Frontier Group Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2025

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 8. “Financial Statements and Supplementary Data” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which was filed with the SEC on February 18, 2025 (the “2024 Annual Report”).

Recent Developments

Macroeconomic Conditions. The Trump Administration is in the process of expanding the scope of tariffs, which has significantly increased the rates on goods imported into the United States. In response, foreign governments have imposed, and are expected to impose, retaliatory measures against the United States.

These or additional changes in U.S. or international trade policies, along with continued uncertainty surrounding such policies, could lead to further weakened business conditions for the transportation industry, which may adversely impact our operations through increased supply chain challenges, commodity price volatility and a decline in discretionary spending and consumer confidence, among others. We continue to monitor the situation.

Labor. We are currently in negotiations with the unions which represent our pilots, flight attendants, material specialist and maintenance controllers regarding their next labor contracts. Additionally, a new five-year contract with our aircraft appearance agents became effective as of July 11, 2025. Please refer to “Notes to Condensed Consolidated Financial Statements — 8. Commitments and Contingencies” for additional information.

Legal. During 2024, we received a preliminary assessment in the amount of $149 million related to the applicability of federal excise tax to certain optional ancillary products and services. In June 2025, we received an updated assessment in the amount of $133 million. We established an estimated liability for certain fees subject to the assessment where we believe a loss for this matter is probable and reasonably estimable. We are contesting the updated assessment.

Pratt & Whitney. Since 2022, we have introduced aircraft into our fleet that use the Pratt & Whitney PW1100 Geared Turbo Fan (“GTF”) engine, and we have selected this engine for our planned future deliveries. During 2023, Pratt & Whitney announced the requirement, mandated by the U.S. Federal Aviation Administration, that certain engines be removed for inspection due to a possible condition in the powdered metal used to manufacture certain engine parts. This will require accelerated inspection of the PW1100 GTF engine, which we use for certain of our A320neo family aircraft, and could result in lengthy turnaround times to perform these inspections, including any resulting repairs or other modifications that may be identified. Although our operations have not been materially impacted as of June 30, 2025, this inspection program may have an adverse impact on our operations, particularly when we are required to temporarily take aircraft out of service. We continue to assess the impact on our future capacity plans.

In July 2025, we executed an agreement with Pratt & Whitney to have their GTF engines power 91 Airbus A321neo aircraft as well as establishing 28 additional spare engines to be delivered throughout the orderbook. Please refer to “Notes to Condensed Consolidated Financial Statements — 13. Subsequent Events” for additional information.

Overview

The following table provides select financial and operational information for the three and six months ended June 30, 2025 and 2024, respectively (in millions, except for per share data):

Revenues

Total operating revenues for the three months ended June 30, 2025 totaled $929 million, a decrease of 5% compared to the three months ended June 30, 2024. This was primarily due to a 2% moderation in capacity, as measured by ASMs, as part of strategic initiatives to stabilize pricing, and a 2% decrease in revenue per available seat mile (“RASM”) for the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The RASM decrease was driven by a 5% higher average stage length supported by 9% fewer departures, which also contributed to the 4% decrease in passenger enplanements, partly offset by the 1.2-point increase in load factor on a higher capacity fleet mix as compared to the corresponding prior year period.

Total operating revenues for the six months ended June 30, 2025 totaled $1,841 million, which is consistent with the six months ended June 30, 2024. This was primarily due to the 1% increase in capacity, as measured by ASMs, offset by a RASM decrease of 1% for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024.

Operating Expenses

Total operating expenses during the three months ended June 30, 2025 increased to $1,004 million, resulting in a cost per available seat mile (“CASM”) of 9.73¢, an increase of 8%, as compared to the three months ended June 30, 2024. Fuel expense for the three months ended June 30, 2025 was $58 million lower than the corresponding prior year period. The 20% decrease in fuel expense for the three months ended June 30, 2025 was primarily driven by the 17% decrease in fuel cost per gallon, as well as the 4% decrease in fuel gallons consumed, as a result of our 2% capacity reduction.

Our non-fuel expenses increased by 17% during the three months ended June 30, 2025, as compared to the corresponding prior year period, driven primarily by increased aircraft rent due to a larger fleet size and higher lease return costs, decreased sale-leaseback transactions, and increased station costs due to station mix and rate inflation, partly offset by decreased operations from fewer passengers and departures. CASM (excluding fuel), a non-GAAP measure, increased 20% to 7.50¢, on a 2% decrease in capacity for the three months ended June 30, 2025, as compared to the corresponding prior year period based on the aforementioned factors.

Total operating expenses during the six months ended June 30, 2025 increased to $1,962 million, resulting in a CASM of 9.68¢, an increase of 5% compared to the six months ended June 30, 2024. Fuel expense for the six months ended June 30, 2025 was $83 million lower than the corresponding prior year period. The 15% decrease in fuel expense for the six months ended June 30, 2025 was primarily driven by the 15% decrease in fuel cost per gallon while consumption held flat.

Our non-fuel expenses increased 16% during the six months ended June 30, 2025, as compared to the corresponding prior year period, driven primarily by a decrease in sale-leaseback transactions, increased station operations due to station mix and rate inflation and increased aircraft rent due to a larger fleet, partly offset by lower lease return costs during the same period. CASM (excluding fuel), a non-GAAP measure, increased 14% to 7.37¢, on a 1% increase in capacity for the six months ended June 30, 2025, as compared to the corresponding prior year based on the aforementioned factors.

Net Income (Loss)

We generated a net loss of $70 million during the three months ended June 30, 2025, compared to net income of $31 million for the three months ended June 30, 2024. There were no non-GAAP adjustments for each of the three months ended June 30, 2025 and 2024.

We generated a net loss of $113 million during the six months ended June 30, 2025, compared to net income of $5 million for the six months ended June 30, 2024. There were no non-GAAP adjustments during the six months ended June 30, 2025. For the six months ended June 30, 2024, our adjusted net income, a non-GAAP measure, was $10 million, due to the $5 million valuation allowance.

For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Results of Operations — Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest” and “Results of Operations — Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR”.

Liquidity

As of June 30, 2025, our total available liquidity was $766 million, made up of unrestricted cash and cash equivalents, including $205 million of funds available to be drawn under our revolving line of credit available for general corporate purposes (the “Revolving Loan Facility”).

Results of Operations

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

Operating Revenues

25

Total operating revenue decreased $44 million, or 5%, during the three months ended June 30, 2025 compared to the three months ended June 30, 2024. Capacity, as measured by ASMs, and RASM each decreased 2%, with the decrease in RASM driven by a 5% higher average stage length supported by 9% fewer departures, which also contributed to the 4% decrease in passenger enplanements, partly offset by the 1.2-point increase in load factor with total revenue per passenger remaining flat, as compared to the corresponding period. Strategic initiatives to stabilize pricing resulted in a moderation of capacity, which was driven by a 13% decrease in average daily aircraft utilization during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, partly offset by the 12% increase in average aircraft in service.

Operating Expenses

N/M = Not meaningful

(a) Cost per ASM figures may not recalculate due to rounding.

(b) This metric is not calculated in accordance with GAAP. For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest”.

Aircraft Fuel. Aircraft fuel expense decreased by $58 million, or 20%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease was primarily due to the 17% decrease in fuel cost per gallon, as well as the 4% decrease in fuel gallons consumed, driven by lower capacity.

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $10 million, or 4%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The increase was primarily due to higher employee benefit costs as compared to the corresponding prior year period.

Aircraft Rent. Aircraft rent expense increased by $47 million, or 32%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a larger fleet and higher lease return costs in the current period due to aircraft lease extension events and the corresponding benefit that occurred in the comparable three months ended June 30, 2024.

Station Operations. Station operations expense increased by $15 million, or 9%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to an increase in station mix and rate inflation, offset by a 4% decrease in passengers and 9% decrease in departures.

Maintenance, Materials and Repairs. Maintenance, materials and repair expense increased by $5 million, or 12%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This increase was primarily due to the 12% increase in average aircraft in service, which resulted in higher aircraft repairs and materials costs, partially offset by lower engine repair costs.

Sales and Marketing. Sales and marketing expense decreased by $8 million, or 17%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to the decrease in third-party distribution channel fees, media advertising and credit card fees as a result of a 5% decrease in revenue. The following table presents our distribution channel mix:

Depreciation and Amortization. Depreciation and amortization expense increased by $3 million, or 17%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to an increase in capitalized maintenance depreciation due to our growing fleet.

Other Operating. Other operating resulted in an expense of $41 million during the three months ended June 30, 2025, compared to a net gain of $1 million during the three months ended June 30, 2024. This movement was primarily driven by a decrease in sale-leaseback gains, as a result of three aircraft inductions subject to sale-leaseback transactions in the current period, compared to six aircraft inductions and two engine inductions subject to sale-leaseback transactions in the corresponding prior year period.

Other Income (Expense). Other income decreased by $2 million, or 29%, during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. The decrease was primarily due to increased interest expense and lower interest income from lower balances in interest-bearing cash accounts, driven by higher principal balances on our debt, partially offset by greater capitalized interest.

Income Taxes. Our effective tax rate for the three months ended June 30, 2025 was 0% on a pre-tax loss, compared to an expense of 3.1% on pre-tax income for the three months ended June 30, 2024. The primary difference between the effective tax rate and the federal statutory rate was related to an increase in our valuation allowance relating to federal and state net operating losses. Please refer to “Notes to Condensed Consolidated Financial Statements — 10. Income Taxes” for additional information.

Results of Operations

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Operating Revenues

Total operating revenue increased $3 million during the six months ended June 30, 2025 compared to the six months ended June 30, 2024. While capacity grew by 1%, as measured by ASMs, revenue was unfavorably impacted by the 1% decrease in RASM driven by a 2% decline in total revenue per passenger, partly offset by 1.7-point increase in load factor and a 1% increase in average stage length, as compared to the corresponding prior year period. The increase in capacity was driven by the 12% increase in average aircraft in service during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, offset by an 11% decrease in average daily aircraft utilization for the corresponding prior year period.

Operating Expenses

N/M = Not meaningful

(a) Cost per ASM figures may not recalculate due to rounding.

(b) These metrics are not calculated in accordance with GAAP. For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest.”

Aircraft Fuel. Aircraft fuel expense decreased by $83 million, or 15%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The decrease was primarily due to the 15% decrease in fuel cost per gallon.

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $26 million, or 5%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. The increase was due to higher crew costs and higher employee benefit costs, as compared to the corresponding prior year period.

Aircraft Rent. Aircraft rent expense increased by $49 million, or 16%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a larger fleet, partially offset by lower aircraft lease return costs.

Station Operations. Station operations expense increased by $58 million, or 19%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to station mix and rate inflation as well as increased airport operations.

Maintenance, Materials and Repairs. Maintenance, materials and repair expense increased by $7 million, or 8%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was primarily due to the 12% increase in average aircraft in service, which resulted in higher aircraft repair and materials costs, offset by lower engine repair costs.

Sales and Marketing. Sales and marketing expense decreased by $7 million, or 8%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to the decrease in distribution channel fees, media advertising and credit card fees. The following table presents our distribution channel mix:

Depreciation and Amortization. Depreciation and amortization expense increased by $7 million, or 21%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to our growing fleet and increased capital maintenance events.

Other Operating. Other operating resulted in an expense of $59 million during the six months ended June 30, 2025, compared to a net gain of $2 million during the six months ended June 30, 2024. This movement was primarily driven by the decrease in sale-leaseback gains as a result of seven aircraft inductions and two engine inductions subject to sale-leaseback transactions in the current period, compared to twelve aircraft inductions and two engine inductions subject to sale-leaseback transactions in the corresponding prior year period.

Other Income (Expense). Other income decreased by $3 million, or 21%, during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due to increased interest expense driven by higher principal debt balances and lower interest income from lower cash balances in interest-bearing cash accounts.

Income Taxes. Our effective tax rate for the six months ended June 30, 2025 was an expense of 2.7%, compared to an expense of 37.5% for the six months ended June 30, 2024, on pre-tax loss and pre-tax income for each of the respective periods. The primary difference between the effective tax rate and the federal statutory rate for the six months ended June 30, 2025 was related to an increase in our valuation allowance relating to federal and state net operating losses. Please refer to “Notes to Condensed Consolidated Financial Statements — 10. Income Taxes” for additional information.

Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest

($ in millions)

($ in millions)

(a) Cost per ASM figures may not recalculate due to rounding.

(b) CASM (excluding fuel) and Adjusted CASM (excluding fuel) are included as supplemental disclosures because we believe that excluding aircraft fuel is useful to investors as it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence. The price of fuel, over which we have limited control, impacts the comparability of period-to-period financial performance, and excluding the price of fuel allows management an additional tool to understand and analyze our non-fuel costs and core operating performance, and increases comparability with other airlines that also provide a similar metric. CASM (excluding fuel) and Adjusted CASM (excluding fuel) are not determined in accordance with GAAP and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

(c) For each of the three months ended June 30, 2025 and 2024, there were no non-GAAP pre-tax adjustments.

(d) Adjusted CASM is included as supplemental disclosure because we believe it is a useful metric to properly compare our cost management and performance to other peers, as derivations of Adjusted CASM are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry. Additionally, we believe this metric is useful because it removes certain items that may not be indicative of our base operating performance or future results. Adjusted CASM is not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

(e) Adjusted CASM including net interest and CASM including net interest are included as supplemental disclosures because we believe they are useful metrics to properly compare our cost management and performance to other peers that may have different capital structures and financing strategies, particularly as it relates to financing primary operating assets such as aircraft and engines. Additionally, we believe these metrics are useful because they remove certain items that may not be indicative of our base operating performance or future results. Adjusted CASM including net interest and CASM including net interest are not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest

($ in millions)

($ in millions)

(a) Cost per ASM figures may not recalculate due to rounding.

(b) CASM (excluding fuel) and Adjusted CASM (excluding fuel) are included as supplemental disclosures because we believe that excluding aircraft fuel is useful to investors as it provides an additional measure of management’s performance excluding the effects of a significant cost item over which management has limited influence. The price of fuel, over which we have limited control, impacts the comparability of period-to-period financial performance, and excluding the price of fuel allows management an additional tool to understand and analyze our non-fuel costs and core operating performance, and increases comparability with other airlines that also provide a similar metric. CASM (excluding fuel) and Adjusted CASM (excluding fuel) are not determined in accordance with GAAP and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

(c) For each of the six months ended June 30, 2025 and 2024, there were no non-GAAP pre-tax adjustments.

(d) Adjusted CASM is included as supplemental disclosure because we believe it is a useful metric to properly compare our cost management and performance to other peers, as derivations of Adjusted CASM are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry. Additionally, we believe this metric is useful because it removes certain items that may not be indicative of our base operating performance or future results. Adjusted CASM is not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

(e) Adjusted CASM including net interest and CASM including net interest are included as supplemental disclosures because we believe they are useful metrics to properly compare our cost management and performance to other peers that may have different capital structures and financing strategies, particularly as it relates to financing primary operating assets such as aircraft and engines. Additionally, we believe these metrics are useful because they remove certain items that may not be indicative of our base operating performance or future results. Adjusted CASM including net interest and CASM including net interest are not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR

(in millions)

(in millions)

(a) Adjusted net income (loss), EBITDA and adjusted EBITDA are included as supplemental disclosures because we believe they are useful indicators of our operating performance. Derivations of net income (loss) and EBITDA are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in our industry.

Adjusted net income (loss), EBITDA and adjusted EBITDA have limitations as analytical tools. Some of the limitations applicable to these measures include: adjusted net income (loss), EBITDA and adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; adjusted net income (loss), EBITDA and adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; EBITDA, and adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness or possible cash requirements related to our warrants; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements; and other companies in our industry may calculate adjusted net income (loss), EBITDA and adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. Because of these limitations, adjusted net income (loss), EBITDA and adjusted EBITDA should not be considered in isolation from or as a substitute for performance measures calculated in accordance with GAAP. In addition, because derivations of adjusted net income (loss), EBITDA and adjusted EBITDA are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of net income (loss) and EBITDA, including adjusted net income (loss) and adjusted EBITDA, as presented may not be directly comparable to similarly titled measures presented by other companies.

For the foregoing reasons, each of adjusted net income (loss), EBITDA and adjusted EBITDA has significant limitations which affect its use as an indicator of our profitability. Accordingly, you are cautioned not to place undue reliance on this information.

(b) EBITDAR and adjusted EBITDAR are included as supplemental disclosures because we believe them to be useful solely as valuation metrics for airlines as their calculations isolate the effects of financing in general, the accounting effects of capital spending and acquisitions (primarily aircraft, which may be acquired directly, directly subject to acquisition debt, by capital lease or by operating lease, each of which is presented differently for accounting purposes), and income taxes, which may vary significantly between periods and for different airlines for reasons unrelated to the underlying value of a particular airline. However, EBITDAR and adjusted EBITDAR are not determined in accordance with GAAP, are susceptible to varying calculations and not all companies calculate the measure in the same manner. As a result, EBITDAR and adjusted EBITDAR, as presented, may not be directly comparable to similarly titled measures presented by other companies. In addition, EBITDAR and adjusted EBITDAR should not be viewed as measures of overall performance since they exclude aircraft rent, which is a normal, recurring cash operating expense that is necessary to operate our business. Accordingly, you are cautioned not to place undue reliance on this information.

(in millions)

(in millions)

(a) During the six months ended June 30, 2024, we recorded a $5 million non-cash valuation allowance against our U.S. federal and state net operating loss deferred tax assets, which largely do not expire, mainly as a result of being in a three-year historical cumulative pre-tax loss position and due to the loss generated during the three months ended March 31, 2024, which had no impact on cash taxes and is not reflective of our effective tax rate for deductible net operating losses generated or actual cash tax obligations created. Please refer to “Notes to Condensed Consolidated Financial Statements — 10. Income Taxes” for additional information.

(b) For each of the three and six months ended June 30, 2025 and 2024, there were no non-GAAP pre-tax adjustments.

Comparative Operating Statistics

The following table sets forth our operating statistics for the three and six months ended June 30, 2025 and 2024. These operating statistics are provided because they are commonly used in the airline industry and, as such, allow readers to compare our performance against our results for the corresponding prior year period, as well as against the performance of our peers.

(a) Figures may not recalculate due to rounding. See “Glossary of Airline Terms” for definitions of terms used in this table.

(b) These metrics are not calculated in accordance with GAAP. For the reconciliation to corresponding GAAP measures, see “Results of Operations—Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest.”

(c) Stage-Length Adjusted (SLA) to 1,000 miles: Applicable Operating Statistic * Square root (stage length / 1,000).

Liquidity and Capital Resources

Overview

As of June 30, 2025, we had $766 million of total available liquidity, consisting of $561 million in unrestricted cash and cash equivalents and $205 million in total undrawn capacity on our Revolving Loan Facility. We had $560 million of total debt, net, of which $326 million is short-term and consists primarily of amounts outstanding under our Pre-delivery Credit Facilities. Our total debt, net is comprised of $386 million outstanding under our Pre-delivery Credit Facilities, $101 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), $66 million in 10-year, low-interest loans (collectively, the “PSP Promissory Notes”) from the U.S. Department of the Treasury (the “Treasury”) and $12 million in secured indebtedness for our headquarters building, partially offset by $5 million in deferred debt acquisition costs.

In connection with the term loan facility entered into with the Treasury in September 2020, which was repaid in full in February 2022, and the PSP Promissory Notes, we issued warrants (the “Warrants”) to purchase 3,117,940 shares of FGHI common stock at a weighted-average price of $6.95 per share. These Warrants will expire during 2025 and 2026. In June 2024, the Treasury sold all such Warrants to a financial institution. During the six months ended June 30, 2025, 1,244,608 Warrants were exercised. We settled the exercises through a net share settlement of 248,893 shares of FGHI common stock and cash of less than $1 million. As of June 30, 2025, Warrants to purchase 1,873,332 shares of FGHI common stock were outstanding.

During the six months ended June 30, 2024, we reached an agreement with one of our aircraft lessors which eliminated requirements to pay maintenance reserves held as collateral in advance of our required performance of major maintenance activities on our aircraft leases. As a result of the agreement, the lessor disbursed back to us previously paid aircraft maintenance deposits of approximately $104 million. As a result, we no longer have any aircraft maintenance deposits with any of our lessors.

We continue to monitor our covenant compliance with various parties, including, but not limited to, our lenders and credit card processors. As of the date of this report, we are in compliance with all of our covenants.

The following table presents the major indicators of our financial condition and liquidity as of:

($ in millions)

Use of Cash and Future Obligations

We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our debt facilities, and cash flows from operating activities and sale-leaseback financing. We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings under the Pre-delivery Credit Facilities, our undrawn Revolving Loan Facility and/or potential issuances of debt or equity. The Revolving Loan Facility also permits us to enter into additional indebtedness secured by our loyalty program and brand-related assets, to the extent such indebtedness is pari passu to that of the Revolving Loan Facility. Our primary uses of cash are for working capital, aircraft PDPs, debt repayments and capital expenditures.

Our single largest capital commitment relates to the acquisition of aircraft. As of June 30, 2025, we operated all of our 164 aircraft under operating leases. PDPs relating to future deliveries under our agreement with Airbus are required at various times prior to each aircraft’s delivery date. As of June 30, 2025, our Pre-delivery Credit Facilities, which allow us to draw up to an aggregate of $476 million, had $386 million outstanding. As of June 30, 2025, we had $466 million of PDPs held by Airbus which have been partially financed by our Pre-delivery Credit Facilities.

As of June 30, 2025, we had a firm obligation to purchase 180 A320neo family aircraft and 9 additional spare engines to be delivered by 2031. Of our aircraft commitments, 22 had committed operating leases for deliveries occurring between 2025 and 2026. We intend to evaluate financing options for the remaining aircraft.

The following table summarizes current and long-term material cash requirements as of June 30, 2025, which we expect to fund primarily with operating and financing cash flows (in millions):

(a) Includes principal commitments only associated with our Pre-delivery Credit Facilities with borrowings as of June 30, 2025, our affinity card unsecured debt due through 2029, our building notes due through 2031 and the PSP Promissory Notes due through 2031. See “Notes to Condensed Consolidated Financial Statements — 5. Debt.”

(b) Represents interest and commitment fees on debt obligations and our undrawn Revolving Loan Facility.

(c) Represents gross cash payments related to our operating fixed lease obligations that are not subject to discount as compared to the obligations measured on our condensed consolidated balance sheets. See “Notes to Condensed Consolidated Financial Statements — 6. Operating Leases.”

(d) Represents purchase commitments for aircraft and engines. See “Notes to Condensed Consolidated Financial Statements — 8. Commitments and Contingencies.”

Cash Flows

The following table presents information regarding our cash flows in the six months ended June 30, 2025 and 2024 (in millions):

Operating Activities

During the six months ended June 30, 2025, net cash used in operating activities totaled $219 million, which was driven by a $113 million net loss, $71 million of outflows from changes in operating assets and liabilities, and $35 million of non-cash adjustments.

The $71 million of outflows from changes in operating assets and liabilities included:

• $103 million in increases in other long-term assets primarily driven by increases in capital maintenance and prepaid maintenance;
• $32 million in decreases in other liabilities primarily driven by leased aircraft return accruals and other operational related accruals; and
• $25 million in increases in accounts receivable; partially offset by
• $51 million in increases in accounts payable;
• $30 million in increases in our air traffic liability primarily driven by increased bookings on higher average fares and an increase in non-refundable customer flight credits for future travel; and
• $8 million in decreases in supplies and other current assets.

Our net loss of $113 million was also adjusted by the following non-cash items to arrive at cash used in operating activities:

• $90 million in gains recognized on sale-leaseback transactions; partially offset by
• $41 million in depreciation and amortization;
• $11 million in stock-based compensation expense; and
• $3 million in deferred income tax expense.

During the six months ended June 30, 2024, net cash used in operating activities totaled $13 million, which was driven by non-cash adjustments of $102 million, partially offset by $5 million of net income and $84 million of inflows from changes in operating assets and liabilities.

The $84 million of inflows from changes in operating assets and liabilities included:

• $82 million in decreases in our capitalized aircraft maintenance deposits;
• $70 million in increases in our air traffic liability driven by increased bookings;
• $28 million in increases in other liabilities primarily driven by passenger taxes payable;
• $9 million in increases in accounts payable; and
• $1 million in decreases in supplies and other current assets; partially offset by
• $105 million in increases in other long-term assets primarily driven by increases in prepaid maintenance, capitalized maintenance and supplier incentives; and
• $1 million in increases in accounts receivable.

Our net income of $5 million was also adjusted by the following non-cash items to arrive at cash used in operating activities:

• $148 million in gains recognized on sale-leaseback transactions; partially offset by
• $34 million in depreciation and amortization;
• $9 million in stock-based compensation expense; and
• $3 million in deferred income tax expense.

Investing Activities

During the six months ended June 30, 2025, net cash used in investing activities totaled $113 million, driven by:

• $62 million in net outflows for PDP activity; and
• $51 million in cash outflows for capital expenditures.

During the six months ended June 30, 2024, net cash used in investing activities totaled $34 million, driven by:

• $48 million in cash outflows for capital expenditures; and
• $1 million in cash outflows relating to other investing activity; partially offset by
• $15 million in net proceeds for PDP activity.

Financing Activities

During the six months ended June 30, 2025, net cash provided by financing activities was $155 million, driven by:

• $101 million in cash proceeds from debt issuances, consisting of $100 million drawn on our Pre-delivery Credit Facilities and $1 million drawn on our Barclays facility;
• $93 million in net proceeds received from sale-leaseback transactions; and
• $6 million in proceeds from the exercise of stock options; partially offset by
• $43 million in cash outflows from principal repayments on the Pre-delivery Credit Facilities; and
• $2 million in cash outflows for payments related to tax withholdings of share-based awards.

During the six months ended June 30, 2024, net cash provided by financing activities was $96 million, primarily driven by:

• $142 million in cash proceeds from debt issuances, consisting of $133 million drawn on our Pre-delivery Credit Facilities, $6 million in new borrowing on our building note and $3 million drawn on our Barclays facility;
• $116 million in net proceeds received from sale-leaseback transactions; and
• $1 million in proceeds from the exercise of stock options; partially offset by
• $161 million in cash outflows from principal repayments on debt, which includes $145 million on our PDP Financing Facility and $16 million on our building note that reached maturity; and
• $2 million in cash outflows for payments related to tax withholdings of share-based awards.

As of June 30, 2025, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our results of operations, financial condition or cash flows.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates during the six months ended June 30, 2025. For information regarding our critical accounting policies and estimates, see “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates” included in Part II, Item 7 of our 2024 Annual Report.

Recently Adopted Accounting Pronouncements

See “Notes to Consolidated Financial Statements —1. Summary of Significant Accounting Policies” included in Part II, Item 8 of our 2024 Annual Report for a discussion of recent accounting pronouncements.

GLOSSARY OF AIRLINE TERMS

Set forth below is a glossary of industry terms:

“A320neo family” means, collectively, the Airbus series of single-aisle aircraft that feature the new engine option, including the A320neo and A321neo aircraft.

“Adjusted CASM” is a non-GAAP measure and means operating expenses, excluding special items, divided by ASMs. For a discussion of such special items and a reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

“Adjusted CASM including net interest” or “Adjusted CASM + net interest” is a non-GAAP measure and means the sum of Adjusted CASM and net interest expense (income) excluding special items divided by ASMs. For a discussion of such special items and a reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

“Adjusted CASM (excluding fuel)” is a non-GAAP measure and means operating expenses less aircraft fuel expense, excluding special items, divided by ASMs. For a discussion of such special items and a reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

“Air traffic liability” means the value of tickets, unearned membership fees and other related fees sold in advance of travel.

“Ancillary revenue” means the sum of non-fare passenger revenue and other revenue.

“Available seat miles” or “ASMs” means seats (empty or full) multiplied by miles the seats are flown.

“Average aircraft in service” means the average number of aircraft used in flight operations, as calculated on a daily basis.

“Average daily aircraft utilization” means block hours divided by number of days in the period divided by average aircraft in service.

“Average stage length” means the average number of miles flown per flight segment.

“Block hours” means the number of hours during which the aircraft is in revenue service, measured from the time of gate departure before take-off until the time of gate arrival at the destination.

“CASM” or “unit costs” means operating expenses divided by ASMs.

“CASM (excluding fuel)” is a non-GAAP measure and means operating expenses less aircraft fuel expense, divided by ASMs.

“CASM including net interest” or “CASM + net interest” is a non-GAAP measure and means the sum of CASM and net interest expense (income) divided by ASMs.

“DOT” means the U.S. Department of Transportation.

“Fare revenue” consists of base fares for air travel, including miles redeemed under our frequent flyer program, unused and expired passenger credits, other redeemed or expired travel credits and revenue derived from charter flights.

“Fare revenue per passenger” means fare revenue divided by passengers.

“Load factor” means the percentage of aircraft seat miles actually occupied on a flight (RPMs divided by ASMs).

“Non-fare passenger revenue” consists of fees related to certain ancillary items such as baggage, service fees, seat selection, and other passenger-related revenue that is not included as part of base fares for travel.

“Non-fare passenger revenue per passenger” means non-fare passenger revenue divided by passengers.

“Other revenue” consists primarily of services not directly related to providing transportation, such as the advertising, marketing and brand elements of the FRONTIER Miles affinity credit card program and commissions revenue from the sale of items such as rental cars and hotels.

“Other revenue per passenger” means other revenue divided by passengers.

“Passengers” means the total number of passengers flown on all flight segments.

“Passenger revenue” consists of fare revenue and non-fare passenger revenue.

“PDP” means pre-delivery deposit payments, which are payments required by aircraft manufacturers in advance of delivery of the aircraft.

“RASM” or “unit revenue” means total revenue divided by ASMs.

“Revenue passenger miles” or “RPMs” means the number of miles flown by passengers.

“Total ancillary revenue per passenger” means ancillary revenue divided by passengers.

“Total revenue per passenger” means the sum of fare revenue, non-fare passenger revenue, and other revenue (collectively, “Total Revenue”) divided by passengers.

There have been no material changes in market risk from the information provided in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk”, in our 2024 Annual Report.

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended (the “Exchange Act”), refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on such evaluation, our principal executive officer and principal financial officer concluded that, as of June 30, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

During the three months ended June 30, 2025, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors disclosed in Item 1A “Risk Factors” contained in our 2024 Annual Report. Investors are urged to review all such risk factors carefully.