May Delay Airbus Order Due To Rising Fuel Prices

Frontier Airlines announced Wednesday it now expects to post a loss of as much of 68 cents per share this quarter, due mainly to unforeseen increases in the price of fuel.

The airline also announced it will respond by eliminating 100 corporate jobs in Denver. Pilots and flight attendants would be unaffected by the cuts, reports the Denver Business Journal.

"We are also evaluating our fleet size and future aircraft deliveries to ensure the fleet is 'right-sized' to endure this difficult cost environment," said Frontier CEO and President Sean Menke.

Ironically, the discouraging financial news came in the same press release as news that Frontier saw revenue passenger miles in November which may set a monthly record, at almost 789 million.

That doesn't really help, though, when the airline is making less on more fliers, due to fuel prices.

"The cost of jet fuel has climbed 18 percent since October when we last provided an earnings estimate for the December quarter," Menke said. "Even though we are 40 percent hedged in the December quarter with crude oil derivatives, our current estimate of the price of fuel for the December quarter of $2.53 is a 17.7 percent year over year increase. In light of this significant increase to our operating costs, we are revising our previous guidance and we now anticipate a pre-tax loss for the December quarter in the range of $.58 - $.68 cents per share excluding special items."

Frontier operates a fleet of 60 Airbus A318, A319 and A320 aircraft, and ordered 10 Bombardier Q400 turboprops to start launch its new Lynx subsidiary, serving Wichita, Rapid City, Albuquerque and Billings.

Airline spokesman Joe Hodas says the Q400 order for Lynx will not be cut, but a pending order for 10 Airbus A320s for Frontier will be evaluated.

FMI: www.frontier.com