ended December 31, 2024 and 2023 (in millions, except percentages): Year Ended December 31, Change 2024 2023 Total operating revenues $ 3,775 $ 3,589 5 % Total operating expenses $ 3,717 $ 3,592 3 % Income (loss) before income taxes $ 86 $ 32 169 % Available seat miles (“ASMs”) 39,871 37,822 5 % Revenues Total operating revenues for the year ended December 31, 2024 totaled $3,775 million, an increase of 5% compared to the year ended December 31, 2023.
“Revenue passenger miles” or “RPMs” means the number of miles flown by passengers. 79 “RLA” means the United States Railway Labor Act. “Total ancillary revenue per passenger” means ancillary revenue divided by passengers. “Total revenue per passenger” means the sum of fare revenue, non-fare passenger revenue, and other revenue (collectively, “Total Revenue”) divided by passengers. “Treasury” means the U.S.
“Revenue passenger miles” or “RPMs” means the number of miles flown by passengers. “Total ancillary revenue per passenger” means ancillary revenue divided by passengers. “Total revenue per passenger” means the sum of fare revenue, non-fare passenger revenue, and other revenue (collectively, “Total Revenue”) divided by passengers. “VFR” means visiting friends and relatives.
Income Tax Valuation Allowance As of December 31, 2023, our total deferred tax assets, net of a $48 million valuation allowance, were $757 million, which included $75 million of deferred tax assets related to net operating loss (“NOL”) carry forwards.
Income Tax Valuation Allowance As of December 31, 2024, our total deferred tax assets, net of a $30 million valuation allowance, were $988 million, which included $67 million of deferred tax assets related to NOL carry forwards.
Total operating expenses during the year ended December 31, 2023 totaled $3,592 million, resulting in a cost per available seat mile (“CASM”) of 9.50¢, compared to 10.62¢ for the year ended December 31, 2022. Fuel expense was 3% lower during the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Operating Expenses Total operating expenses during the year ended December 31, 2024 increased to $3,717 million, resulting in a cost per available seat mile (“CASM”) of 9.32¢, a decrease of 2% compared to the year ended December 31, 2023. Fuel expense was $89 million lower, as compared to the corresponding prior year period.
These leases expire between 2025 and the end of 2035. Leases for 42 of our aircraft could generally be renewed at rates based on fair market value at the end of a lease term for extensions ranging from two years to four years.
As of December 31, 2024, all 159 aircraft in our fleet were subject to operating leases. These leases expire between 2025 and 2036. Leases for 59 of our aircraft could generally be renewed based on market rates at the end of the lease term for extensions ranging from two years to four years.
Year Ended December 31, 2023 2022 Change Operating statistics (unaudited) (a) ASMs (millions) 37,822 31,746 19 % Departures 188,841 165,447 14 % Average stage length (miles) 1,007 991 2 % Block hours 523,440 451,156 16 % Average aircraft in service 126 112 13 % Aircraft – end of period 136 120 13 % Average daily aircraft utilization (hours) 11.3 11.1 2 % Passengers (thousands) 30,218 25,486 19 % Average seats per departure 199 193 3 % RPMs (millions) 30,798 25,669 20 % Load Factor 81.4 % 80.9 % 0.5 pts Fare revenue per passenger ($) 42.26 54.22 (22) % Non-fare passenger revenue per passenger ($) 73.85 73.21 1 % Other revenue per passenger ($) 2.66 3.07 (13) % Total ancillary revenue passenger ($) 76.51 76.28 — % Total revenue per passenger ($) 118.77 130.50 (9) % RASM (¢) 9.49 10.48 (9) % CASM (¢) 9.50 10.62 (11) % CASM (excluding fuel) (¢) (b) 6.51 6.96 (6) % CASM + net interest (¢) (b) 9.40 10.62 (11) % Adjusted CASM (¢) (b) 9.49 10.56 (10) % Adjusted CASM (excluding fuel) (¢) (b) 6.50 6.90 (6) % Adjusted CASM (excluding fuel), SLA 1,000 (¢) (b)(c) 6.52 6.87 (5) % Adjusted CASM + net interest (¢) (b) 9.40 10.54 (11) % Fuel cost per gallon ($) 3.10 3.72 (17) % Fuel gallons consumed (thousands) 364,606 312,115 17 % Full-time equivalent employees 7,214 6,450 12 % _________________ (a) Figures may not recalculate due to rounding.
Year Ended December 31, 2024 2023 Change Operating statistics (unaudited) (a) ASMs (millions) 39,871 37,822 5 % Departures 216,374 188,841 15 % Average stage length (miles) 894 1,007 (11) % Block hours 554,399 523,440 6 % Average aircraft in service 146 126 16 % Aircraft – end of period 159 136 17 % Average daily aircraft utilization (hours) 10.3 11.3 (9) % Passengers (thousands) 33,296 30,218 10 % Average seats per departure 205 199 3 % RPMs (millions) 30,630 30,798 (1) % Load factor 76.8 % 81.4 % (4.6) pts Fare revenue per passenger ($) 43.09 42.26 2 % Non-fare passenger revenue per passenger ($) 67.50 73.85 (9) % Other revenue per passenger ($) 2.79 2.66 5 % Total ancillary revenue passenger ($) 70.29 76.51 (8) % Total revenue per passenger ($) 113.38 118.77 (5) % RASM (¢) 9.47 9.49 — % CASM (¢) 9.32 9.50 (2) % CASM (excluding fuel) (¢) (b) 6.71 6.51 3 % CASM + net interest (¢) (b) 9.25 9.40 (2) % Adjusted CASM (¢) (b) 9.42 9.49 (1) % Adjusted CASM (excluding fuel) (¢) (b) 6.81 6.50 5 % Adjusted CASM (excluding fuel), SLA 1,000 (¢) (b)(c) 6.44 6.52 (1) % Adjusted CASM + net interest (¢) (b) 9.35 9.40 (1) % Adjusted CASM + net interest, SLA 1,000 (¢) (b)(d) 8.84 9.43 (6) % Fuel cost per gallon ($) 2.73 3.10 (12) % Fuel gallons consumed (thousands) 381,444 364,606 5 % Full-time equivalent employees 7,913 7,214 10 % _________________ (a) Figures may not recalculate due to rounding.
Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth. As a result of our assessment, we concluded that as of December 31, 2023, it is more likely than not that the benefit from a portion of our federal and state deferred tax assets will not be realized.
As a result of our assessment, we concluded that as of December 31, 2023, it is more likely than not that the benefit from a portion of our federal and state deferred tax assets will not be realized and we recorded a valuation allowance of $37 million against our federal and state deferred tax assets.
Our total debt, net was comprised of $312 million outstanding under our PDP Financing Facility, $80 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), $66 million in 10-year, low-interest loans from the Treasury (collectively, the “PSP Promissory Notes”) and $16 million in secured indebtedness for our headquarters building, partially offset by $4 million in deferred debt acquisition costs.
Our total debt, net was comprised of $329 million outstanding under our PDP Financing Facility, $100 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), $66 million in 10-year, low-interest loans (collectively, the “PSP Promissory Notes”) from the U.S.
Year Ended December 31, 2023 2022 (in millions) Adjusted net income (loss) reconciliation (unaudited): Net income (loss) $ (11) $ (37) Non-GAAP Adjustments (a) : Transaction and merger-related costs, net 1 10 Other operating costs - legal fees 1 — Asset impairment — 7 Collective bargaining contract ratification — 2 CARES Act - write-off of deferred financing costs due to paydown of loan — 7 Pre-tax impact 2 26 Tax benefit (expense) related to non-GAAP adjustments — (6) Valuation allowance (b) 37 — Net income (loss) impact $ 39 $ 20 Adjusted net income (loss) $ 28 $ (17) Adjusted pre-tax income (loss) reconciliation (unaudited): Income (loss) before income taxes $ 32 $ (45) Pre-tax impact 2 26 Adjusted pre-tax income (loss) $ 34 $ (19) 67 Year Ended December 31, 2023 2022 (in millions) EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR reconciliation (unaudited): Net income (loss) $ (11) $ (37) Plus (minus): Interest expense 29 21 Capitalized interest (28) (11) Interest income and other (36) (10) Income tax expense (benefit) 43 (8) Depreciation and amortization 50 45 EBITDA 47 — Plus: Aircraft rent 554 556 EBITDAR $ 601 $ 556 EBITDA $ 47 $ — Plus (minus) (a) : Transaction and merger-related costs, net 1 10 Other operating costs - legal fees 1 — Collective bargaining contract ratification — 2 Adjusted EBITDA 49 12 Plus: Aircraft rent 554 556 Adjusted EBITDAR $ 603 $ 568 (a) See “Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest” above for discussion on adjusting items.
Accordingly, you are cautioned not to place undue reliance on this information. 68 Year Ended December 31, 2024 2023 (in millions) Adjusted net income (loss) reconciliation (unaudited): Net income (loss) $ 85 $ (11) Non-GAAP Adjustments (a) : Legal settlement (38) — Transaction and merger-related costs — 1 Other operating costs - legal fees — 1 Write-off of deferred financing costs 1 — Pre-tax impact (37) 2 Tax benefit (expense) related to non-GAAP adjustments — — Valuation allowance (b) 5 37 Net income (loss) impact $ (32) $ 39 Adjusted net income (loss) $ 53 $ 28 Adjusted pre-tax income (loss) reconciliation (unaudited): Income (loss) before income taxes $ 86 $ 32 Pre-tax impact (37) 2 Adjusted pre-tax income (loss) $ 49 $ 34 69 Year Ended December 31, 2024 2023 (in millions) EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR reconciliation (unaudited): Net income (loss) $ 85 $ (11) Plus (minus): Interest expense 36 29 Capitalized interest (32) (28) Interest income and other (32) (36) Income tax expense (benefit) 1 43 Depreciation and amortization 72 50 EBITDA 130 47 Plus: Aircraft rent 675 554 EBITDAR $ 805 $ 601 EBITDA $ 130 $ 47 Plus (minus) (a) : Legal settlement (38) — Transaction and merger-related costs — 1 Other operating costs - legal fees — 1 Adjusted EBITDA 92 49 Plus: Aircraft rent 675 554 Adjusted EBITDAR $ 767 $ 603 __________________ (a) See “Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest” above for discussion on adjusting items.
This will create higher depreciation expense specific to any aircraft related to heavy maintenance during the final years of the lease as compared to earlier periods.
As a result, maintenance events occurring closer to the end of the lease term will generally have shorter depreciation periods than those occurring earlier in the lease term. This will create higher depreciation expense specific to any aircraft related to heavy maintenance during the final years of the lease as compared to earlier periods. Recent Developments Financing.
(d) Represents $1 million of legal fees incurred due to the U.S. Department of Justice’s substantial requests for information and deposition testimony from us related to the contemplated merger of Spirit and JetBlue Airways. (e) Represents a write-off of $7 million in capitalized software development costs as a result of a termination of a vendor arrangement.
(“Spirit”) and $1 million in other operating costs associated with legal fees incurred due to the U.S. Department of Justice’s substantial requests for information and deposition testimony from us related to the contemplated merger of Spirit and JetBlue Airways (“JetBlue”).
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on February 22, 2023. Overview Frontier Airlines, Inc. (“Frontier”) is an ultra low-cost carrier whose business strategy is focused on Low Fares Done Right .
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on February 20, 2024.
Once these maintenance holidays expire, these 61 aircraft will require more maintenance as they age and our maintenance and repair expenses for each of our aircraft will be incurred at approximately the same intervals.
Once these maintenance holidays expire, these aircraft will require more maintenance as they age and our maintenance and repair expenses for each of our aircraft will be incurred at approximately the same intervals. When these more significant maintenance activities occur, this will result in out-of-service periods during which our aircraft are dedicated to maintenance activities and unavailable to generate revenue.
CASM (excluding fuel) and Adjusted CASM (excluding fuel) are not determined in accordance with GAAP and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. (c) Represents $1 million in employee retention costs incurred in connection with the terminated merger with Spirit for the year ended December 31, 2023.
CASM (excluding fuel) and Adjusted CASM (excluding fuel) are not determined in accordance with GAAP and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
Maintenance, materials and repair expense increased by $33 million, or 23%, during the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Salaries, wages and benefits expense increased by $96 million, or 11%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023.
We have the intent and ability to settle the warrants issued to the Treasury in common shares and we have classified the warrant liability to additional paid-in capital on our consolidated balance sheet. The Treasury has not exercised any warrants as of December 31, 2023.
We have the intent and ability to settle the warrants issued in common shares and we have classified the warrant liability to additional paid-in capital on our consolidated balance sheet. These warrants will expire between May 2025 and June 2026.
We believe that our insurance would cover most of our exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft, services, equipment lease and sale and financing agreements described above. 74 Certain of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations.
Certain of our aircraft and other financing transactions include provisions that require us to make payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations.
For the reconciliation to corresponding GAAP measures, see “Results of Operations—Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest.” (c) Stage Length Adjusted (SLA) to 1,000 miles: Adjusted CASM (excluding fuel) * Square root (stage length / 1,000). 69 Liquidity, Capital Resources and Financial Position Overview As of December 31, 2023, we had $609 million in total available liquidity, made up of cash and cash equivalents.
For the reconciliation to corresponding GAAP measures, see “Results of Operations—Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest.” (c) Stage Length Adjusted (SLA) to 1,000 miles: Adjusted CASM (excluding fuel) * Square root (stage length / 1,000).
(d) Represents purchase commitments for aircraft and engines. See “Notes to Consolidated Financial Statements — 12. Commitments and Contingencies”. (e) Represents fixed maintenance reserve payments for aircraft including estimated amounts for contractual price escalations. See “Notes to Consolidated Financial Statements — 9.
See “Notes to Consolidated Financial Statements — 9. Operating Leases”. (d) Represents purchase commitments for aircraft and engines. See “Notes to Consolidated Financial Statements — 12. Commitments and Contingencies”.
Station Operations . Station operations expense increased by $94 million, or 22%, during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to a 14% increase in departures and a 19% increase in passengers, partially offset by lower passenger reaccommodation expenses. Maintenance, Materials and Repairs .
Station operations expense increased by $121 million, or 23%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increased airport operations as a result of the 15% increase in departures and 10% increase in passengers, partially offset by increased benefits from airport revenue and cost sharing arrangements. 65 Maintenance, Materials and Repairs .
“GDSs” means Global Distribution Systems such as Amadeus, Sabre and Travelport, used by travel agencies and corporations to purchase tickets on participating airlines. “LCC” means low-cost carrier. “Load factor” means the percentage of aircraft seat miles actually occupied on a flight (RPMs divided by ASMs). “Net interest expenses (income)” means interest expense, capitalized interest, interest income and other.
“Load factor” means the percentage of aircraft seat miles actually occupied on a flight (RPMs divided by ASMs). “Net interest expenses (income)” means interest expense, capitalized interest, interest income and other.
See the reconciliation to corresponding GAAP measures provided below. 63 Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest Year Ended December 31, 2023 2022 ($ in millions) Per ASM (¢) ($ in millions) Per ASM (¢) Non-GAAP financial data: (a) CASM 9.50 10.62 Aircraft fuel (1,130) (2.99) (1,160) (3.66) CASM (excluding fuel) (b) 6.51 6.96 Transaction and merger-related costs, net (c) (1) (0.01) (10) (0.03) Other operating costs - legal fees (d) (1) — — — Asset impairment (e) — — (7) (0.02) Collective bargaining contract ratification (f) — — (2) (0.01) Adjusted CASM (excluding fuel) (b) 6.50 6.90 Aircraft fuel 1,130 2.99 1,160 3.66 Adjusted CASM (g) 9.49 10.56 Net interest expense (income) (35) (0.09) — — CARES Act - write-off of deferred financing costs due to paydown of loan (h) — — (7) (0.02) Adjusted CASM + net interest (i) 9.40 10.54 CASM 9.50 10.62 Net interest expense (income) (35) (0.10) — — CASM + net interest (i) 9.40 10.62 __________________ (a) Cost per ASM figures may not recalculate due to rounding.
The primary difference between the effective tax rate and the federal statutory rate for the year ended December 31, 2024 was related to a decrease in our valuation allowance relating to federal and state net operating losses (“NOLs”). 66 Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest Year Ended December 31, 2024 2023 ($ in millions) Per ASM (¢) ($ in millions) Per ASM (¢) Non-GAAP financial data: (a) CASM 9.32 9.50 Aircraft fuel (1,041) (2.61) (1,130) (2.99) CASM (excluding fuel) (b) 6.71 6.51 Legal settlement (c) 38 0.10 — — Transaction and merger-related costs (d) — — (1) (0.01) Other operating costs - legal fees (e) — — (1) — Adjusted CASM (excluding fuel) (b) 6.81 6.50 Aircraft fuel 1,041 2.61 1,130 2.99 Adjusted CASM (f) 9.42 9.49 Net interest expense (income) (28) (0.07) (35) (0.09) Write-off of deferred financing costs (g) (1) — — — Adjusted CASM + net interest (h) 9.35 9.40 CASM 9.32 9.50 Net interest expense (income) (28) (0.07) (35) (0.10) CASM + net interest (h) 9.25 9.40 __________________ (a) Cost per ASM figures may not recalculate due to rounding.
RASM decreased 9% during the year ended December 31, 2023 as compared to the year ended December 31, 2022, driven by a 9% decrease in total revenue per passenger due to fare, as well as the 2% increase in stage length, partially offset by the 0.5 point increase in load factor. 62 Operating Expenses Year Ended December 31, Change Cost per ASM Change 2023 2022 2023 2022 Operating expenses ($ in millions): (a) Aircraft fuel $ 1,130 $ 1,160 $ (30) (3) % 2.99 ¢ 3.66 ¢ (18) % Salaries, wages and benefits 858 715 143 20 % 2.27 2.25 1 % Aircraft rent 554 556 (2) — % 1.47 1.75 (16) % Station operations 516 422 94 22 % 1.36 1.33 2 % Maintenance, materials and repairs 179 146 33 23 % 0.47 0.46 2 % Sales and marketing 164 164 — — % 0.43 0.52 (17) % Depreciation and amortization 50 45 5 11 % 0.13 0.14 (7) % Transaction and merger-related costs, net 1 10 (9) (90) % — 0.03 N/M Other operating expenses 140 153 (13) (8) % 0.38 0.48 (21) % Total operating expenses $ 3,592 $ 3,371 $ 221 7 % 9.50 ¢ 10.62 ¢ (11) % Operating statistics: ASMs (millions) 37,822 31,746 6,076 19 % Average stage length (miles) 1,007 991 16 2 % Passengers (thousands) 30,218 25,486 4,732 19 % Departures 188,841 165,447 23,394 14 % CASM (excluding fuel) (¢) (b) 6.51 6.96 (0.45) (6) % Adjusted CASM (excluding fuel) (¢) (b) 6.50 6.90 (0.40) (6) % Fuel cost per gallon ($) 3.10 3.72 (0.62) (17) % Fuel gallons consumed (thousands) 364,606 312,115 52,491 17 % ________________ N/M = Not meaningful (a) Cost per ASM figures may not recalculate due to rounding.
The increase in capacity was driven by the 16% increase in average aircraft in service during the year ended December 31, 2024, as compared to the year ended December 31, 2023, partially offset by a 9% decrease in average daily aircraft utilization for the corresponding prior year period due primarily to our disciplined capacity deployment focused on peak days of the week. 64 Operating Expenses Year Ended December 31, Change Cost per ASM Change 2024 2023 2024 2023 Operating expenses ($ in millions): (a) Aircraft fuel $ 1,041 $ 1,130 $ (89) (8) % 2.61 ¢ 2.99 ¢ (13) % Salaries, wages and benefits 954 858 96 11 % 2.39 2.27 5 % Aircraft rent 675 554 121 22 % 1.69 1.47 15 % Station operations 637 516 121 23 % 1.60 1.36 18 % Maintenance, materials and repairs 209 179 30 17 % 0.52 0.47 11 % Sales and marketing 178 164 14 9 % 0.45 0.43 5 % Depreciation and amortization 72 50 22 44 % 0.18 0.13 38 % Transaction and merger-related costs — 1 (1) N/M — — N/M Other operating expenses (49) 140 (189) N/M (0.12) 0.38 N/M Total operating expenses $ 3,717 $ 3,592 $ 125 3 % 9.32 ¢ 9.50 ¢ (2) % Operating statistics: ASMs (millions) 39,871 37,822 2,049 5 % Average stage length (miles) 894 1,007 (113) (11) % Passengers (thousands) 33,296 30,218 3,078 10 % Departures 216,374 188,841 27,533 15 % CASM (excluding fuel) (¢) (b) 6.71 6.51 0.20 3 % Adjusted CASM (excluding fuel) (¢) (b) 6.81 6.50 0.31 5 % Fuel cost per gallon ($) 2.73 3.10 (0.37) (12) % Fuel gallons consumed (thousands) 381,444 364,606 16,838 5 % ________________ N/M = Not meaningful (a) Cost per ASM figures may not recalculate due to rounding.
We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings on our credit facility and/or potential issuances of debt or equity. We also have unencumbered 70 loyalty and brand-related assets which we believe could generate significant additional liquidity, if desired.
We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings under the Pre-delivery Credit Facilities, our undrawn Revolving Loan Facility and/or potential issuances of debt or equity.
When such costs become both probable and estimable, they are accrued as a component of supplemental rent through the remaining lease term. Changes to the assumptions utilized in the estimation of these lease return costs are accounted for on a cumulative catch-up basis.
These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition). When such costs become both probable and estimable, they are accrued as a component of supplemental rent through the remaining lease term.
Operating Leases”. 71 Cash Flows The following table presents information regarding our cash flows in the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (in millions) Net cash used in operating activities $ (261) $ (78) Net cash used in investing activities (90) (154) Net cash provided by financing activities 199 75 Net decrease in cash, cash equivalents and restricted cash (152) (157) Cash, cash equivalents and restricted cash at beginning of period 761 918 Cash, cash equivalents and restricted cash at end of period $ 609 $ 761 Operating Activities During the year ended December 31, 2023, net cash used in operating activities totaled $261 million, which was driven by an $11 million net loss, $211 million of outflows from changes in operating assets and liabilities and non-cash adjustments totaling $39 million.
During the year ended December 31, 2023, net cash used in operating activities totaled $261 million, which was driven by an $11 million net loss, $211 million of outflows from changes in operating assets and liabilities and non-cash adjustments totaling $39 million.
The $30 million decrease in fuel expense for the year ended December 31, 2023, compared to the corresponding period in 2022, was primarily driven by a 17% decrease in fuel prices, largely offset by the 17% increase in fuel gallons consumed during the year ended December 31, 2023, as a result of our 19% increase in capacity.
This 8% decrease in fuel expense for the year ended December 31, 2024 was primarily driven by the 12% decrease in fuel cost per gallon, partially offset by the 5% increase in fuel gallons consumed, as a result of our 5% capacity increase.
To the extent that there are material differences between these estimates and actual results, our financial condition and results of operations could be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.
We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting estimates, which we discuss below.
Depreciation and amortization expense increased by $5 million, or 11%, during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to an increase in capitalized maintenance, partially offset by a $7 million asset impairment recorded during the year ended December 31, 2022. Transaction and Merger-Related Costs, Net.
Depreciation and amortization expense increased by $22 million, or 44%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to an increase in capitalized maintenance depreciation due to our growing fleet. Other Operating .
Aircraft Rent . Aircraft rent expense decreased slightly by $2 million, during the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to the reversal of $53 million of previously accrued lease return costs due to lease extensions of six of our aircraft and five engines, partially offset by a larger fleet.
Aircraft rent expense increased by $121 million, or 22%, during the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to a larger fleet and increased aircraft lease return costs. Station Operations .
This was primarily due to a 19% increase in capacity, as measured by ASMs, partially offset by the 9% decrease in revenue per available seat mile (“RASM”).
This was primarily due to the 5% increase in capacity, as measured by ASMs.
We had $470 million of total debt, net, of which $251 million was short-term and consisted of amounts outstanding under our pre-delivery deposit payment facility (“PDP Financing Facility”) and secured indebtedness related to our headquarters building.
We had $502 million of total debt, net, of which $261 million was short-term and consisted primarily of amounts outstanding under our Pre-delivery Credit Facilities.
Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with GAAP. In doing so, we make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities.
In doing so, we make estimates and assumptions that affect our reported amounts of assets, liabilities, revenue and expenses, as well as related disclosure of contingent assets and liabilities. To the extent that there are material differences between these estimates and actual results, our financial condition and results of operations could be affected.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are subject to market risk associated with changing interest rates, due to Secured Overnight Financing Rate (“SOFR”) based interest rates on our PDP Financing Facility and our floating rate building note and Effective Federal Funds Rate (“EFFR”) based interest rates on our affinity card advance purchase of miles.
Biggest changeWe are subject to market risk associated with changing interest rates, due to Secured Overnight Financing Rate (“SOFR”) based interest rates on our PDP Financing Facility, Second PDP Financing Facility and Revolving Loan Facility, which remains undrawn as of December 31, 2024, as well as Effective Federal Funds Rate (“EFFR”) based interest rates on our affinity card advance purchase of miles with Barclays.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We are subject to market risks in the ordinary course of our business. These risks include commodity price risk, with respect to aircraft fuel, as well as interest rate risk, specifically with respect to our floating rate obligations and interest rate swaps.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK We are subject to market risks in the ordinary course of our business. These risks include commodity price risk, with respect to aircraft fuel, as well as interest rate risk, specifically with respect to our floating rate obligations.
Based on our annual fuel consumption over the last 12 months, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased aircraft fuel expense by approximately $113 million. Interest Rates .
Based on our annual fuel consumption over the last 12 months, a hypothetical 10% increase in the average price per gallon of aircraft fuel would have increased aircraft fuel expense by approximately $104 million. Interest Rates .
During the year ended December 31, 2023 as applied to our average debt balances, a hypothetical increase of 100 basis points in average annual interest rates on our variable-rate debt would have increased the annual interest expense by $4 million.
During the year ended December 31, 2024, as applied to our average debt balances, a hypothetical increase of 100 basis points in average annual interest rates on our variable-rate debt would have increased the annual interest expense by $4 million. 83
Our results of operations can vary materially due to changes in the price and availability of aircraft fuel and are also impacted by the number of aircraft in use and the number of flights we operate. Aircraft fuel represented approximately 31% and 34% of total operating expenses for the years ended December 31, 2023 and 2022, respectively.
Our results of operations can vary materially due to changes in the price and availability of aircraft fuel and are also impacted by the number of aircraft in use and the number of flights we operate. Aircraft 82 fuel represented approximately 28% and 31% of total operating expenses for the years ended December 31, 2024 and 2023, respectively.
Removed
We are exposed to interest rate risk through aircraft lease contracts for the time period between agreement of terms and commencement of the lease, where portions of the rental payments are adjusted and become fixed based on swap rates.
Removed
As part of our risk management program, we enter into contracts in order to limit the exposure to fluctuations in interest rates. During the year ended December 31, 2023, we did not enter into any swaps and, therefore, paid no upfront premiums for options.
Removed
During the year ended December 31, 2022, we paid $19 million in upfront premiums for the option to enter into and exercise cash-settled swaps with a forward starting effective date. As of December 31, 2023, we have no interest rate hedges outstanding . 80

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