Key Financial Results
- Q1 Adjusted Revenue: Nearly $1.1 billion (company record)
- Stage-Adjusted RASM: 17% YoY
- Adjusted Pretax Loss: $69 million
- Adjusted Net Loss: $68 million
- Adjusted Loss Per Share: -$0.30 (favorable to guidance)
- Q1 Fuel: $2.88/gallon
- Flown Load Factor: ~78% (nearly 4 points YoY)
- Total Adjusted Revenue Per Passenger: ~$128 (+10% YoY)

Balance Sheet & Liquidity
- Q1 End Liquidity: $974 million (25% of trailing 12-month revenues – “upper end” for airline historically)
- Q2 Expected Liquidity: $900-950 million
- Liquidity Sources: Internal measures including fleet-related activity, co-brand credit card agreement extension discussions

Q2 2026 Guidance
- RASM: 20% YoY
- Stage-Adjusted RASM: Up high teens
- Capacity (ASM): +6% to +8% YoY (lower than originally planned)
- Average Stage Length: ~890 miles
- Fuel Recovery: Anticipate recapturing 35-45% in Q2, improving throughout year; expect ~50% by end Q2, potentially 100% by end of year/early 2027
- Competitive Overlap Capacity: Down 4% YoY

Spirit Airlines Impact

Immediate Response:
- Provided discounted fares on 100+ Spirit routes over weekend
- Extended travel benefits to assist Spirit employees return home
- Encouraging Spirit team members to apply for Frontier positions
- Expanding service summer 2026: 9 additional routes + 15 daily departures across 18 former Spirit routes (Orlando, Las Vegas, DFW, Fort Lauderdale, Detroit)

RASM Impact Expectations:
- 3-5% run rate RASM uplift going forward (based on historical Spirit capacity reductions)
- Approximately 2 points of Q2 improvement already built into guidance from Spirit shutdown
- Management believes uplift “could be higher than 3-5%”
- Frontier has over 30% business overlap with Spirit
- In Q2 2026, Frontier has more route overlap with Spirit than any other US carrier
- Historical context: When Spirit previously reduced capacity, industry backfilled ~50%, with Frontier representing ~40% of that backfill

Market Context:
- Spirit operated 220 aircraft at peak (2024-25), ranked 7th largest US fleet
- Spirit ran 49 daily flights from NYC area airports (35 Newark, 14 LaGuardia) with ~10,000 daily seats
- Summer 2026: US aviation loses 100,000+ available seats daily from Spirit shutdown

Fleet Strategy

Current Status:
- Q1: Took delivery of 7 aircraft (1 more than expected)
- Q2: Expect 7 more deliveries, return 24 aircraft (all by early June)

Deferral/Termination Program:
- Executed 69 aircraft deferrals with Airbus
- 24 lease terminations with AerCap (completed)
- Non-cash charges: $212-239 million total (middle of $200-270M original range)
- Cash charges: $75-95 million (payments largely in 2028-2029)

2026-2027 Fleet Plan:
- 2026: 24 net aircraft (25 deliveries, but last 5 of 2026 + first 6 of 2027 sold outright without leaseback)
- 2027: 6 deliveries (but all 6 sold, so zero net additions)
- Result: Frontier begins 2026 and ends 2027 with same fleet size (~171 aircraft)
- Fleet mix improvement: Removing A320neos, replacing with more efficient A321neos
- Current average passenger fleet age lowered to 11.8 years

Strategic Priorities (4 Pillars)

1. Fleet Rightsizing: ✓ Completed as outlined above

2. Cost Discipline:
- $200 million targeted annual run rate cost savings by 2027 (on track)
- Includes rent reductions, network optimization, productivity benefits
- Full year 2026 CapEx guidance: Lowered by $30 million
- Predelivery deposit (PDP) reduction: $170-210 million expected
- Expect “meaningful reduction” in adjusted nonfuel unit costs as utilization increases

3. Operational Reliability:
- Launched system-wide maintenance strategy
- Focus: Reduce unscheduled aircraft out-of-service events, improve aircraft return-to-service
- Enhancing airport operations, simplifying ticket counters, improving turn times
- Result: April YTD ranked 4th among major domestic carriers in completion factor
- Received FAA Diamond Award of Excellence (2nd consecutive year – highest FAA recognition for maintenance training/safety)
- Multiyear project showing “positive early results”

4. Building Customer Loyalty:
- Loyalty programs: +30% growth in Q1 (4th consecutive quarter of double-digit growth)
- Record co-brand card acquisitions in both February and March
- March card spend: All-time monthly high
- Significant penetration increases in loyalty bookings, credit card, Go Wild membership
- Premium product (Upfront Plus): Driving significant benefit, showcasing demand for upcoming first-class

Product Enhancements:
- First-class seating: Launching second half 2026
- WiFi service: Vendor selection in final stages, installations begin 2027

Capacity & Network Strategy

Fuel Crisis Response:
- Participated in 5 broad industry fare actions since early March
- Targeted capacity reductions concentrated in long-haul flying
- Trimming Tuesday/Wednesday off-peak capacity and long-stage off-peak times
- Management notes: Off-peak capacity performing “pretty well” from RASM perspective
- June capacity: “Cut a little too much,” may redeploy some opportunistically

Long-Term Capacity Philosophy:
- Previously: 20-25% annual growth
- New target: Slightly less than 10% annual growth
- “Reset phase” to improve utilization (some delayed due to fuel spike)
- Fuel-efficient fleet advantage: Lowest per-passenger fuel cost in industry (large portion A321neo)

Utilization Targets:
- Goal: Above 11 hours to 11.5 hours daily utilization by next summer
- Somewhat delayed due to fuel spike but “not meaningfully delayed”
- Managing training classes for pilots/flight attendants to align with production levels

Demand Environment
- Management: “Demand environment is quite strong”
- Q1 strength came from both yield and load factor increases
- Higher fares with people transacting and flying at higher rates
- No signs of demand softening
- Customer resilient with higher fares
- Booking curve showing continued YoY RASM improvement post-fuel spike

Government Relations (AVA)
- Strong relationship with Transportation Secretary Duffy and DOT
- DOT requested AVA share perspective on fuel impact
- Frontier shared fuel cost impact estimates if volatility persists
- Focus on self-help rather than bailouts
- “Feel very good about liquidity position right now”

Asset Opportunities from Spirit
- Spirit announced “orderly wind down”
- Frontier evaluating asset opportunities (immediate aircraft availability)
- Criteria for any acquisition: Must improve unit cost base, market position/network deployment, create value, generate profitability
- “Significant amount of opportunities” around Spirit assets
- Will be “disciplined in any decision”

Management expressed confidence in returning to profitability, noting airline was “on very good trajectory in Q1 prior to fuel spike” and would have been “very close to breakeven” without fuel impact. Strong excitement about capitalizing on Spirit-related opportunities while maintaining disciplined capacity and cost management.