Frontier's November Results Not as Positive as They May Seem

(MoneyWatch)  I've heard people crowing about how great it is that Frontier made money in November. As an airline in bankruptcy, they have to release all their info on a monthly basis, so we get to pick it apart that much more often. Many think that the airline is finally turning itself around on its way out of bankruptcy, but a deeper dive into the numbers has me far from convinced that's the case.

On the surface, Frontier had net income of $2.9 million in November with an operating profit of $2.5 million. The airline has shrunk dramatically since the summer with only about 2/3 the revenue that it had in July. With revenues down, the airline had to rely on cost cutting to save money. Fortunately, November was an easy month to cut costs since the airline's fuel bill dropped by about $18.5 million. Promotion and sales expense along with G&A were both down by about $1m a piece. So it's no surprise that the airline made some money.

In the most important area, cash actually went up by $1.3 million in the month, but that's thanks to a lot of special items. First of all, they sold some aircraft to bring in a great deal of cash. They also extinguished some long term debt as part of the reorganization. Larger credit card holdbacks and air traffic liability cut into their cash as well. So while the sale of aircraft brought in $55 million, that was used for reorganizing. Net cash used in operations declined by $14.5 million.

On the revenue side, some rough calculations show that their yield has actually risen slightly over the last couple months, but that should hardly be a surprise. If you cut 25% of your ASMs, I would think your yields would grow. I would hope they could have grown more than they did.

The bottom line is that Frontier only showed a profit thanks to a tremendous fuel benefit. If fuel stays where it is, then they may be ok, but that's a big "if."

See Frontier's November Report