DENVER,
May 24 /PRNewswire-FirstCall/ -- Frontier Airlines Holdings, Inc.
(Nasdaq: FRNT) today reported a net loss of
$20.4 million, or
$0.56 per
diluted common share, for its fiscal year ended
March 31, 2007. This compares
to a net loss of
$14.0 million, or
$0.39 per diluted common share for the year
ended
March 31, 2006. Included in the Company's net loss for the year ended
March 31, 2007 was a non-cash valuation allowance on net deferred tax assets
of
$4.0 million offset by a non-cash mark to market fuel derivative gain which
decreased pretax fuel expense by
$12.8 million and
$0.7 million in pretax
gains relating to the sale of
Boeing parts held for sale. These items, net of
income taxes, decreased the Company's net loss for the year ended
March 31,
2007 by
$0.12 per share. Included in the Company's net loss for the year
ended
March 31, 2006 were the following items before the effect of income
taxes: aircraft lease and facility exit charges of
$3.4 million primarily
relating to three leased
Boeing 737-300 aircraft that the Company ceased using
during the year, a non-cash mark to market fuel derivative loss which
increased pretax fuel expense by
$2.2 million which were offset by gains of
$1.1 million related to the sale of Boeing parts held for sale and other
assets. These items, net of income taxes, increased the Company's net loss
for the year ended
March 31, 2006 by
$0.08 per share.
For Frontier's fiscal fourth quarter ended March 31, 2007, the airline
reported a net loss of $10.4 million, or $0.29 per common share, compared to a
net loss of $7.9 million, or $0.22 per common share, for the same period last
year. Included in the Company's net loss for the quarter ended March 31, 2007
was a $15.1 million pretax non-cash mark to market fuel derivative gain, which
was offset by a non-cash valuation allowance on net deferred tax assets of
$3.9 million. This item, net of income taxes, reduced the Company's net loss
for the quarter by $0.14 per share. The fiscal fourth quarter 2006 results, on
a pretax basis, included a $0.1 million unrealized fuel derivative gain and a
$0.2 million gain from the sale of spare parts and inventory. These items, net
of income taxes, did not impact the Company's net loss per share.
Chief Executive Officer's Comments
Frontier President and CEO Jeff Potter said, "This quarter was one of the
toughest that we have faced financially, as we continued to suffer the impacts
of the winter storms in Denver that began in December 2006 and carried through
into January 2007, and we were hampered throughout the quarter by adverse
weather around the country. Simultaneously, we saw weakening demand across the
domestic industry that carried through into April combined with a resurgence
of historically high fuel prices.
"What the financial results are unable to reflect however, is the
significant year over year operational improvements we achieved in fiscal 2007
and the growing excitement regarding our diversification which we announced
towards the end of the last calendar year and will be almost fully implemented
by the end of this calendar year. We are on track to launch our subsidiary,
Lynx Aviation, which will provide service to at least four new mountain
destinations and five non-mountain destinations by December 2007. We have
begun flying the Embraer 170 aircraft with our new partners at Republic
Airlines, which will enable us to double our regional jet fleet by December
2008. We continue to grow our successful Mexico service which now operates
year-round in several markets, and we will expand our Central American
footprint this year as we launch service to our fourth country, Costa Rica, in
November 2007. Equally as important, we continue to develop new strategies to
enhance our ancillary revenues through efforts such as trip insurance,
creating co-branded credit card demand, our frequent-flyer and referral
relationship with AirTran, the "cashless cabin" and the development of a new
vacation product that we plan to announce in the coming quarter. In fact, for
the fiscal year ended March 2007, we achieved a very healthy 34 percent
increase in "other" revenue on a year-over-year basis and this is at the
forefront of our strategic focus in the coming year.
"With a foundation of six new gates at our Denver hub that we have brought
on line over the past few months, we continue to diversify our growth away
from over-saturated markets while we further leverage the revenue benefits
inherent in our Denver hub, pairing the proper size of aircraft with smaller
demand markets that are anxious for lower fares and a differentiated product.
With several of our new markets like Memphis and Louisville, we have seen
tremendous response to new low-fare service to the West and for the level of
service that led us to be named Business Traveler Magazine's Low Cost Carrier
of the Year in 2006."
Fourth Quarter Operating and Financial Highlights
Compared to the same quarter last year, mainline passenger revenue
increased 13.4 percent as mainline revenue passenger miles (RPMs) grew at a
rate of 11.0 percent during the fiscal fourth quarter, while mainline capacity
growth as measured by mainline available seat miles (ASMs) increased
14.7 percent. As a result, the airline's mainline load factor was 71.1
percent for its fiscal fourth quarter of 2007, 2.4 load factor points less
than the airline's mainline load factor of 73.5 percent during the same
quarter last year. The airline's mainline breakeven load factor, excluding
special items, for the fiscal fourth quarter 2007 decreased 0.5 load factor
points year over year from 76.2 percent to 75.7 percent.
During the fiscal fourth quarter 2007, the airline's mainline revenue per
available seat mile (RASM) decreased 0.9 percent to 8.57 cents from the same
quarter last year. The decrease in mainline RASM was primarily due to lower
year over year load factors partially offset by a 2.5 percent increase in
mainline yield. Mainline average length of haul decreased 1.1 percent on a
year-over-year basis.
Mainline fuel cost per gallon during the quarter (excluding a non-cash
mark to market fuel hedging gain) decreased less than one percent to
$2.03 compared to $2.04 for the same period last year. Mainline CASM excluding
fuel increased 3.9 percent to 6.61 cents from the same period last year, when
CASM excluding fuel was 6.36 cents.
Senior Vice President and Chief Financial Officer Paul Tate discussed the
airline's year over year unit cost comparatives stating, "Our fiscal fourth
quarter generated higher year over year mainline CASM excluding fuel, caused
primarily by $3.8 million in bad weather operating costs such as increased
deicing costs and $1.5 million in start up costs for our new subsidiary, Lynx
Aviation."
The Company's current unrestricted cash and working capital deficit as of
March 31, 2007 were $203.0 million and -$18.9 million, respectively. This
compares to the Company's unrestricted cash and working capital position as of
March 31, 2006 last year of $272.8 million and $89.9 million, respectively.
Fiscal Year Operating and Financial Highlights
The airline's mainline passenger revenues during its fiscal year 2007
increased 18.1 percent to $1.0 billion from $878.7 million for the prior
fiscal year. The airline's mainline capacity, as measured by ASMs, increased
14.4 percent during fiscal year 2007. During fiscal year 2007, the airline's
mainline break-even load factor, excluding special items, increased 1.6 points
to 77.0 percent. The airline's average fare during its fiscal year 2007
decreased 0.4 percent to $102.59 from $103.05 from the prior fiscal year. The
Company's mainline passenger RASM for fiscal year 2007 increased 3.4 percent
to 9.09 cents from 8.79 cents for fiscal year 2006.
Mainline CASM for the fiscal year 2007 increased to 9.49 cents from
9.13 cents for fiscal year 2006. Mainline CASM excluding the airline's fuel
costs increased 2.9 percent to 6.46 cents during fiscal year 2007, compared to
6.28 cents during fiscal year 2006. During fiscal year 2007, the average cost
per gallon of fuel was $2.20 (excluding a non-cash mark to market gain), an
11.1 percent increase from the prior fiscal year. Daily aircraft utilization
for fiscal year 2007 averaged 11.9 hours, an increase of 3.5 percent from
fiscal year 2006.
Business developments during the quarter included:
* Ratified a new collective bargaining agreement with Frontier Airlines
Pilot Association (FAPA).
* Signed an agreement with Republic Airlines to operate a fleet of
17 Embraer 170 Aircraft, and subsequently took delivery of the first
four aircraft. When fully realized, the new Republic relationship will
almost double Frontier's existing regional fleet of 9 CRJ-700 aircraft
operated by Horizon Air. The Horizon Air agreement is slated to end in
December 2007.
* Designated by the Department of Transportation (DOT) as a "major"
carrier, which recognizes airlines that post more than $1 billion in
revenue during a fiscal year.
* Began new non-stop service between Denver and Hartford, Conn. on
March 2, 2007.
* Began new non-stop service from Sacramento and San Jose, Calif. to Cabo
San Lucas on March 3, 2007.
* Announced new non-stop service between Denver and Louisville, KY which
began March 30, 2007.
* Announced new non-stop service between Dallas and Mazatlan, Mexico,
which will begin June 7, 2007. The new route represents Frontier's
11th US city with non-stop service to one of its eight Mexico
destinations.
* Announced new non-stop service between Denver and Memphis, TN which
began on May 12, 2007.
* Announced new service between Jacksonville, FL and Denver which will
begin June 15, 2007.
* Took delivery of one new Airbus A318 and one new A319 aircraft.
* Executed a stock buy-back of 300,000 shares of common stock to fund the
2007 Employee Stock Ownership Plan contribution.
Outlook
Potter concluded, "The demand in new as well as existing markets, along
with some momentum in terms of revenue for the quarter ahead are positive
indicators of a healthy start to our new fiscal year. However, our enthusiasm
is certainly tempered by fuel costs that continue to spike and remain at
uncomfortably high levels. Frontier's 5,200 employees are ready for a busy
summer. I am confident that while we are going to fly more people than any
time in our history over the next three months, our employees will continue to
impress new and existing passengers alike with the level of customer service
they provide."
Senior leadership will host a conference call to discuss Frontier's
quarterly and annual results on May 25, 2007 at 9:00 a.m. Mountain Daylight
Time. The call is available via the World Wide Web on the airline's Web site
at FrontierAirlines.com or using the following URL:
http://www.vcall.com/IC/CEPage.asp?ID=117169.
Frontier Airlines Holdings, Inc. is the parent company of Denver-based
Frontier Airlines. Currently in its 13th year of operations, Frontier Airlines
is the second-largest jet service carrier at Denver International Airport,
employing approximately 5,200 aviation professionals. With 59 aircraft and one
of the youngest Airbus fleet in North America, Frontier offers 24 channels of
DIRECTV(R) service in every seatback along with 33 inches of legroom in an all
coach configuration. In conjunction with its regional jet fleet, operated by
Horizon and Republic Airlines, Frontier offers routes linking its Denver hub
to 58 destinations including 48 U.S. cities in 30 states spanning the nation
from coast to coast, eight cities in Mexico and two cities in Canada. In
November 2006, Frontier and AirTran announced a first-of-its-kind integrated
marketing partnership that offers travelers the ability to reach more than
80 destinations across four countries with low fares, aboard two of the
youngest fleets in the industry. In December 2006, Frontier was designated
"Best Low Cost Carrier" in the U.S. by the readers of Business Traveler
magazine. Frontier's maintenance department has received the Federal Aviation
Administration (FAA) Diamond Award recognizing its advanced training standards
for eight consecutive years, from 1999 to 2006. For more in-depth information
on Frontier Airlines, please visit our Web site at www.FrontierAirlines.com.
Legal Notice Regarding Forward-Looking Statements
Statements contained in this press release that are not historical facts,
including certain statements of belief by Mr. Potter and Frontier executives
and projections of future performance, may be considered forward-looking
statements as that item is defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements are inherently subject to risks and
uncertainties that could cause actual results to differ materially from these
forward-looking statements. Many of these risks and uncertainties cannot be
predicted with accuracy and some might not even be anticipated. Some of the
factors that could significantly impact the forward-looking statements in this
press release include, but are not limited to: the timing of, and expense
associated with, expansion and modification of our operations in accordance
with our business strategy or in response to competitive pressures or other
factors; failure of our new markets to perform as anticipated; the inability
to achieve a level of revenue through fares sufficient to obtain profitability
due to competition from other air carriers and excess capacity in the markets
we serve; the inability to obtain sufficient gates at Denver International
Airport ("DIA") to accommodate the expansion of our operations; the inability
to successfully lease or build a new maintenance hanger prior to a potential
lease termination of our primary maintenance hanger located at DIA that is on
a month-to-month sublease with Continental Airlines; general economic factors
and behavior of the fare-paying public and its potential impact on our
liquidity; terrorist attacks or other incidents that could cause the public to
question the safety and/or efficiency of air travel; hurricanes and their
impact on oil production; operational disruptions, including weather; industry
consolidation; the impact of labor disputes; enhanced security requirements;
changes in the government's policy regarding relief or assistance to the
airline industry; the economic environment of the airline industry generally;
increased federal scrutiny of low-fare carriers generally that may increase
our operating costs or otherwise adversely affect us; actions of airlines
competing in our primary markets, such as increasing capacity and pricing
actions of United Airlines, Southwest Airlines, and other competitors,
particularly in some of our Mexico destinations due to the increase in the
number of domestic airlines authorized to serve Mexican markets from the U.S.;
the availability of suitable aircraft, which may inhibit our ability to
achieve operating economies and implement our business strategy; the
unavailability of, or inability to secure upon acceptable terms, debt or
operating lease financing necessary to acquire aircraft which we have ordered;
uncertainties regarding aviation fuel price; inherent risks of entering into,
new business strategies, such as the start-up of a new subsidiary using a
different type of aircraft and in different markets and a new regional jet
partner, and various risk factors to our business discussed elsewhere in this
report. Any forward-looking statement is qualified by reference to these risks
and factors. These risks and factors are not exclusive, and the Company
undertakes no obligation to publicly update or revise any forward-looking
statements to reflect events or circumstances that may arise after the date of
this press release. Additional information regarding these and other factors
may be contained in the Company's SEC filings, including without limitation,
the Company's Form 10-K for its fiscal year ended March 31, 2007. The
Company's filings are available from the Securities and Exchange Commission or
may be obtained through the Company's website, www.FrontierAirlines.com.
-Financial Tables To Follow-
FRONTIER AIRLINES HOLDINGS, INC.
SELECTED CONSOLIDATED BALANCE SHEET DATA
(unaudited)
March 31,
2007 2006
(in thousands)
Cash and cash equivalents 202,981 272,840
Current assets 340,405 390,957
Total assets 1,042,868 970,432
Current liabilities 359,326 301,011
Long-term debt 451,908 405,482
Total liabilities 833,372 741,656
Stockholders' equity 209,496 228,776
Working capital (deficit) (18,921) 89,946
FRONTIER AIRLINES HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND YEAR ENDED MARCH 31, 2007 AND 2006
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Year Ended
March 31, March 31, March 31, March 31,
2007 2006 2007 2006
Revenues:
Passenger - mainline $253,306 $223,404 $1,037,302 $878,681
Passenger -
regional partner 19,110 22,992 94,164 92,826
Cargo 1,646 1,623 6,880 5,677
Other 8,356 6,971 32,603 24,338
Total revenues 282,418 254,990 1,170,949 1,001,522
Operating expenses:
Flight operations 43,450 37,218 161,544 141,316
Aircraft fuel 69,625 73,515 343,082 281,906
Aircraft lease 27,862 23,955 108,623 94,229
Aircraft and traffic
servicing 46,339 37,442 166,525 138,492
Maintenance 22,911 20,223 87,978 77,238
Promotion and sales 29,013 24,646 115,536 89,751
General and
administrative 14,649 12,176 56,019 48,979
Operating expenses -
regional partner 24,676 27,297 108,355 106,866
Aircraft lease and
facility exit costs (43) 49 (57) 3,414
Gains on sales of
assets, net -- (179) (656) (1,144)
Depreciation 9,943 7,293 34,702 28,372
Total operating
expenses 288,425 263,635 1,181,651 1,009,419
Business interruption
insurance proceeds -- -- 868 --
Operating income (6,007) (8,645) (9,834) (7,897)
Nonoperating income
(expense):
Interest income 3,002 3,530 14,982 9,366
Interest expense (7,338) (6,887) (29,899) (21,758)
Other, net (135) 24 (245) (179)
Total nonoperating
income (expense),
net (4,471) (3,333) (15,162) (12,571)
Loss before income
tax benefit (10,478) (11,978) (24,996) (20,468)
Income tax benefit (48) (4,125) (4,626) (6,497)
Net loss $(10,430) $(7,853) $(20,370) $(13,971)
Loss per share:
Basic and diluted $(0.29) $(0.22) $(0.56) $(0.39)
Weighted average
shares of common
stock outstanding
Basic and diluted 36,627 36,287 36,608 36,167
FRONTIER AIRLINES HOLDINGS, INC.
COMPARATIVE OPERATING STATISTICS
(unaudited)
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
Selected Operating
Data - Mainline:
Passenger revenue
(000s) $253,306 $223,404 $1,037,302 $878,681
Revenue passengers
carried (000s) 2,223 1,980 9,140 7,764
Revenue passenger
miles (RPMs) (000s) 2,089,189 1,881,737 8,532,577 7,436,830
Available seat miles
(ASMs) (000s) 2,937,034 2,559,519 11,310,070 9,885,599
Passenger load factor 71.1% 73.5% 75.4% 75.2%
Break-even load
factor (1) 75.7% 76.2% 77.0% 75.4%
Block hours 61,583 52,977 234,965 202,300
Departures 25,123 21,540 97,554 82,878
Average seats per
departure 129.8 129.4 129.6 129.4
Average stage length 901 918 895 922
Average length of haul 940 950 934 958
Average daily block
hour utilization 12.3 11.9 11.9 11.5
Passenger yield per
RPM (cents) (2), (3) 12.05 11.76 12.05 11.68
Total yield per RPM
(cents) 12.60 12.33 12.62 12.22
Passenger yield per
ASM (cents) 8.57 8.65 9.09 8.79
Total yield per ASM
(cents) 8.97 9.06 9.52 9.19
Cost per ASM (cents) 8.98 9.23 9.49 9.13
Fuel expense per ASM
(cents) 2.37 2.87 3.03 2.85
Cost per ASM excluding
fuel (cents) (4) 6.61 6.36 6.46 6.28
Average fare $102.09 $101.97 $102.59 $103.05
Average aircraft in
service 55.8 49.4 54.1 48.2
Aircraft in service
at end of period 57 50 57 50
Average age of aircraft
at end of period 3.2 2.6 3.2 2.6
Average fuel cost
per gallon $1.67 $2.03 $2.12 $1.99
Average fuel cost
per gallon
(excluding non-cash
mark to market
adjustments) (5) $2.03 $2.04 $2.20 $1.98
Fuel gallons consumed
(000's) 41,681 36,144 161,616 141,474
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
Selected Operating Data -
Regional Partner (2):
Passenger revenue
(000s) $19,110 $22,992 $94,164 $92,826
Revenue passengers
carried (000s) 179 217 899 912
Revenue passenger miles
(RPMs) (000s) 118,796 149,509 576,431 591,787
Available seat miles
(ASMs) (000s) 180,685 213,050 799,914 821,244
Passenger load factor 65.7% 70.2% 72.1% 72.1%
Passenger yield per
RPM (cents) 16.09 15.38 16.34 15.69
Passenger yield per
ASM (cents) 10.58 10.79 11.77 11.30
Cost per ASM (cents) 13.66 12.81 13.55 13.01
Average fare $106.86 $105.71 $104.72 $101.78
Aircraft in service
at end of period 9 9 9 9
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
Selected Operating Data -
Combined:
Passenger revenue
(000s) $272,416 $246,396 $1,131,466 $971,507
Revenue passengers
carried (000s) 2,402 2,197 10,039 8,676
Revenue passenger
miles (RPMs) (000s) 2,207,985 2,031,246 9,109,008 8,028,617
Available seat miles
(ASMs) (000s) 3,117,719 2,772,569 12,109,984 10,706,843
Passenger load factor 70.8% 73.3% 75.2% 75.0%
Passenger yield per
RPM (cents) (2), (3) 12.27 12.03 12.32 11.98
Total yield per RPM
(cents) 12.79 12.55 12.85 12.47
Passenger yield per
ASM (cents) 8.69 8.81 9.27 8.98
Total yield per ASM
(cents) 9.06 9.20 9.67 9.35
Cost per ASM (cents) 9.25 9.51 9.76 9.43
"Break-even load factor" is the passenger load factor that will result in
operating revenues being equal to operating expenses, net of certain
adjustments, assuming constant yield per RPM and no change in ASMs.
Break-even load factor as presented above may be deemed a non-GAAP financial
measure under regulations issued by the Securities and Exchange Commission.
We believe that presentation of break-even load factor calculated after
certain adjustments is useful to investors because the elimination of special
items allows a meaningful period-to-period comparison. Furthermore, in
preparing operating plans and forecasts we rely on an analysis of break-even
load factor exclusive of these special items. Our presentation of non-GAAP
results should not be viewed as a substitute for our financial or statistical
results based on GAAP, and other airlines may not necessarily compute
break-even load factor in a manner that is consistent with our computation.
A reconciliation of the components of the calculation of break-even load
factor is as follows:
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
(in thousands) (in thousands)
Net loss $10,430 $7,853 $20,370 $13,971
Income tax benefit 48 4,125 4,626 6,497
Passenger revenue 253,306 223,404 1,037,302 878,681
Regional partner
expense (24,676) (27,297) (108,355) (106,866)
Regional partner
revenue 19,110 22,992 94,164 92,826
Charter revenue (1,568) (2,052) (8,861) (10,011)
Passenger revenue
mainline (excluding
charter and regional
partner revenue
required to break
even (based on
GAAP amounts) $256,650 $229,025 $1,039,246 $875,098
Non-GAAP adjustments:
Gain/ (loss) on fuel
hedging 15,059 91 12,753 (2,164)
Aircraft and facility
lease exit
reversals/(costs) 43 (49) 57 (3,414)
Valuation allowance
on net deferred tax
assets (3,938) -- (3,980) --
Gain on sale of assets -- 179 656 1,144
Passenger revenue
(excluding charter and
regional partner
revenue) required to
break-even (based on
adjusted amounts) $267,814 $229,246 $1,048,732 $870,664
The calculation of the break-even load factor follows:
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
(in thousands) (in thousands)
Calculation of
break-even load factor
using GAAP amounts:
Passenger revenue
mainline (excluding
charter and regional
partner revenue
required to break
even (based on GAAP
amounts) ($000s) $256,650 $229,025 $1,039,246 $875,098
Mainline yield per
RPM (cents) 12.05 11.76 12.05 11.68
Mainline revenue
passenger miles
(000s) to break
even assuming
constant yield
per RPM 2,129,876 1,947,491 8,624,448 7,492,277
Mainline available
seat miles (000's) 2,937,034 2,559,519 11,310,070 9,885,599
Mainline break-even
load factor using
GAAP amounts 72.5% 76.1% 76.3% 75.8%
Calculation of
break-even load
factor using
Non-GAAP amounts:
Passenger revenue
(excluding charter
and regional partner
revenue) required
to break even
(based on adjusted
amounts) ($000s) $267,814 $229,246 $1,048,732 $870,664
Mainline yield per
RPM (cents) 12.05 11.76 12.05 11.68
Mainline revenue
passenger miles to
break even assuming
constant yield per
RPM 2,222,523 1,949,370 8,703,170 7,454,315
Mainline available
seat miles (000's) 2,937,034 2,559,519 11,310,070 9,885,599
Mainline break-even
load factor using
non-GAAP amounts 75.7% 76.2% 77.0% 75.4%
2. "Passenger yield per RPM" is determined by dividing passenger revenues
(excluding charter revenue) by revenue passenger miles.
3. For purposes of these yield calculations, charter revenue is excluded
from passenger revenue. These figures may be deemed non-GAAP
financial measures under regulations issued by the Securities and
Exchange Commission. We believe that presentation of yield excluding
charter revenue is useful to investors because charter flights are not
included in RPMs or ASMs. Furthermore, in preparing operating plans
and forecasts, we rely on an analysis of yield exclusive of charter
revenue. Our presentation of non-GAAP financial measures should not
be viewed as a substitute for our financial or statistical results
based on GAAP. The calculation of passenger revenue excluding charter
revenue is as follows:
Three months Ended Year Ended
March 31, March 31,
2007 2006 2007 2006
Passenger revenues -
mainline, as
reported $253,306 $223,404 $1,037,302 $878,681
Less: charter revenue 1,568 2,052 8,861 10,011
Passenger revenues -
mainline excluding
charter 251,738 221,352 1,028,441 868,670
Add: Passenger
revenues - regional
partner 19,110 22,992 94,164 92,826
Passenger revenues,
system combined $270,848 $244,344 $1,122,605 $961,496
4. This may be deemed a non-GAAP financial measure under regulations
issued by the Securities and Exchange Commission. We believe the
presentation of financial information excluding fuel expense is useful
to investors because we believe that fuel expense tends to fluctuate
more than other operating expenses, it facilitates comparison of
results of operations between current and past periods and enables
investors to better forecast future trends in our operations.
Furthermore, in preparing operating plans and forecasts, we rely, in
part, on trends in our historical results of operations excluding fuel
expense. However, our presentation of non-GAAP financial measures
should not be viewed as a substitute for our financial results
determined in accordance with GAAP.
5. "Average fuel cost per gallon (excluding mark to market derivatives)"
excludes non-cash mark to market gains/(losses) of $15,059,000 and
$91,000 for the three months ended March 31, 2007 and 2006,
respectively, and $12,753,000 and $(2,163,000) for the years ended
March 31, 2007 and 2006, respectively.
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