frontier airlines “a whole different animal”
Post on 07-Jan-2016
24 Views
Preview:
DESCRIPTION
TRANSCRIPT
Frontier Airlines“A Whole Different Animal”
Mike Smith Nathan Galieti Matt Miller Jack Moutoux
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
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
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
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
Financial Picture
Year Ended March 31 2008 2007 2006 2005 2004
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) 10,175,220 8,532,577 7,436,830 6,587,589 5,120,587
Available Seat Miles (000s) 12,666,316 11,310,070 9,885,599 9,115,868 7,153,740
Passenger Load Factor 80.3% 75.4% 75.2% 72.3% 71.6%
Average Fare $ 103.71 $ 102.59 $ 103.05 $ 102.31 $ 103.54
Letter from the CEOThank 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. MenkePresident & CEOFrontier Airlines
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%
Fare ComparisonAirline Price
American Airlines $281
United Airlines $154
Frontier Airlines $154
• Chicago, Illinois to Denver, Colorado– Flight Leaving Today, November 20– Flights searched off of www.priceline.com– *Frontier’s Flight from Midway, not O’Hare
Fleet
Aircraft ModelNo. of Aircraft
(* leased)Year of
ManufactureApprox. Seating
Capacity
A319 36* 01-07 136
A319 11 01-06 136
A318 2* 04 114
A318 9 03-07 114
A320 2 07 162
Average 3.9 years 132 seats
• Operate a mainline fleet of 60 jets, 38 leased and 22 owned
• Regional fleet of 10 Bombardier Q400 turboprops operated by Lynx Aviation
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
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
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
FuelFiscal Year Ended Average 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 $1.9 Million
Salary Cuts• August-September 2007
– Compensation committee approved salary increases 5.3%-25%
• Salaries at or below 50th percentile in the market
• Bankruptcy Filing on April 10, 2008– Salary reduction program – CEO Sean Menke
• 20% Reduction in Base Salary– Other officers 10% Reduction in Base Salary
SalaryName and Principal Position Year Salary ($)
StockAwards ($)
OptionAwards ($)
All OtherCompensation ($) Total ($)
Sean Menke President and CEO
2008 183,542 161,100 310,520 527,526 1,182,688
Jeff S. Potterformer President and CEO
2008 2007
161,623311,250
110,826100,304
221,000200,595
7,50010,680
500,949622,829
Paul Tateformer Chief Financial
Officer
2008 2007
267,839213,542
120,69050,003
233,19199,998
26,77111,835
648,491375,378
Christopher L. CollinsExecutive VP and COO
2008 2007
263,828194,917
82,21847,503
160,34694,996
18,60657,321
524,998347,862
Ann E. BlockSr. VP People
2008 2007
195,833183,125
64,84835,000
121,25869,997
21,91410,665
403,853289,788
Gerard A. CoadySenior VP and CIO
2008 199,785 16,513 38,767 1,905 256,970
John B. Happformer Sr. VP Marketing &
Planning
2008 2007
182,107225,000
136,80056,251
248,278112,495
188,1253,742
755,310397,488
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”
Commitment to the Future
Referenceshttp://www.frontierairlines.com/secfilings/10k063008/10k063008.pdfhttp://www.frontierairlines.com/frontier/who-we-are/company-info/our-
difference.dohttp://www.frontierairlines.com/frontier/who-we-are/company-info/emails-
from-sean.dohttp://www.frontierairlines.com/frontier/pdf/Annual_Report_2007.pdfwww.priceline.comwww.airliners.net
top related