Frontier Airlines 2005 Annual Report Download - page 64

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purchased in 2004. The unit cost increased to 1.0¢ in 2005 compared to 0.8¢ in 2004.
Impairment loss and accrued return costs of ($4.2) million were recorded in 2005 to reverse the remaining balance of a
reserve for the return of our Saab fleet of aircraft after an agreement to return all the Saab turboprop aircraft to lessors was executed
and all liabilities were settled. Impairment charges in 2004 of $1.4 million mainly consisted of a write off of purchased route costs on
markets that were abandoned during 2004.
Other expenses increased 31.0%, or $14.7 million, to $62.2 million in 2005 from $47.5 million in 2004, due mainly to $6.3
million of charges paid to American Airlines for having 70-seat aircraft on the Chautauqua operating certificate in 2005 and higher
pilot training, crew-related and administrative expenses to support the growing 70-seat regional jet operations. The unit cost decreased
to 0.9¢ in 2005 compared to 1.0¢ in 2004.
Interest expense increased 123.3% or $35.1 million, to $63.5 million in 2005 from $28.5 million in 2004 primarily due to
interest on debt related to the purchase of 31 additional 70-seat aircraft in 2005 and the full year effect of 24 regional jet aircraft
purchased in 2004. The weighted average interest rate increased to 5.6% in 2005 from 5.0% in 2004. The unit cost increased to 1.0¢ in
2005 compared to 0.6¢ in 2004.
We incurred income tax expense of $39.5 million during 2005, compared to $24.5 million in 2004. The effective tax rates for
2005 and 2004 were 39.5% and 38.7%, respectively, which were higher than the statutory rate due to state income taxes and
non-deductible meals and entertainment expense, primarily for our flight crews.
-39-
Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Research℠