Frontier Group Holdings, Inc.
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PART I
ITEM 1. BUSINESS
Overview
Frontier Group Holdings, Inc. is the parent company of Frontier Airlines, Inc. (“Frontier” or “the Company”), an ultra low-cost carrier. We are headquartered in Denver, Colorado and offer flights throughout the United States and to select near international destinations in the Americas. As of December 31, 2025, we had a fleet of 176 Airbus single-aisle aircraft, consisting of 6 A320ceos, 89 A320neos, 21 A321ceos and 60 A321neos. Our unique strategy is underpinned by our low-cost structure and superior low-fare brand.
Our Business Model
Our business model is based on our unique ULCC strategy and customer offerings. While our strategy is similar to the business models utilized by other ULCCs, including with respect to low-cost structure, low fares and flexible optional services, we believe our strategy differentiates us from other ULCCs as a result of our focus on delivering a family-friendly customer experience with a more upscale look and feel than traditionally experienced on ULCCs globally. From the perspective of our customers, our business model provides a product offering that combines low-cost fares with dependable customer service, a customer-friendly digital platform, a modern fleet, comfortable cabin seating, a rewarding frequent flyer program, flexible optional and bundled services, and operational integrity. Additionally, our A320neo family fleet, along with our use of high-density seating configuration and weight-saving initiatives, have contributed to Frontier having the most fuel-efficient fleet of all major U.S. carriers when measured by available seat miles (“ASMs”) per fuel gallon consumed during the year ended December 31, 2025, which helps us maintain our low-cost structure.
Our Competitive Strengths & Our Business Strategy
Our goal is to offer the most attractive option for air travel with a compelling combination of value, product and service, and, in doing so, to grow profitably and enhance our position among U.S. airlines. Through the key elements of our business strategy, we seek to achieve:
Low Unit Costs. Our low-cost structure, built around low aircraft ownership cost, fuel efficiency and low operational costs, is our key strategic advantage. We intend to strengthen and maintain our low unit costs, including by:
•maintaining high utilization levels, deploying our capacity where demand is highest;
•utilizing new generation, fuel-efficient aircraft that deliver lower operating costs compared to prior generation aircraft;
•increasing the average size and seat capacity of the aircraft in our fleet through the continued introduction and operation of 240-seat A321neo aircraft;
•utilizing a low-cost distribution model, with our services primarily sold through direct distribution channels including our website, mobile app and contact centers;
•maintaining a highly productive workforce and third-party specialist providers;
•outsourcing certain functions, such as customer contact centers, lost bag services, ground handling services and catering services; and
•taking a disciplined approach to our operational performance in order to reduce disruption.
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Delivering Industry-Leading Values at Low Fares. To enhance our brand and support measured and sustainable growth, we are focused on strengthening our position as a high-value, low-fare carrier by delivering a higher-quality customer experience than traditionally associated with ultra-low-fare airlines while maintaining our structural cost advantage. Our strategy centers on fleet and network optimization, disciplined cost management, operational reliability, and the continued development of customer loyalty through the following priorities:
•optimizing fleet utilization and network efficiency by focusing on fleet deployment and network planning initiatives to maximize aircraft utilization and align capacity with demand patterns;
•strengthening our cost advantage through disciplined expense management largely from network optimization, operational productivity enhancements and other efficiencies across the business;
•enhancing operational reliability by reducing cancellations and improving on-time performance and overall operational consistency through network planning discipline, operational initiatives, employee engagement and technology enhancements; and
•maturing customer loyalty by continuing to expand and refine our loyalty platforms, including FRONTIER Miles, our co-brand credit card partnership, GoWild! All-You-Can-Fly Pass and Discount Den membership. In addition, premium seating options, including planned First Class Seating (“First Seats”) seating by the end of 2026 and planned offering of onboard Wi-Fi by the end of 2027, are intended to support customer loyalty, broaden appeal across traveler segments and create additional ancillary revenue opportunities while preserving our low-fare foundation.
In addition to these priorities, we continue investing in digital capabilities such as an upgraded website and mobile app, environmental efficiency and brand initiatives intended to strengthen our position as a differentiated value airline while maintaining the economic discipline that underpins our low-fare model.
Strong Growth Driven by an Expanding and Efficient Network. We strategically focus on routes where we believe our business model will stimulate demand and allow for stable growth. This strategy has historically supported more consistent revenue performance throughout the year, improved utilization, lower unit costs, increased revenues and enhanced profitability. We intend to continue to utilize our disciplined and methodical approach to expand our network in an efficient manner, including by:
•strategically deploying our capacity in high-volume markets that deliver stronger and more consistent revenue performance across the year;
•continuing to take advantage of opportunities in overpriced and/or underserved markets across the United States and select international destinations in the Americas;
•leveraging our diverse geographic footprint and existing crew and maintenance base infrastructure to take advantage of lower-risk network growth opportunities while maintaining high operational standards;
•utilizing our low-cost structure to offer low fares which organically drive growth through market stimulation, focusing on what we believe are the most profitable opportunities where our cost differential drives the largest competitive advantage;
•enhancing our out-and-back scheduling approach, which we believe will help drive improved efficiencies and operational recoverability, as well as reduce crew travel costs; and
•continuing to rebalance our network to mitigate seasonal fluctuations in our results and discontinue underperforming routes.
Our Talented ULCC Leadership Team. Our management team has extensive day-to-day experience operating ULCCs and other airlines.
•James G. Dempsey, our Chief Executive Officer and President, previously served as our Executive Vice President and Chief Financial Officer, and as Treasurer and Head of Investor Relations for Ryanair;
•Mark C. Mitchell, our Senior Vice President and Chief Financial Officer, previously served as our Vice President, Finance and Investor Relations, as well as our Chief Accounting Officer, and prior to that, served in various leadership capacities for Starwood Hotels and Resorts Worldwide and Starwood Vacation Ownership;
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•Howard M. Diamond, our Executive Vice President, Legal and Corporate Affairs and Corporate Secretary, previously served as Vice President, General Counsel and Corporate Secretary for Thales USA;
•Robert A. Schroeter, our Senior Vice President, Chief Commercial Officer, previously served as Senior Vice President, Chief Marketing Officer for Spirit Airlines;
•Jeff Mathew, our Chief Information Officer, previously served as Chief Operating Officer at Accelya Group and Senior Vice President of Operations at Farelogix and various positions within the airlines industry;
•Trevor J. Stedke, our Senior Vice President, Operations, previously served as Vice President, Aircraft Technical Operations for Southwest Airlines;
•Steve C. Schuller, our Senior Vice President, Human Resources, previously served as our Vice President, Human Resources, and prior to that, served as Vice President of Talent and Chief Learning Officer for Catapult Health; and
•Alex Clerc, our Senior Vice President, Customers, previously worked as a Senior Expert with McKinsey & Company in their Transport and Travel Practice, served as Chief Operating Officer for Interjet Airlines and worked in leadership positions for multiple other airlines.
Strong Liquidity and Capital Structure. We intend to maintain our strong capital structure, which enables us to obtain financing for our aircraft pursuant to attractive operating leases, in order to support our growth strategies and the expansion of our fleet and network.
As of December 31, 2025, our total available liquidity was $874 million, consisting of $654 million in unrestricted cash and cash equivalents and $220 million from the undrawn revolving line of credit (the “Revolving Loan Facility”), and our capital structure was comprised of the following (please refer to “Notes to Consolidated Financial Statements — Note 7. Debt”):
•$348 million of the available $391 million under our multiple pre-delivery deposit (“PDP”) credit facilities, which consists of the PDP Financing Facility, the Second PDP Financing Facility and the Third PDP Financing Facility, each as defined within “Notes to Consolidated Financial Statements — Note 7. Debt” (together, the “Pre-delivery Credit Facilities”), for the financing of PDP payments for our A320neo family aircraft purchase agreement;
•$105 million under the class A-1 enhanced equipment trust certificates and related equipment notes (the “2025-1 EETCs”);
•$101 million from our pre-purchased miles facility; and
•$66 million in unsecured loans as part of our participation in the payroll support programs under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”).
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Our Fares and the Choices We Offer
We provide low-fare passenger airline service primarily to leisure travelers. Our low fares are designed to stimulate demand from price-sensitive travelers and consist of a base fare, plus taxes and governmental fees.
We combine our low fares with flexible optional services for an additional cost. Such additional options include carry-on and checked baggage, advance seat selection, our extended-legroom premium seats, guaranteed empty middle seats in certain rows, First Class seating in the first two rows beginning in 2026, free priority boarding for our loyalty members and bundle customers, and ticket changes and cancellations, as well as bundled options combining various optional services. We also promote and sell products in-flight to enhance the customer experience. We offer a convenient onboard payment system that enables customers to bundle products together to save money, make multiple purchases with a single credit card transaction and provide gratuities to our flight attendants. We reward our repeat customers through our FRONTIER Miles frequent flyer program and also offer our Discount Den membership program, which provides subscribers with exclusive access to some of our lowest fares as well as access to our Kids Fly Free program. We also offer the GoWild! All-You-Can-Fly Pass, which allows members unlimited travel for a specified period of time for a base fare of $0.01 per flight, subject to certain restrictions. In addition to enhancing the customer experience, these offerings have helped increase our ancillary revenues from $60.55 per passenger in 2021 to $67.57 per passenger in 2025. Our other revenues also include services such as our FRONTIER Miles affinity credit card program and commissions revenue from the sale of items such as rental cars and hotels.
The following table represents our revenue, on a per-passenger basis for the periods presented:
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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, 2025, which was filed with the SEC on February 18, 2026 (the “2025 Annual Report”).
Recent Developments
Macroeconomic Conditions. Recent geopolitical tensions and military conflict in the Middle East, including developments involving Iran, have contributed to volatility in global energy markets. Higher crude oil prices can increase our jet fuel costs, which we experienced during the three and nine months ended September 30, 2026. In addition, related instability may create supply chain challenges affecting aircraft parts and other operational inputs. Continued uncertainty or further escalation could pressure our operating costs and negatively affect our financial performance. We continue to monitor the situation and the related impacts to our business.
Financing. In June 2026, we amended our Credit Card Affinity Agreement with Barclays Bank Delaware (“Barclays”) to extend the term of both the co-branded credit card agreement and the pre-purchased miles facility from December 31, 2029 to June 30, 2037. The amendment also increased the pre-purchased miles facility from $200 million to $375 million. Please refer to “Notes to Condensed Consolidated Financial Statements — 2. Revenue Recognition” for additional information.
Labor. In September 2026, we entered into a collective bargaining contract ratification with the union representing our aircraft technicians. Further, we are currently in negotiations with the unions which represent our pilots and flight attendants regarding their next labor contracts. Please refer to “Notes to Condensed Consolidated Financial Statements — 8. Commitments and Contingencies” for additional information.
Legal/Regulatory. During 2025, we obtained a revised preliminary assessment in the amount of $133 million related to the applicability of federal excise tax to certain optional ancillary products and services. We established reserves for certain fees subject to the assessment where we believe a loss for this matter is probable and estimable and we are contesting the assessment.
We previously received an immaterial audit assessment from the U.S. Transportation Security Administration (the “TSA”) that covered the third quarter of 2016 through the fourth quarter of 2018 and related to the remittance of TSA fees where flight credits expired unused (the “2016-2018 Audit”). We appealed this assessment to the United States Tenth Circuit Court of Appeals. In addition, we are under audit by the TSA for the period from the fourth quarter of 2019 through the fourth quarter of 2022 (the “2019-2022 Audit”). In April 2026, we lost our appeal regarding the 2016-2018 Audit and received a preliminary assessment for the 2019-2022 Audit in the amount of $42 million, which mainly covered remittance of TSA fees where flight credits expired unused as well as for other passengers that purchased tickets and did not travel. During the nine months ended September 30, 2026, we recorded a one-time charge related to prior periods of $73 million (the “TSA Reserve”) for the 2016-2018 Audit and 2019-2022 Audit periods, which is largely related to remittance of TSA fees for passengers that purchased tickets and did not travel and is included in other current liabilities and other long-term liabilities on our condensed consolidated balance sheets and in passenger revenues within our condensed consolidated statements of operations. We could be subject to further TSA audit examinations and resulting assessments.
Product. In July 2026, we announced that the first Starlink-equipped aircraft will launch in 2027 and deployment of high-speed Wi-Fi to the rest of our fleet will follow. Starlink will be our first offering of Wi-Fi and enhance the inflight experience for our customers.
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Fleet. In March 2026, we entered into an agreement (the “Early Return Agreement”) to terminate the leases associated with 24 A320neo aircraft. As of September 30, 2026, all 24 aircraft have been returned and removed from the fleet. For the three and nine months ended September 30, 2026, we recognized $3 million and $212 million, respectively, of expenses related to the Early Return Agreement, which includes one-time charges for lease return costs, costs related to the write-off of non-recoverable capitalized prepaid maintenance, accelerated depreciation of capitalized maintenance, and costs related to commitment fees.
In August 2026, we entered into an agreement (the “Second Early Return Agreement”) to terminate the leases associated with 13 A320neo aircraft. As of October 2026, all 13 aircraft have been returned and removed from the fleet. For the three months ended September 30, 2026, we recognized $134 million of operating expenses related to the Second Early Return Agreement, which includes one-time charges for lease return costs and costs related to the write-off of non-recoverable capitalized prepaid maintenance and accelerated depreciation of capitalized maintenance. For additional information related to the Early Return Agreement and the Second Early Return Agreement (collectively the “Early Return Agreements”) please refer to “Notes to Condensed Consolidated Financial Statements — 6. Operating Leases.” In addition, during the third quarter of 2026 and in conjunction with our fleet optimization strategy, we entered into 10 direct leases for A321neo aircraft.
In June 2026, we entered into an agreement with an existing lessor (the “Aircraft Sale Agreement”) to sell 11 A321neo aircraft at the time of delivery from our existing purchase agreement. The 11 aircraft include 3 deliveries expected in the fourth quarter of 2026 and 8 deliveries anticipated in the first half of 2027.
Overview
The following table provides select financial and operational information for the three and nine months ended September 30, 2026 and 2025 (in millions, except per share data):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||
| Total operating revenues | $ | 1,355 | $ | 886 | $ | 3,626 | $ | 2,727 | |||||||||||||||||
| Total operating expenses | $ | 1,463 | $ | 963 | $ | 4,114 | $ | 2,925 | |||||||||||||||||
| Pre-tax income (loss) | $ | (104) | $ | (76) | $ | (479) | $ | (186) | |||||||||||||||||
| Adjusted pre-tax income (loss) | $ | 39 | $ | (76) | $ | (54) | $ | (186) | |||||||||||||||||
| Available seat miles (“ASMs”) | 11,419 | 9,689 | 32,331 | 29,951 | |||||||||||||||||||||
| Earnings (loss) per share, diluted | $ | (0.45) | $ | (0.34) | $ | (2.03) | $ | (0.84) | |||||||||||||||||
Revenues
Total operating revenues for the three months ended September 30, 2026 totaled $1,355 million, an increase of 53% compared to the three months ended September 30, 2025. This was primarily due to the 30% increase in revenue per available seat mile (“RASM”), driven by a 30% increase in total revenue per passenger as compared to the corresponding prior year period. Capacity, as measured by ASMs, for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, increased by 18%.
Total operating revenues for the nine months ended September 30, 2026 totaled $3,626 million, an increase of 33% compared to the nine months ended September 30, 2025. This was primarily due to the 23% increase in RASM, driven by an 18% increase in total revenue per passenger and a 0.9-point increase in load factor for the nine months ended September 30, 2026, as compared to the corresponding prior year period. Capacity, as measured by ASMs, for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, increased by 8%.
Adjusted RASM, a non-GAAP measure, increased from 9.10¢ during the nine months ended September 30, 2025 to 11.44¢ during the nine months ended September 30, 2026. For the nine months ended September 30, 2026, Adjusted RASM excludes the impact of $73 million related to the TSA Reserve associated with prior periods. There
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were no adjustments for the three months ended September 30, 2026 and the three and nine months ended September 30, 2025.
Operating Expenses
Total operating expenses during the three months ended September 30, 2026 increased to $1,463 million, resulting in a cost per available seat mile (“CASM”) of 12.81¢, an increase of 29%, as compared to the three months ended September 30, 2025. Fuel expense for the three months ended September 30, 2026 was $191 million higher than the corresponding prior year period. The 82% increase in fuel expense for the three months ended September 30, 2026 was driven by a 56% increase in fuel cost per gallon and a 16% increase in fuel gallons consumed.
Our non-fuel expenses increased by 42% during the three months ended September 30, 2026, as compared to the corresponding prior year period, driven primarily by expenses related to the Second Early Return Agreement to terminate the leases associated with 13 A320neo aircraft. The 42% increase was also driven by higher operations, as measured by capacity and departures, as well as higher aircraft rent due to increased lease return costs, and a decrease in sale-leaseback transactions resulting in decreased sale-leaseback gains. CASM (excluding fuel), a non-GAAP measure, increased 21% to 9.09¢, on an 18% increase in capacity, for the three months ended September 30, 2026, as compared to the corresponding prior year period, due to the aforementioned drivers of increased non-fuel expenses.
Adjusted CASM (excluding fuel), a non-GAAP measure, increased from 7.53¢ for the three months ended September 30, 2025 to 7.84¢ for the three months ended September 30, 2026. For the three months ended September 30, 2026, Adjusted CASM (excluding fuel) also excludes the impact of $136 million in expenses related to the Early Return Agreements and the $6 million expense relating to the collective bargaining contract ratification. There were no adjustments for the three months ended September 30, 2025.
Total operating expenses during the nine months ended September 30, 2026 increased to $4,114 million, resulting in a CASM of 12.73¢, an increase of 30% compared to the nine months ended September 30, 2025. Fuel expense for the nine months ended September 30, 2026 was $427 million higher than the corresponding prior year period. The 61% increase in fuel expense for the nine months ended September 30, 2026 was driven by the 49% increase in fuel cost per gallon and an 8% increase in fuel gallons consumed.
Our non-fuel expenses increased by 34% during the nine months ended September 30, 2026, as compared to the corresponding prior year period, driven primarily by expenses related to the Early Return Agreements, higher aircraft rent due to increased lease return costs driven by a larger fleet, increased station, employee, and maintenance costs, and a decrease in sale-leaseback gains. CASM (excluding fuel), a non-GAAP measure, increased 24% to 9.23¢, on an 8% increase in capacity, for the nine months ended September 30, 2026, as compared to the corresponding prior period due to the aforementioned drivers of increased non-fuel expenses.
Adjusted CASM (excluding fuel), a non-GAAP measure, increased from 7.42¢ for the nine months ended September 30, 2025 to 8.15¢ for the nine months ended September 30, 2026. For the nine months ended September 30, 2026, Adjusted CASM (excluding fuel) also excludes the impact of $345 million in expenses relating to the Early Return Agreements and $6 million in expenses related to aircraft technicians collective bargaining contract ratification. There were no adjustments for the nine months ended September 30, 2025.
Net Income (Loss)
We generated a net loss of $104 million during the three months ended September 30, 2026, compared to a net loss of $77 million for the three months ended September 30, 2025. Considering the aforementioned non-GAAP adjustments, as well as $1 million of commitment fees related to the Early Return Agreement, and $1 million of related tax benefit, our adjusted net income, a non-GAAP measure, was $40 million for the three months ended
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September 30, 2026. There were no non-GAAP adjustments to net loss during the three months ended September 30, 2025.
We generated a net loss of $466 million during the nine months ended September 30, 2026, compared to a net loss of $190 million for the nine months ended September 30, 2025. Considering the aforementioned non-GAAP adjustments, as well as $1 million of commitment fees related to the Early Return Agreement, and $9 million of related tax expense, our adjusted net loss, a non-GAAP measure, was $50 million for the nine months ended September 30, 2026. There were no non-GAAP adjustments to net loss during the nine months ended September 30, 2025.
For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Results of Operations — Reconciliation of GAAP to Non-GAAP Financial Data.”, “Results of Operations — Reconciliation of Revenue to Adjusted Revenue”, and “Results of Operations — Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss), and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR.”
Liquidity
As of September 30, 2026, our total available liquidity was $1,178 million, consisting of $958 million of unrestricted cash and cash equivalents and availability under our revolving line of credit (the “Revolving Loan Facility”).
Results of Operations
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Operating Revenues
| Three Months Ended September 30, | Change | |||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||
| Operating revenues ($ in millions): | ||||||||||||||||||||||
| Passenger | $ | 1,327 | $ | 854 | $ | 473 | 55 | % | ||||||||||||||
| Other | 28 | 32 | (4) | (13) | % | |||||||||||||||||
| Total operating revenues | $ | 1,355 | $ | 886 | $ | 469 | 53 | % | ||||||||||||||
| Operating statistics: | ||||||||||||||||||||||
| ASMs (millions) | 11,419 | 9,689 | 1,730 | 18 | % | |||||||||||||||||
| Revenue passenger miles (“RPMs”) (millions) | 9,000 | 7,815 | 1,185 | 15 | % | |||||||||||||||||
| Average stage length (miles) | 891 | 917 | (26) | (3) | % | |||||||||||||||||
| Load factor | 78.8 | % | 80.7 | % | (1.9) pts | N/A | ||||||||||||||||
| RASM (¢) | 11.87 | 9.14 | 2.73 | 30 | % | |||||||||||||||||
| Fare revenue per passenger ($) | 67.82 | 39.74 | 28.08 | 71 | % | |||||||||||||||||
| Total revenue per passenger ($) | 138.22 | 106.44 | 31.78 | 30 | % | |||||||||||||||||
| Passengers (thousands) | 9,805 | 8,325 | 1,480 | 18 | % | |||||||||||||||||
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Total operating revenue increased $469 million, or 53%, during the three months ended September 30, 2026 compared to the three months ended September 30, 2025. Revenue was favorably impacted by the 30% increase to RASM, driven by a 30% increase in total revenue per passenger, led by fare revenue per passenger, and a 3% decrease in average stage length, supported by a 19% increase in departures, partially offset by a 1.9-point reduction in load factor, as compared to the corresponding prior year period. The 18% increase in capacity, as measured by ASMs, was primarily driven by an 18% increase in average daily aircraft utilization as compared to the corresponding prior year period.
Operating Expenses
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| Three Months Ended September 30, | Change | Cost per ASM | Change | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
Operating expenses ($ in millions):(a) | ||||||||||||||||||||||||||||||||||||||
| Aircraft fuel | $ | 425 | $ | 234 | $ | 191 | 82 | % | 3.72 | ¢ | 2.42 | ¢ | 54 | % | ||||||||||||||||||||||||
| Salaries, wages and benefits | 275 | 251 | 24 | 10 | % | 2.41 | 2.59 | (7) | % | |||||||||||||||||||||||||||||
| Aircraft rent | 301 | 181 | 120 | 66 | % | 2.64 | 1.87 | 41 | % | |||||||||||||||||||||||||||||
| Station operations | 218 | 173 | 45 | 26 | % | 1.91 | 1.79 | 7 | % | |||||||||||||||||||||||||||||
| Maintenance, materials and repairs | 89 | 52 | 37 | 71 | % | 0.78 | 0.54 | 44 | % | |||||||||||||||||||||||||||||
| Sales and marketing | 49 | 38 | 11 | 29 | % | 0.43 | 0.39 | 10 | % | |||||||||||||||||||||||||||||
| Depreciation and amortization | 59 | 24 | 35 | 146 | % | 0.52 | 0.25 | 108 | % | |||||||||||||||||||||||||||||
| Other operating | 47 | 10 | 37 | 370 | % | 0.40 | 0.10 | 300 | % | |||||||||||||||||||||||||||||
| Total operating expenses | $ | 1,463 | $ | 963 | $ | 500 | 52 | % | 12.81 | ¢ | 9.95 | ¢ | 29 | % | ||||||||||||||||||||||||
| Operating statistics: | ||||||||||||||||||||||||||||||||||||||
| ASMs (millions) | 11,419 | 9,689 | 1,730 | 18 | % | |||||||||||||||||||||||||||||||||
| Average stage length (miles) | 891 | 917 | (26) | (3) | % | |||||||||||||||||||||||||||||||||
| Passengers (thousands) | 9,805 | 8,325 | 1,480 | 18 | % | |||||||||||||||||||||||||||||||||
| Departures | 59,703 | 50,141 | 9,562 | 19 | % | |||||||||||||||||||||||||||||||||
CASM (excluding fuel) (¢)(b) | 9.09 | 7.53 | 1.56 | 21 | % | |||||||||||||||||||||||||||||||||
Adjusted CASM (excluding fuel) (¢)(b) | 7.84 | 7.53 | 0.31 | 4 | % | |||||||||||||||||||||||||||||||||
| Fuel cost per gallon ($) | 3.96 | 2.54 | 1.42 | 56 | % | |||||||||||||||||||||||||||||||||
| Fuel gallons consumed (thousands) | 107,214 | 92,188 | 15,026 | 16 | % | |||||||||||||||||||||||||||||||||
(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 GAAP to Non-GAAP Financial Data.”
Aircraft Fuel. Aircraft fuel expense increased by $191 million, or 82%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was primarily due to the 56% increase in fuel cost per gallon as well as a 16% increase in fuel gallons consumed, driven by higher capacity.
Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $24 million, or 10%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was primarily due to higher crew costs and costs related to the collective bargaining contract ratification with our aircraft technicians, as compared to the corresponding prior year period.
Aircraft Rent. Aircraft rent expense increased by $120 million, or 66%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to higher aircraft lease return expense, driven by the Second Early Return Agreement.
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Station Operations. Station operations expense increased by $45 million, or 26%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to increased airport operations driven by an 18% increase in passengers and a 19% increase in departures as well as an increase in airport cost sharing arrangements.
Maintenance, Materials and Repairs. Maintenance, materials and repair expense increased by $37 million, or 71%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This increase was primarily due to the write-off of non-recoverable prepaid maintenance balances related to the Second Early Return Agreement and higher engine repair costs.
Sales and Marketing. Sales and marketing expense increased by $11 million, or 29%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to the increase in credit card fees as a result of the 55% increase in passenger revenue, partially offset by a decrease in third-party distribution channel fees. The following table presents our distribution channel mix:
| Three Months Ended September 30, | Change | |||||||||||||||
| Distribution Channel | 2026 | 2025 | ||||||||||||||
Our website, mobile app and other direct channels | 70 | % | 68 | % | 2 | pts | ||||||||||
Third-party channels | 30 | % | 32 | % | (2) | pts | ||||||||||
Depreciation and Amortization. Depreciation and amortization expense increased by $35 million, or 146%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, primarily due to the accelerated depreciation on capitalized maintenance costs related to the Second Early Return Agreement.
Other Operating Expense. Other operating expenses increased by $37 million, or 370%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. This increase was primarily driven by the decrease in sale-leaseback gains as a result of four aircraft inductions compared to two aircraft inductions and six engine inductions in the corresponding prior year period.
Other Income (Expense). Other income increased by $3 million, or 300%, during the three months ended September 30, 2026, as compared to the three months ended September 30, 2025. The increase was primarily due to higher interest income from higher balances in interest-bearing cash accounts and decreased interest expense, driven by lower principal balances on our debt, partially offset by lower capitalized interest.
Income Taxes. Our effective tax rate for the three months ended September 30, 2026 was 0% on pre-tax loss, compared to an expense of 1.3% on a pre-tax loss for the three months ended September 30, 2025. The primary difference between the effective tax rate and the federal statutory rate was related to the increase in our valuation allowance relating to U.S. federal and state net operating loss. Please refer to “Notes to Condensed Consolidated Financial Statements — 10. Income Taxes” for additional information.
28
Results of Operations
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Operating Revenues
| Nine Months Ended September 30, | Change | |||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||
| Operating revenues ($ in millions): | ||||||||||||||||||||||
| Passenger | $ | 3,514 | $ | 2,636 | $ | 878 | 33 | % | ||||||||||||||
| Other | 112 | 91 | 21 | 23 | % | |||||||||||||||||
| Total operating revenues | $ | 3,626 | $ | 2,727 | $ | 899 | 33 | % | ||||||||||||||
| Operating statistics: | ||||||||||||||||||||||
| ASMs (millions) | 32,331 | 29,951 | 2,380 | 8 | % | |||||||||||||||||
| RPMs (millions) | 25,601 | 23,451 | 2,150 | 9 | % | |||||||||||||||||
| Average stage length (miles) | 895 | 928 | (33) | (4) | % | |||||||||||||||||
| Load factor | 79.2% | 78.3% | 0.9 pts | N/A | ||||||||||||||||||
| RASM (¢) | 11.22 | 9.10 | 2.12 | 23 | % | |||||||||||||||||
| Fare revenue per passenger ($) | 62.01 | 41.70 | 20.31 | 49 | % | |||||||||||||||||
| Total revenue per passenger ($) | 130.17 | 110.56 | 19.61 | 18 | % | |||||||||||||||||
Adjusted RASM (¢)(a) | 11.44 | 9.10 | 2.34 | 26 | % | |||||||||||||||||
Adjusted fare revenue per passenger ($)(a) | 62.46 | 41.70 | 20.76 | 50 | % | |||||||||||||||||
Adjusted total revenue per passenger ($)(a) | 132.79 | 110.56 | 22.23 | 20 | % | |||||||||||||||||
| Passengers (thousands) | 27,859 | 24,663 | 3,196 | 13 | % | |||||||||||||||||
__________________
(a)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 GAAP to Non-GAAP Financial Data.”
Total operating revenue increased $899 million, or 33%, during the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025. Revenue was favorably impacted by the 23% increase in RASM, driven by an 18% increase in total revenue per passenger, led by fare revenue per passenger, a 4% decrease in average stage length, supported by an 11% increase in departures and a 0.9-point increase in load factor as compared to the corresponding prior year period. In addition, capacity, as measured by ASMs, for the nine months ended September 30, 2026, increased by 8% primarily due to the 8% increase in average aircraft in service as compared to the nine months ended September 30, 2025. Revenue was unfavorably impacted by the TSA Reserve related to prior periods of $73 million incurred during the nine months ended September 30, 2026.
29
Operating Expenses
| Nine Months Ended September 30, | Change | Cost per ASM | Change | |||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||||
Operating expenses ($ in millions):(a) | ||||||||||||||||||||||||||||||||||||||
| Aircraft fuel | $ | 1,129 | $ | 702 | $ | 427 | 61 | % | 3.50 | ¢ | 2.35 | ¢ | 49 | % | ||||||||||||||||||||||||
| Salaries, wages and benefits | 812 | 754 | 58 | 8 | % | 2.51 | 2.52 | — | % | |||||||||||||||||||||||||||||
| Aircraft rent | 832 | 536 | 296 | 55 | % | 2.57 | 1.79 | 44 | % | |||||||||||||||||||||||||||||
| Station operations | 607 | 531 | 76 | 14 | % | 1.88 | 1.77 | 6 | % | |||||||||||||||||||||||||||||
| Maintenance, materials and repairs | 295 | 150 | 145 | 97 | % | |||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-11-11 | Mitchell Mark Christopher | SVP & CFO | Sell | -40,798 | $8.15 | -$332,406 |
| 2026-11-10 | Schuller Steve | SVP, Human Resources | Sell | -5,000 | $8.35 | -$41,750 |
| 2026-11-09 | Diamond Howard | EVP, Legal & Corporate Affairs | Sell | -35,401 | $8.40 | -$297,368 |
| 2026-11-06 | Stedke Trevor J. | Sr. Vice President, Operations | Sell | -34,180 | $7.36 | -$251,394 |
| 2026-11-09 | Wetzel Josh A | VP & CAO | Sell | -2,000 | $8.00 | -$16,000 |
| 2026-11-06 | Wetzel Josh A | VP & CAO | Sell | -5,000 | $7.50 | -$37,500 |
| 2026-11-05 | Wetzel Josh A | VP & CAO | Sell | -5,000 | $7.00 | -$35,000 |
| 2026-11-05 | Clerc Alexandre | SVP, Customers | Sell | -5,520 | $7.12 | -$39,302 |
| 2026-11-05 | Schroeter Robert | SVP, Chief Marketing Officer | Sell | -37,914 | $6.92 | -$262,429 |
| 2026-09-04 | Schuller Steve | SVP, Human Resources | Sell | -7,500 | $6.00 | -$45,000 |
| 2026-09-04 | Clerc Alexandre | SVP, Customers | Sell | -3,480 | $5.71 | -$19,871 |
Source: SEC Form 4 filings.
Next expected filings
- ~2027-02-17 10-K expected by 2027-02-26 (in 94 days)
- ~2027-05-05 10-Q expected by 2027-05-13 (in 171 days)
- ~2027-07-29 10-Q expected by 2027-08-06 (in 256 days)
- ~2027-10-28 10-Q expected by 2027-11-05 (in 347 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-11-02 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-10-28 10-Q Quarterly Report
- 2026-10-28 8-K Earnings Release; Financial Statements and Exhibits
- 2026-08-31 8-K Costs Associated with Exit; Other Events
- 2026-07-29 10-Q Quarterly Report
- 2026-07-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-07-17 8-K Officer/Director Change
- 2026-07-07 8-K Material Agreement Entered
- 2026-06-30 8-K Material Agreement Entered; Material Financial Obligation
- 2026-06-12 8-K Officer/Director Change
- 2026-05-05 8-K Earnings Release; Financial Statements and Exhibits
- 2026-05-05 10-Q Quarterly Report
- 2026-03-17 8-K Material Agreement Entered; Costs Associated with Exit
- 2026-02-18 10-K Annual Report
- 2026-02-11 8-K Earnings Release; Financial Statements and Exhibits