Frontier Group Holdings, Inc. (ULCC)

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.

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;

•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”).

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.

From 10-K filed 2026-02-18 (period ending 2025-12-31).

ITEM 7. 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 audited consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K. Our discussion and analysis of fiscal year 2025 compared to fiscal year 2024 is included herein. For a discussion of the results of operations for fiscal year 2023 and comparisons between fiscal year 2024 and fiscal year 2023, please refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” 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.

Overview

The following table provides select financial and operational information for the years ended December 31, 2025 and 2024 (in millions, except percentages):

	Year Ended December 31,				Change
	2025		2024
Total operating revenues	$	3,724	$	3,775	(1)	%
Total operating expenses	$	3,873	$	3,717	4	%
Income (loss) before income taxes	$	(134)	$	86	N/M
Available seat miles (“ASMs”)	39,754		39,871		—	%
Earnings (loss) per share, diluted	$	(0.60)	$	0.37	N/M

Revenues

Total operating revenues for the year ended December 31, 2025 totaled $3,724 million, a decrease of 1% compared to the year ended December 31, 2024. Revenue per available seat mile (“RASM”) decreased by 1% driven by a 1% decrease in total revenue per passenger, as compared to the corresponding prior year period.

Operating Expenses

Total operating expenses during the year ended December 31, 2025 increased to $3,873 million, resulting in a cost per available seat mile (“CASM”) of 9.74¢, an increase of 5% compared to the year ended December 31, 2024. Fuel expense was $112 million lower, as compared to the corresponding prior year period. This 11% decrease in fuel expense for the year ended December 31, 2025 was primarily driven by a 10% decrease in fuel cost per gallon, as well as the 2% decrease in fuel gallons consumed.

Our non-fuel expenses increased by 10% during the year ended December 31, 2025, as compared to the corresponding prior year period, driven primarily by increased aircraft rent due to a larger fleet, increased station costs due to station mix and rate inflation, increased employee costs, and the benefit from a legal settlement in the prior period, partially offset by lower lease return costs during the same period. CASM (excluding fuel), a non-GAAP measure, increased 10% to 7.41¢, while capacity remained consistent, for the year ended December 31, 2025, 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 6.81¢ for the year ended December 31, 2024 to 7.41¢ for the year ended December 31, 2025. There were no adjustments for the year ended December 31, 2025. For the year ended December 31, 2024, Adjusted CASM (excluding fuel) excludes the impact of $38 million related to a legal settlement.

Net Income (Loss)

We generated a net loss of $137 million during the year ended December 31, 2025, compared to a net income of $85 million for the year ended December 31, 2024. There were no non-GAAP adjustments for the year ended December 31, 2025. Considering the aforementioned non-GAAP adjustments and the $5 million valuation allowance and the write-off of $1 million in unamortized deferred financing costs for the year ended December 31, 2024, our adjusted net income, a non-GAAP measure, was $53 million for the year ended December 31, 2024.

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), 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 December 31, 2025, our total available liquidity was $874 million, consisting of $654 million of unrestricted cash and cash equivalents and availability of $220 million under our revolving line of credit (the “Revolving Loan Facility”).

Trends and Uncertainties Affecting Our Business

We believe our operating and business performance is driven by various factors that typically affect airlines and their markets, including trends which affect the broader travel industry, as well as trends which affect the specific markets and customer base that we target. The following key factors may affect our future performance:

Competition. The airline industry is highly competitive. The principal competitive factors in the airline industry are the fare and total price, flight schedules, number of routes served from a city, frequent flyer programs, product and passenger amenities, customer service, fleet type and reputation. The airline industry is particularly susceptible to price discounting as once a flight is scheduled, airlines incur only nominal incremental costs to provide service to passengers occupying otherwise unsold seats. Price competition occurs on a route-by-route basis through price discounts, changes in pricing structures, fare matching, target promotions and frequent flyer initiatives. Airlines typically use discount fares and other promotions to stimulate traffic during normally slower travel periods to generate cash flow and to maximize RASM. The prevalence of discount fares can be particularly acute when a competitor has excess capacity that it is under financial pressure to sell. A key element of our competitive strategy is to maintain very low unit costs in order to permit us to compete successfully in price-sensitive markets. In addition, some of the legacy network carriers match LCC and ULCC pricing on portions of their network, including through the selective deployment of so-called “basic economy” fares. We believe that fare discounts, along with more customer optionality over product offerings and enhancements to our frequent flyer program, have and will continue to stimulate demand for Frontier.

Our strategy is underpinned by our low-cost structure, and has significantly reduced our cost base by optimizing aircraft utilization to align capacity with expected travel demand patterns, transitioning to larger and more fuel-efficient aircraft, maximizing seat density, renegotiating the majority of our distribution agreements, realigning and simplifying our network, enhancing our website and mobile app, boosting employee productivity and contracting with leading specialists to provide us with select operating and other services.

We believe that we are well positioned to maintain our low unit operating costs relative to our competitors through on-going strategic initiatives, including continuing our cost optimization efforts, planned increases in aircraft utilization and further realizing economies of scale. To the extent that we are unable to maintain our low-cost structure, our ability to compete effectively may be impaired. In addition, if our competitors engage in fare wars or similar behavior, our financial performance could be adversely impacted.

Aircraft Fuel. Fuel expense represents one of the single largest operating expense for most airlines, including ours. Aircraft fuel prices and availability are subject to market fluctuations, refining capacity, periods of market surplus and shortage and demand for heating oil, gasoline and other petroleum products, as well as meteorological, economic and political factors and events occurring throughout the world, which we can neither control nor accurately predict. The future cost and availability of aircraft fuel cannot be predicted with any degree of certainty.

Volatility. The air transportation business is volatile and highly affected by economic cycles and trends. Global pandemics and related health scares, consumer confidence and discretionary spending, fear of terrorism or war, weakening economic conditions, fare initiatives, fluctuations in fuel prices, labor actions, changes in governmental regulations on taxes and fees, weather and other factors have resulted in significant fluctuations in revenue and results of operations in the past.

Seasonality. Our results of operations for any interim period are not necessarily indicative of those for the entire year because the air transportation business and our route network are subject to seasonal fluctuations. We generally expect demand to be greater in the summer months and less in the winter months, apart from the holiday season. As we increase our routes in other markets, we have reduced our concentration in Denver to decrease the impact of seasonality in our business. During the year ended December 31, 2025, 21% of our flights had Denver International Airport as either their origin or destination, as compared to 23% of our flights during the year ended December 31, 2024.

Labor. The airline industry is heavily unionized. The wages, benefits and work rules of unionized airline industry employees are determined by collective bargaining agreements (“CBAs”). Relations between air carriers and labor unions in the United States are governed by the United States Railway Labor Act (“RLA”). Under the RLA, CBAs generally contain “amendable dates” rather than expiration dates and the RLA requires that a carrier maintain the existing terms and conditions of employment following the amendable date through a multi-stage and usually lengthy series of bargaining processes overseen by the National Mediation Board (“NMB”). This process continues until either the parties have reached an agreement on a new CBA or the parties have been released to “self-help” by the NMB. In most circumstances, the RLA prohibits strikes. However, after release by the NMB, carriers and unions are free to engage in self-help measures such as lockouts and strikes.

We have seven union-represented employee groups comprising approximately 86% of our employees as of December 31, 2025. Our pilots are represented by the Air Line Pilots Association (“ALPA”); our flight attendants are represented by the Association of Flight Attendants (“AFA-CWA”); our aircraft technicians, aircraft appearance agents, material specialists and maintenance controllers are all represented by the International Brotherhood of Teamsters (“IBT”); and our dispatchers are represented by the Transport Workers Union (“TWU”). We are currently in negotiations with the ALPA, AFA-CWA, and aircraft technicians represented by IBT regarding the next labor contract. Please refer to “Notes to Consolidated Financial Statements — 11. Commitments and Contingencies” for additional information.

Maintenance, Materials and Repairs and Maintenance Reserve Obligations. The amount of total maintenance costs and related depreciation of heavy maintenance expense is subject to variables such as estimated usage, government regulations, the size, age and makeup of the fleet in future periods, and the level of unscheduled maintenance events and their actual costs. Accordingly, we cannot reliably quantify future maintenance-related expenses for any significant period of time.

As of December 31, 2025, the average age of our aircraft was approximately five years and all of the aircraft in our fleet were financed with operating leases, the last of which is scheduled to expire in 2037. Please refer to “Notes to Consolidated Financial Statements — 8. Operating Leases” for further discussion. We expect that these new aircraft will require less maintenance when they are first placed into service (sometimes called a “maintenance holiday”) because the aircraft will benefit from manufacturer warranties and also will be able to operate for a significant period of time, generally measured in years, before the most expensive scheduled maintenance obligations, known as heavy maintenance, are required. Once these maintenance holidays expire, these aircraft will require more maintenance as they age and our maintenance and repair expenses for each of our aircraft will be incurred at approximately the same intervals. When these more significant maintenance activities occur, this will

result in out-of-service periods during which our aircraft are dedicated to maintenance activities and unavailable to generate revenue.

We account for heavy maintenance under the deferral method. Accordingly, heavy maintenance is depreciated over the shorter of either the remaining lease term or the period until the next estimated heavy maintenance event. As a result, maintenance events occurring closer to the end of the lease term will generally have shorter depreciation periods than those occurring earlier in the lease term. This will create higher depreciation expense specific to any aircraft related to heavy maintenance during the final years of the lease as compared to earlier periods.

Recent Developments

Macroeconomic Conditions. The U.S. government is in the process of expanding the scope of tariffs, which have 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 other impacts.

During 2025, the United States and European Union reached a trade agreement. The agreement, among other changes, included an exemption on tariffs for aircrafts and aircraft parts. We continue to monitor the situation and the related impacts to our business.

Financing. During 2025, we entered into multiple transactions to provide additional cash available for general purposes. We issued approximately $105 million of class A-1 enhanced equipment trust certificates (“2025-1 EETCs”), which are secured by liens on substantially all of our spare parts and tooling. In addition, we amended our Revolving Loan Facility, which now provides for $220 million of total commitments. We continue to utilize sale-leaseback transactions related to our aircraft and engines which generated $441 million of cash proceeds in 2025.

Labor. During 2025, we entered into new contracts with our aircraft appearance agents, material specialists, and maintenance controllers, effective for five years, respectively. We are currently in negotiations with the unions which represent our pilots, flight attendants, and aircraft technicians regarding their next labor contracts. Please refer to “Notes to Consolidated Financial Statements — 11. 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. We are contesting the assessment.

Product. During 2025, we implemented various enhanced benefits related to our frequent flyer program including: free seat upgrades for Elite Gold members and above (including First Class Seating (“First Seats”), available in 2026), priority boarding for our loyalty members, options to redeem FRONTIER Miles for bundles, For Less price guarantee, and no change or cancel fees on bundles.

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 impacted as of December 31, 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 do not anticipate this impacting our future capacity.

Results of Operations

Year Ended December 31, 2025 Compared to Year Ended December 31, 2024

Operating Revenues

	Year Ended December 31,						Change
	2025			2024
Operating revenues ($ in millions):
Passenger	$	3,598		$	3,683		$	(85)		(2)	%
Other	126			92			34			37	%
Total operating revenues	$	3,724		$	3,775		$	(51)		(1)	%
Operating statistics:
ASMs (millions)	39,754			39,871			(117)			—	%
Revenue passenger miles (RPMs) (millions)	31,187			30,630			557			2	%
Average stage length (miles)	919			894			25			3	%
Load factor	78.4		%	76.8		%	1.6		pts	N/A
RASM (¢)	9.37			9.47			(0.10)			(1)	%
Total ancillary revenue per passenger ($)	67.57			70.29			(2.72)			(4)	%
Total revenue per passenger ($)	112.17			113.38			(1.21)			(1)	%
Passengers (thousands)	33,200			33,296			(96)			—	%

Total operating revenues decreased $51 million, or 1%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. Revenue was unfavorably impacted by the 1% decrease in RASM, driven by 3% higher average stage length, supported by 5% fewer departures, and a 1% decrease in total revenue per passenger, partially offset by the 1.6-point increase in load factor compared to the corresponding prior year period. Capacity, as measured by ASMs, for the year ended December 31, 2025 as compared to the year ended December 31, 2024, remained consistent due to an 11% increase in average aircraft in service, offset by an 11% decrease in average daily aircraft utilization.

Operating Expenses

	Year Ended December 31,				Change				Cost per ASM				Change
	2025		2024						2025		2024
Operating expenses ($ in millions):(a)
Aircraft fuel	$	929	$	1,041	$	(112)	(11)	%	2.33	¢	2.61	¢	(11)	%
Salaries, wages and benefits	1,016		954		62		6	%	2.56		2.39		7	%
Aircraft rent	748		675		73		11	%	1.88		1.69		11	%
Station operations	717		637		80		13	%	1.80		1.60		13	%
Maintenance, materials and repairs	209		209		—		—	%	0.53		0.52		2	%
Sales and marketing	159		178		(19)		(11)	%	0.40		0.45		(11)	%
Depreciation and amortization	91		72		19		26	%	0.23		0.18		28	%
Other operating expenses	4		(49)		53		N/M		0.01		(0.12)		N/M
Total operating expenses	$	3,873	$	3,717	$	156	4	%	9.74	¢	9.32	¢	5	%
Operating statistics:
ASMs (millions)	39,754		39,871		(117)		—	%
Average stage length (miles)	919		894		25		3	%
Passengers (thousands)	33,200		33,296		(96)		—	%
Departures	205,622		216,374		(10,752)		(5)	%
CASM (excluding fuel) (¢) (b)	7.41		6.71		0.70		10	%
Adjusted CASM (excluding fuel) (¢) (b)	7.41		6.81		0.60		9	%
Fuel cost per gallon ($)	2.47		2.73		(0.26)		(10)	%
Fuel gallons consumed (thousands)	375,527		381,444		(5,917)		(2)	%

________________

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 $112 million, or 11%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily due to a 10% decrease in fuel cost per gallon, as well as a 2% decrease in gallons consumed.

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $62 million, or 6%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The increase was primarily due to higher crew, employee benefits and incentives, and salary costs, as compared to the corresponding prior year period.

Aircraft Rent. Aircraft rent expense increased by $73 million, or 11%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to a larger fleet, partially offset by lower aircraft lease return costs.

Station Operations. Station operations expense increased by $80 million, or 13%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to increase in station mix and rate inflation, partially offset by 5% fewer departures.

Maintenance, Materials and Repairs. Maintenance, materials and repair expense remained consistent during the year ended December 31, 2025, as compared to the year ended December 31, 2024. This was primarily due to the

11% increase in average aircraft in service, which resulted in higher aircraft repair and materials costs, partially offset by lower engine repair costs from recognition of vendor credits.

Sales and Marketing. Sales and marketing expense decreased by $19 million, or 11%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to decreases in third-party distribution channel fees, call center operation fees and credit card fees. The following table presents our distribution channel mix:

	Year Ended December 31,				Change
Distribution Channel	2025		2024
Our website, mobile app and other direct channels	70	%	72	%	(2)	pt
Third-party channels	30	%	28	%	2	pt

Depreciation and Amortization. Depreciation and amortization expense increased by $19 million, or 26%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to an increase in capitalized maintenance depreciation driven by our growing fleet.

Other Operating. Other operating resulted in an expense of $4 million during the year ended December 31, 2025, compared to a net gain of $49 million during the year ended December 31, 2024. This movement was primarily driven by a legal settlement gain of $40 million during the year ended December 31, 2024, as well as increases to travel, taxes, insurance, and IT costs, partially offset by the increase in sale-leaseback gains compared to the corresponding prior year period.

Other Income (Expense). Other income decreased by $13 million, or 46%, during the year ended December 31, 2025, as compared to the year ended December 31, 2024. The decrease was primarily due to increased interest expense, driven by higher principal balances on our debt and decreased interest income from lower interest-bearing cash accounts, partially offset by greater capitalized interest.

Income Taxes. Our effective tax rate for the year ended December 31, 2025 was an expense of 2.2%, compared to an expense of 1.2% for the year ended December 31, 2024, on pre-tax loss and income, respectively. The primary difference between the effective tax rate and the federal statutory rate for the year ended December 31, 2025 was related to an increase in our valuation allowance relating to federal and state net operating losses (“NOLs”).

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

	Year Ended December 31,
	2025		2024
	($ in millions)	Per ASM (¢)	($ in millions)	Per ASM (¢)
Non-GAAP financial data:(a)
CASM		9.74		9.32
Aircraft fuel	(929)	(2.33)	(1,041)	(2.61)
CASM (excluding fuel)(b)		7.41		6.71
Legal settlement(c)	—	—	38	0.10
Adjusted CASM (excluding fuel)(b)		7.41		6.81
Aircraft fuel	929	2.33	1,041	2.61
Adjusted CASM(d)		9.74		9.42
Net interest expense (income)	(15)	(0.04)	(28)	(0.07)
Write-off of deferred financing costs(e)	—	—	(1)	—
Adjusted CASM + net interest(f)		9.70		9.35
CASM		9.74		9.32
Net interest expense (income)	(15)	(0.04)	(28)	(0.07)
CASM + net interest(f)		9.70		9.25

__________________

(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)We reached a legal settlement with a former lessor for breach of contract for a total of $40 million (please refer to “Notes to Consolidated Financial Statements — 11. Commitments and Contingencies” for additional information). $38 million of the settlement represents a one-time reimbursement of damages incurred and $2 million relates to the reimbursement of previously recorded legal expenses.

(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 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)In September 2024, we reduced the capacity of the pre-delivery deposit payments (“PDPs”) Financing Facility from $365 million to $135 million. The downsize of the facility resulted in a one-time write-off of $1 million in unamortized deferred financing costs. This amount is a component of interest expense within our consolidated statements of operations.

(f)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 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), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss) and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR

	Year Ended December 31,
	2025		2024
	(in millions)
Non-GAAP financial data (unaudited):
Adjusted pre-tax income (loss)(a)	$	(134)	$	49
Adjusted net income (loss)(a)	$	(137)	$	53
EBITDA(a)	$	(58)	$	130
EBITDAR(b)	$	690	$	805
Adjusted EBITDA(a)	$	(58)	$	92
Adjusted EBITDAR(b)	$	690	$	767

__________________

(a)Adjusted pre-tax income (loss), 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 pre-tax income (loss), 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 pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA have limitations as analytical tools. Some of the limitations applicable to these measures include: adjusted pre-tax income (loss), 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 pre-tax income (loss), 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; 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 pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. Because of these limitations, adjusted pre-tax income (loss), 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 pre-tax income (loss), 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 pre-tax income (loss), net income (loss) and EBITDA, including adjusted pre-tax income (loss), adjusted net income (loss) and adjusted EBITDA, as presented may not be directly comparable to similarly titled measures presented by other companies.

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Next expected filings

~2026-08-05 10-Q expected by 2026-08-13 (in 94 days)
~2026-11-05 10-Q expected by 2026-11-13 (in 186 days)
~2027-02-17 10-K expected by 2027-02-26 (in 290 days)
~2027-05-01 10-Q expected by 2027-05-09 (in 363 days)

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Recent SEC filings

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
2026-02-09 8-K Officer/Director Change; Financial Statements and Exhibits
2026-01-08 8-K Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
2025-12-15 8-K Earnings Release; Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
2025-11-05 10-Q Quarterly Report
2025-11-05 8-K Earnings Release; Financial Statements and Exhibits
2025-08-05 10-Q Quarterly Report
2025-08-05 8-K Earnings Release; Financial Statements and Exhibits
2025-05-13 8-K Officer/Director Change
2025-05-01 10-Q Quarterly Report
2025-05-01 8-K Earnings Release; Financial Statements and Exhibits
2025-04-10 8-K Earnings Release; Regulation FD Disclosure
2025-03-13 8-K Officer/Director Change