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Frontier Airlines “A Whole Different Animal” Mike Smith Nathan Galieti Matt Miller Jack Moutoux.

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Presentation on theme: "Frontier Airlines “A Whole Different Animal” Mike Smith Nathan Galieti Matt Miller Jack Moutoux."— Presentation transcript:

1 Frontier Airlines “A Whole Different Animal” Mike Smith Nathan Galieti Matt Miller Jack Moutoux

2 Mission Statement “Our tagline "A whole different animal" means we approach our business with four key principles in mind. These are the four legs that we stand on. They're who we are. "A whole different animal" represents our promise to you. Simply put, our goal is to do the little things that make a big difference to you.” Four Principles Are: –Affordable –Flexible –Accommodating –Comfortable

3 Revamped Mission Statement “Our tagline "A whole different animal" means we approach our business with four key principles in mind. These are the four legs that we stand on. They're who we are. "A whole different animal" represents our promise to you. Simply put, our goal is to do the little things that make a big difference to you.” Five Principles Are: –Affordable –Flexible –Accommodating –Comfortable –Commitment to Safety

4 Business Strategy “Provide air service at affordable fares to high volume markets from our Denver hub and limited point-to-point routes outside of our Denver hub while seeking ways to leverage our strong market position in Denver and excellent product and service.” –Stimulate demand by offering a combination of low fares, quality service and frequent flyer credits in our frequent flyer program, EarlyReturns –Continue filling gaps in flight frequencies to current markets from our Denver hub. –Continue to successfully defend our position in Denver against new entrants. Investment in the Community –99% of flights begin or end at Denver International –6000+ jobs in the Denver area

5 Important Officers Sean Menke – President and Chief Executive Officer Chris Collins – Executive Vice President and Chief Operations Officer Ted Christie – Senior Vice President and Chief Financial Officer Gerry Coady – Senior Vice President and Chief Information Officer Ann Block – Senior Vice President – People Matt Henry – Vice President and General Counsel Cameron Kenyon – Vice President –Flight Operations

6 Financial Picture Year Ended March Total Operating Revenue (000s) $1,398,981$1,170,949$1,001,522$837,585$644,739 Total Operating Expenses (000s) $1,434,311$1,181,651$1,009,419$864,032$617,257 Net Income (Loss) (35,030)(9,834)(7,897)(26,447)27,482 Revenue Passenger Miles (000s) 10,175,2208,532,5777,436,8306,587,5895,120,587 Available Seat Miles (000s) 12,666,31611,310,0709,885,5999,115,8687,153,740 Passenger Load Factor 80.3%75.4%75.2%72.3%71.6% Average Fare $ $ $ $ $

7 Letter from the CEO Thank you for choosing to fly with us on Frontier Airlines. Please relax and enjoy your trip, and allow our people to show you the one-of-a-kind customer service we have become known for over the years. You may have heard our corporate slogan: A Whole Different Animal. Yes, that's a play on words with the animals on our tails, but the message runs deeper than that. Our people show up to work each and every day set on the purpose of delivering you a different, superior travel experience every time you fly Frontier. We want to earn your loyalty one action at a time, no matter how big or how small. As you no doubt know, these are challenging economic times for everybody, and the airline industry is no different. The airlines have been hit particularly hard by the rising cost of oil. You feel the pain at the pump when you gas up your automobiles. That pain is magnified significantly for us when we fuel our fleet of aircraft. In April of this year, Frontier and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Our goal is for this move to have as little impact as possible upon you, our valued customer. Our mission and values have not changed, and our people are as committed to you as ever. We continue to work diligently to do everything possible to ensure that we are viable as an airline for the long-term. We have recently secured a number of agreements that will give us a great deal of staying power. We want you to feel confident when you book future flights on Frontier Airlines that we will be here for you; always willing to go the extra mile to make sure you have an enjoyable trip. Through our first 15 years of operation, we have enjoyed a loyalty and affection among our customers that is especially rare in the airline industry. Never has that support been more appreciated than in the last several months. We know you have put your faith in us, and we want to reward that faith by providing our passengers safe, high-quality, affordable air service with an emphasis on customer service for many years to come. We look forward to seeing you in the skies again very soon. Thank you again for flying Frontier Airlines. Sincerely, Sean E. Menke President & CEO Frontier Airlines

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9 Competition Major Competition out of Denver International Airport (DIA) –United Airlines –Ted (Low Cost Carrier owned by United) –Southwest Airlines Market Share of DIA (March, 2008) –United Airlines, Ted, and Affiliates: 49.8% –Southwest Airlines: 6.6% –Frontier Airlines & Lynx Aviation: 26.7%

10 Fare Comparison AirlinePrice American Airlines$281 United Airlines$154 Frontier Airlines$154 Chicago, Illinois to Denver, Colorado –Flight Leaving Today, November 20 –Flights searched off of –*Frontier’s Flight from Midway, not O’Hare

11 Fleet Aircraft Model No. of Aircraft (* leased) Year of Manufacture Approx. Seating Capacity A31936* A A3182*04114 A A Average3.9 years132 seats Operate a mainline fleet of 60 jets, 38 leased and 22 owned Regional fleet of 10 Bombardier Q400 turboprops operated by Lynx Aviation

12 Maintenance and Repairs Perform majority of line and long interval MX at our subleased hanger at DIA Maintain additional facilities in: Phoenix, AZ and Kansas City, MO Contract MX at spoke cities, when we can’t meet demand: facility, staff, or MX needs 9 consecutive years: received FAAs Diamond Certificate of Excellence – 100% of MX and engineering staff completed advanced training programs

13 Aircraft and Engines Common Airbus fleet with GE engines MX cost/hour agreement with GE – 12 month contracts – Monthly payments: (Flat Rate) × (Engine Hours) Aircraft Cost savings: – Standardized crew training – Simplified MX issues – Reduced spare parts inventory – More efficient scheduling

14 Fleet and Maintenance Dependent on single manufacturers Airbus unable to manufacture aircraft or spare parts, we would incur substantial costs if forced to acquire Boeing aircraft Business significantly disrupted resulting from FAA airworthiness directive or service bulletin that grounded Airbus fleet or GE engines Public perception of safety, due to accident or incident involving Airbus aircraft or GE engines

15 Fuel Fiscal Year EndedAverage Fuel Price/Gallon June 23, 2008*$4.22 March 31, 2008$2.45 March 31, 2007$2.12 March 31, 2006$1.99 Based on current fleet and capacity, an estimated 1¢ increase in fuel price/gallon, increases annual operating expenses by $1.9 Million

16 Salary Cuts August-September 2007 –Compensation committee approved salary increases 5.3%-25% Salaries at or below 50th percentile in the market Bankruptcy Filing on April 10, 2008 –Salary reduction program –CEO Sean Menke 20% Reduction in Base Salary –Other officers 10% Reduction in Base Salary

17 Salary Name and Principal PositionYearSalary ($) Stock Awards ($) Option Awards ($) All Other Compensation ($)Total ($) Sean Menke President and CEO ,542161,100310,520527,526 1,182,688 Jeff S. Potter former President and CEO , , , , , ,595 7,500 10, , ,829 Paul Tate former Chief Financial Officer , , ,690 50, ,191 99,998 26,771 11, , ,378 Christopher L. Collins Executive VP and COO , ,917 82,218 47, ,346 94,996 18,606 57, , ,862 Ann E. Block Sr. VP People , ,125 64,848 35, ,258 69,997 21,914 10, , ,788 Gerard A. Coady Senior VP and CIO ,78516,51338,7671, ,970 John B. Happ former Sr. VP Marketing & Planning , , ,800 56, , , ,125 3, , ,488

18 Severance plan “In June 2008, the United States Bankruptcy Court for the Southern District of New York approved a severance plan…payments to each of our executive officers cannot exceed (approx) $144,000”

19 Commitment to the Future

20 References difference.do from-sean.do


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