Frontier Airlines 2004 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2004 Frontier Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 87

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87

Deferred Warrant Charge
Pursuant to our code
-
share agreement with Delta, we have issued Delta the following warrants:
___________
(1) These amounts reflect the surrender of 45% of the warrants originally issued by us to Delta in December 2004. The deferred warrant charge as of December 31, 2004 was approximately
$3.8 million. In 2005 and thereafter, deferred warrant charges, excluding charges with respect to the warrants issued in December 2004, will be amortized over the term of the Delta code
-
share
agreement, as amended, resulting in an annual non
-
cash charge of approximately $334,000.
(2) The exercise price is subject to downward adjustment, if we issue additional shares of our common stock in certain instances.
(3) The deferred warrant charge for warrants issued in December 2004 is approximately $3.6 million. Amortization will begin as the ERJ
-
170 regional jets are placed into service and will result
in amortization of approximately $97,000 in 2005 and approximately $380,000 each year thereafter.
Certain Statistical Information
(1) During the fourth quarter of 2001, we decided to exit the turboprop business, return our entire fleet of leased Saab 340 aircraft and dispose of related inventory and equipment. New leases
(between the lessor and Shuttle America) were obtained for 21 aircraft, of which leases for three aircraft expired in January 2004. We remain liable if Shuttle America defaults with respect to the
remaining leases. We recorded impairment losses and accrued aircraft return cost of $3.8 and $10.2 million in 2002 and 2003, respectively. As of December 31, 2004, we maintained a reserve
of $6.0 million with respect to such losses which we believe is adequate to cover our exposure for additional losses.
Issued
Number
of Shares
Exercise
Price
Vesting
Exercise Period
June 2002
825,000(1
)
$
12.50(2
)
Fully Vested
Through June 2012
June 2004
825,000(1
)
12.35(2
)
Fully Vested
Through May 2014
February 2003
396,000(1
)
13.00
Fully Vested
Through February
2013
October 2003
165,000(1
)
12.35
Fully Vested
Through October
2013
March 2004
264,000(1
)
12.35
Fully Vested
Through March
2014
December 2004
960,000(3
)
11.60
Fully Vested
Through December
2014
Years Ended December 31,
Operating Expenses per ASM in cents
2004
2003
2002
Wages and benefits
2.29
2.21
2.24
Aircraft fuel
2.55
2.19
2.44
Passenger fees and commissions
—
—
0.08
Landing fees
0.46
0.47
0.47
Aircraft and engine rent
1.50
1.71
2.39
Maintenance and repair
1.23
1.22
1.47
Insurance and taxes
0.27
0.34
0.66
Depreciation and amortization
0.77
0.68
0.50
Impairment loss and accrued aircraft return
costs (1)
—
0.29
0.16
Other
0.87
0.80
1.30
Stabilization Act compensation
0.01
Total operating expenses
9.94
9.91
11.72
Plus interest expense
0.64
0.64
0.51
Total operating and interest expenses
10.58
10.55
12.23
28