Frontier posts loss as parent Republic seeks buyer

Washington DC
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Frontier Airlines lost $20.1 million during the first quarter of 2013 as parent company Republic Airways Holdings continues to pursue a sale of its low-cost subsidiary.

In an earnings call today, Republic president and chief executive Bryan Bedford declines to provide details about efforts to spin off Frontier, which Republic purchased in 2009 for $109 million plus $1 billion in liabilities, but says the process is moving forward.

"There has recently been some speculative reporting over the last few weeks, [but] we are simply not yet at a point in the process where we can answer any questions," says Bedford. "I can confirm that we continue to work towards a goal of completing the separation process in the June-to-July timeframe."

Bedford's comments come after reports in mid-April that two firms - Phoenix-based Indigo Partners LLC and New York-based Anchorage Capital Group LLC - were interested in purchasing Frontier.

Republic has declined to discuss the matter.

Frontier's $20.1 million pre-tax loss for the quarter is down compared to its pre-tax loss of $21.6 million for the first quarter of 2012.

The airline had a record load factor of nearly 88% during the period, and available seat miles declined nearly 13% as the carrier removed four Airbus aircraft from service.

Republic also reduced from 12 to four the number of Embraer 190 aircraft in Frontier's fleet.

Expenses related to aircraft returns cost Frontier $6 million during the quarter, Bedford notes.

Frontier's total revenue per available seat mile was 11.86 cents, up nearly 4%, and operating cost per available seat mile was 12.58 cents, also up 4%, Republic reports.

Daniel Shurz, Frontier's senior vice president of commercial, says Frontier should benefit from declining domestic capacity at its Denver hub, where it has the majority of its operations.

He expects domestic capacity at the airport to fall 3% in the second quarter of 2013, compared to last year, and fall 4% to 6% in the third quarter, compared to the same period last year.