Frontier Announces Small Operating Profit for January

I love bankrupt airlines. There's nothing like the required monthly financial reports to give us some insight into broader trends around the industry. We'll have to wait another couple months for all the solvent airlines to report first quarter earnings, but we already know how Frontier's January went. It actually wasn't too bad.

Frontier squeezed out an operating profit of $2.8 million with a net loss of $27.9 million. The bulk of the difference came from payments on previous commitments to unsecured creditors. In other words, it's a one-time deal during bankruptcy that doesn't really reflect the success of the operation. The $2.8 million operating profit is what we're most interested in here, and that's not bad, though they did lose cash during the month.

Cash went from $69 million to $61 million. In total, they used $5.4 million in operating activities, but $3.2 million of that was related to hedging activities. So if you exclude that, which we should only do it they stop the hedging shenanigans, then they were out a couple million bucks on the month. It's never good to see cash flowing out, but that's more of a trickle than a flood and the results are pretty solid.

Their excellent December revenues came crashing back down to Earth in January, as you would expect. Available Seat Miles (ASMs) were down only about 0.8 percent compared to December but passenger revenue dropped more than 20 percent. January should be weaker than December, but if we compare to November, things aren't favorable.

January ASMs were up nearly 5 percent over November but passenger revenue was down more than 9 percent. I don't think what we're seeing here is specific to Frontier. It's showing the tremendous drop off in demand that hit the airlines after the holidays this year in particular. We can probably look forward to uglier numbers from the other airlines when they report their first quarter earnings. Frontier's results may be some of the best we see.