Frontier Group Holdings Inc

Previous wording

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, 2023, which was filed with the SEC on February 20, 2024 (the “2023 Annual Report”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the “Risk Factors” section of our 2023 Annual Report and other factors set forth in other parts of this Quarterly Report on Form 10-Q and our other reports and documents filed with the SEC from time to time.

Current wording

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, 2023, which was filed with the SEC on February 20, 2024 (the “2023 Annual Report”).

Previous wording

The following table provides select financial and operational information for the three and six months ended June 30, 2024 and 2023, respectively (in millions):

Current wording

The following table provides select financial and operational information for the three and nine months ended September 30, 2024 and 2023, respectively (in millions):

Previous wording

Total operating revenues for the three and six months ended June 30, 2024 totaled $973 million and $1,838 million, respectively, an increase of 1% compared to each of the three and six months ended June 30, 2023, respectively. This was primarily due to an increase in capacity, as measured by ASMs, partially offset by a reduction in revenue per available seat mile (“RASM”) for the three and six months ended June 30, 2024 as compared to the corresponding prior year periods.

Current wording

Total operating revenues for the nine months ended September 30, 2024 totaled $2,773 million, an increase of 3% compared to the nine months ended September 30, 2023. This was primarily due to the 8% increase in capacity, as measured by ASMs, partially offset by a 5% decrease in RASM driven by an 8% decline in total revenue per passenger, as compared to the corresponding prior year period.

Previous wording

Total operating expenses during the three and six months ended June 30, 2024 totaled $948 million and $1,844 million, respectively, resulting in a cost per available seat mile (“CASM”) of 8.98¢ and 9.22¢, compared to 9.51¢ and 9.72¢ for the three and six months ended June 30, 2023, respectively. Fuel expense was 18% and 3% higher, respectively, as compared to the corresponding prior year periods. The $44 million increase in fuel expense for the three months ended June 30, 2024 as compared to the corresponding prior year period was primarily driven by a 13% increase in fuel gallons consumed as a result of our 13% capacity increase and a 6% increase in fuel cost per gallon. The $15 million increase in fuel expense for the six months ended June 30, 2024 as compared to the corresponding prior year period was primarily driven by a 9% increase in fuel gallons consumed as a result of our 10% increase in capacity partially offset by a 6% reduction in fuel cost per gallon.

Current wording

Total operating expenses during the three months ended September 30, 2024 decreased to $916 million, resulting in a cost per available seat mile (“CASM”) of 9.10¢, a decrease of 6% compared to the three months ended September 30, 2023. Fuel expense was 10% lower, as compared to the corresponding prior year period. The $30 million decrease in fuel expense for the three months ended September 30, 2024, as compared to the corresponding prior year period, was primarily driven by the 13% decrease in fuel cost per gallon, partially offset by the 4% increase in fuel gallons consumed, as a result of our 4% capacity increase.

Previous wording

Our non-fuel expenses increased by 2% and 6% during the three and six months ended June 30, 2024, respectively, as compared to the corresponding prior year periods, driven primarily by higher capacity and larger fleet size and the resulting increase in operations during the same periods partially offset by increased sale-leaseback gains, lower lease return costs and lower maintenance, materials and repairs costs. While non-fuel expenses increased by $16 million and $68 million, CASM (excluding fuel), a non-GAAP measure, decreased by 10% and 5% to 6.24¢ and 6.46¢ for the three and six months ended June 30, 2024, respectively. The decrease in CASM (excluding fuel) on increased ASMs of 13% and 10% for the three and six months ended June 30, 2024, respectively, as compared to the corresponding prior year periods, was due to an increase in sale-leaseback gains compared to the corresponding prior year periods as well as a decrease in aircraft rent expense due to lease extension events and a decrease in maintenance, materials and repairs primarily due to lower contract labor costs partially offset by an increase in station costs due to a lower stage length on higher departures. Additionally, for the six months ended June 30, 2024, CASM (excluding fuel) was unfavorably impacted by higher crew costs including other benefits and increased salaried support staff expenses. For the reconciliation to corresponding GAAP 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.”

Current wording

Our non-fuel expenses increased by 1% during the three months ended September 30, 2024, as compared to the corresponding prior year period, driven primarily by higher capacity and larger fleet size and the resulting increase in operations during the same period. This movement was partially offset by an increase in sale-leaseback gains and a legal settlement, as compared to the three months ended September 30, 2023. CASM (excluding fuel), a non-GAAP measure, decreased by 2% to 6.51¢ on a 4% increase in capacity for the three months ended September 30, 2024, as compared to the corresponding prior year period. This decrease was primarily due to the increase in sale-leaseback gains and a legal settlement. This movement was partially offset by increases in stations costs due to a lower stage length on higher departures and higher aircraft rent expense due to increases to the fleet size.

Previous wording

As of June 30, 2024, our total available liquidity was $658 million, made up of cash and cash equivalents.

Current wording

As of September 30, 2024, our total available liquidity was $576 million, made up of cash and cash equivalents, and we have $205 million of funds available to be drawn under our revolving loan facility.

Previous wording

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $33 million, or 16%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase was primarily due to higher crew costs, driven by elevated credit hours on higher capacity and other benefit costs, as well as increased headcount of salaried support staff, as compared to the corresponding prior year period.

Current wording

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $15 million, or 7%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The increase was primarily due to higher crew costs, driven primarily by elevated credit hours on higher capacity and other benefit costs, as well as an increase in headcount of salaried support staff, as compared to the corresponding prior year period.

Previous wording

Aircraft Fuel. Aircraft fuel expense increased by $44 million, or 18%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase was primarily due to an increase of 13% in fuel gallons consumed due to higher capacity and a 6% growth in fuel cost per gallon.

Current wording

Aircraft Rent. Aircraft rent expense increased by $27 million, or 18%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to a 17% larger fleet.

Previous wording

Station Operations. Station operations expense increased by $39 million, or 31%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to increased airport operations as a result of the 26% increase in departures and 17% increase in passengers.

Current wording

Station Operations. Station operations expense increased by $31 million, or 23%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to increased airport operations as a result of the 17% increase in departures and 15% increase in passengers partially offset by increased benefits from airport revenue and cost sharing arrangements.

Previous wording

Maintenance, Materials and Repairs. Maintenance, materials and repair expense decreased by $10 million, or 19%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. This decrease was primarily due to lower contract labor costs, partially offset by the 18% increase in average aircraft in service, resulting in higher aircraft maintenance costs.

Current wording

Maintenance, Materials and Repairs. Maintenance, materials and repair expense increased by $5 million, or 10%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. This increase was primarily due to the 17% increase in average aircraft in service, which resulted in higher aircraft maintenance costs, partially offset by lower contract labor costs.

Previous wording

Sales and Marketing. Sales and marketing expense increased by $3 million, or 4%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to an increase in customer reservation system fees and paid media advertising, partially offset by less contract labor costs. The following table presents our distribution channel mix:

Current wording

Sales and Marketing. Sales and marketing expense increased by $5 million, or 12%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to the increase in credit card and third-party distribution channel fees as a result of a 6% increase in revenue. The following table presents our distribution channel mix:

Previous wording

Depreciation and Amortization. Depreciation and amortization expense increased by$11 million, or 48%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to an increase in capitalized maintenance depreciation due to our growing fleet.

Current wording

Depreciation and Amortization. Depreciation and amortization expense increased by $6 million, or 46%, during the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to an increase in capitalized maintenance depreciation due to our growing fleet.

Previous wording

Other Operating. Other operating resulted in a net gain of $1 million during the three months ended June 30, 2024, as compared to an expense of $53 million during the three months ended June 30, 2023. This movement was primarily driven by the increase in sale-leaseback gains compared to the corresponding prior year period, as a result of six aircraft inductions and two engine inductions subject to sale-leaseback transactions in the current period compared to one aircraft induction and one engine induction subject to sale-leaseback transactions in the corresponding prior year period.

Current wording

Other Operating. Other operating resulted in a net gain of $40 million during the three months ended September 30, 2024, compared to an expense of $40 million during the three months ended September 30, 2023. This movement was primarily driven by a legal settlement gain of $40 million and the increase in sale-leaseback gains, as a result of five aircraft inductions subject to sale-leaseback transactions in the current period, compared to three aircraft induction subject to sale-leaseback transactions in the corresponding prior year period.

Previous wording

Income Taxes. Our effective tax rate for the three months ended June 30, 2024 was an expense of 3.1%, compared to an expense of 19.3% for the three months ended June 30, 2023, on pre-tax net income for both periods. The primary difference between the effective tax rate and the federal statutory rate is related to a decrease in our valuation allowance relating to federal and state net operating losses. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Current wording

Income Taxes. Our effective tax rate for the three months ended September 30, 2024 was an expense of 3.7% on pre-tax income, compared to a benefit of 28.9% on a pre-tax loss for the three months ended September 30, 2023. The primary difference between the effective tax rate and the federal statutory rate is related to a decrease in our valuation allowance relating to federal and state net operating losses. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Previous wording

Total operating revenue increased $23 million, or 1%, during the six months ended June 30, 2024 compared to the six months ended June 30, 2023. While capacity grew by 10%, as measured by ASMs, revenue was unfavorably impacted by the 8% reduction in RASM due to decreased total revenue per passenger as well as lower load factor. Revenue performance reflected weak domestic industry pricing and the above-average concentration of capacity allocated to new markets. The increase in capacity was driven by a 16% increase in average aircraft in service during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, partially offset by an 11% decrease in average stage length to 925 miles compared to 1,045 miles for the corresponding prior year period as well as a 4% decrease in average daily aircraft utilization to 10.9 hours per day compared to 11.4 hours per day for the corresponding prior year period.

Current wording

Total operating revenue increased $75 million, or 3%, during the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023. While capacity grew by 8%, as measured by ASMs, revenue was unfavorably impacted by a 5% decline in RASM due to the 8% decline in total revenue per passenger as well as a 6-point reduction in load factor, partially offset by a reduction in stage length of 12% on a 12% increase in passengers. The increase in capacity was driven by the 16% increase in average aircraft in service during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, partially offset by a 7% decrease in average daily aircraft utilization to 10.6 hours per day compared to 11.4 hours per day for the corresponding prior year period.

Previous wording

Aircraft Fuel. Aircraft fuel expense increased by $15 million, or 3%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase was primarily due to a 9% increase in fuel gallons consumed, driven by higher capacity, partially offset by a 6% reduction in fuel cost per gallon.

Current wording

Aircraft Fuel. Aircraft fuel expense decreased by $15 million, or 2%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The decrease was primarily due to the 8% decrease in fuel cost per gallon, partially offset by the 7% increase in fuel gallons consumed, driven by higher capacity.

Previous wording

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $63 million, or 15%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase was due to higher crew costs, driven primarily by elevated credit hours on higher capacity, an increased headcount of salaried support staff and increased other benefits for the six months ended June 30, 2024, as compared to the corresponding prior year period.

Current wording

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $78 million, or 12%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The increase was due to higher crew costs, driven primarily by elevated credit hours on higher capacity and other benefit costs, as well as an increased headcount of salaried support staff, as compared to the corresponding prior year period.

Previous wording

Aircraft Rent. Aircraft rent expense increased by $27 million, or 10%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to a larger fleet, partially offset by a decrease in lease return costs.

Current wording

Aircraft Rent. Aircraft rent expense increased by $54 million, or 13%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to a larger fleet, partially offset by a decrease in aircraft lease return costs.

Previous wording

Station Operations. Station operations expense increased by $52 million, or 21%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to increased airport operations as a result of the 20% increase in departures and 10% increase in passengers, partially offset by an increase in airport revenue sharing arrangements.

Current wording

Station Operations. Station operations expense increased by $83 million, or 22%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to increased airport operations as a result of the 19% increase in departures and 12% increase in passengers partially offset by increased benefits from airport revenue and cost sharing arrangements.

Previous wording

Maintenance, Materials and Repairs. Maintenance, materials and repair expense decreased by $6 million, or 6%, during the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. This was primarily due to lower contract labor costs, partially offset by a 16% increase in average aircraft in service, which resulted in higher aircraft maintenance costs.

Current wording

Maintenance, Materials and Repairs. Maintenance, materials and repair expense decreased by $1 million, or 1%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. This decrease was primarily due to lower contract labor, partially offset by a 16% increase in average aircraft in service, which resulted in higher aircraft repair and maintenance costs.

Previous wording

Sales and Marketing. Sales and marketing expense increased by $3 million, or 7%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due an increase in customer reservation system fees and paid media advertising. The following table presents our distribution channel mix:

Current wording

Sales and Marketing. Sales and marketing expense increased by $8 million, or 6%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to an increase in customer reservation system fees and increase in paid media advertising. The following table presents our distribution channel mix:

Previous wording

Depreciation and Amortization. Depreciation and amortization expense increased by $6 million, or 50%, during the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to an increase in capitalized maintenance depreciation due to the increase in fleet size as well as a gain on asset disposal during the comparable prior year period.

Current wording

Depreciation and Amortization. Depreciation and amortization expense increased by$17 million, or 47%, during the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to an increase in capitalized maintenance depreciation due to our growing fleet.

Previous wording

Other Operating. Other operating resulted in a net gain of $2 million during the six months ended June 30, 2024, compared to an expense of $80 million during the six months ended June 30, 2023. This movement was primarily driven by the increase in sale-leaseback gains compared to the corresponding prior year period as a result of twelve aircraft inductions and two engine inductions subject to sale-leaseback transactions in the current period compared to four aircraft inductions and two engine inductions subject to sale-leaseback transactions in the corresponding prior year period.

Current wording

Other Operating. Other operating resulted in a net gain of $42 million during the nine months ended September 30, 2024, compared to an expense of $120 million during the nine months ended September 30, 2023. This movement was primarily driven by a legal settlement gain of $40 million and the increase in sale-leaseback gains, as a result of 17 aircraft inductions subject to sale-leaseback transactions in the current period, compared to seven aircraft inductions subject to sale-leaseback transactions in the corresponding prior year period.

Previous wording

Other Income (Expense). Other income decreased by $2 million, or 22%, during the three months ended June 30, 2024, as compared the three months ended June 30, 2023. The decrease was primarily due to lower interest income from lower balances in interest-bearing cash accounts and increased interest expense, driven mainly by higher interest rates and higher principal balances on our debt, partially offset by greater capitalized interest due to higher interest rates.

Current wording

Other Income (Expense). Other income decreased by $4 million, or 15%, during the nine months ended September 30, 2024, as compared the nine months ended September 30, 2023. The decrease was primarily due to lower interest income from lower balances in interest-bearing cash accounts and the $1 million loss on extinguishment of debt from the write-off of unamortized deferred financing cost related to the PDP Financing Facility.

Previous wording

Income Taxes. Our effective tax rate for the six months ended June 30, 2024 was an expense of 37.5%, compared to an expense of 18.3% for the six months ended June 30, 2023, on pre-tax net income for both periods. The primary difference between the effective tax rate and the federal statutory rate for thesix months ended June 30, 2024 is related to the impact of non-deductibility of certain executive compensation costs and other employee benefits in addition to net shortfalls related to the vesting and exercise of our share-based awards. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Current wording

Income Taxes. Our effective tax rate for the nine months ended September 30, 2024 was an expense of 11.4%, compared to an expense of 0% for the nine months ended September 30, 2023, on pre-tax income for both periods. The primary difference between the effective tax rate and the federal statutory rate for the nine months ended September 30, 2024 is related to a decrease in our valuation allowance relating to federal and state net operating losses, partially offset by the impact of non-deductibility of certain executive compensation and other employee benefits. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Previous wording

(d)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.

Current wording

(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.

Previous wording

(c)Represents $1 million in employee retention costs incurred in connection with the terminated merger with Spirit Airlines, Inc., for the six months ended June 30, 2023.

Current wording

(d)Represents $1 million in employee retention costs incurred in connection with the terminated merger with Spirit Airlines, Inc., for the nine months ended September 30, 2023.

Previous wording

(c)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.

Current wording

(e)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.

Previous wording

(e)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.

Current wording

(g)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.

Previous wording

(b)During the six months ended June 30, 2024, we recorded a $5 million non-cash valuation allowance against our U.S. federal and state net operating loss deferred tax assets, which largely do not expire, mainly as a result of being in a three-year historical cumulative pre-tax loss position and due to the loss generated during the three months ended March 31, 2024, which has no impact on cash taxes and is not reflective of our effective tax rate for deductible net operating losses generated or actual cash tax obligations created. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Current wording

(b)During the nine months ended September 30, 2024, we recorded a $5 million non-cash valuation allowance against our U.S. federal and state net operating loss deferred tax assets, which largely do not expire, mainly as a result of being in a three-year historical cumulative pre-tax loss position and due to the loss generated during the three months ended March 31, 2024, which has no impact on cash taxes and is not reflective of our effective tax rate for deductible net operating losses generated or actual cash tax obligations created. Please refer to “Notes to Condensed Consolidated Financial Statements—11. Income Taxes” for additional information.

Previous wording

The following table sets forth our operating statistics for the three and six months ended June 30, 2024 and 2023. These operating statistics are provided because they are commonly used in the airline industry and, as such, allow readers to compare our performance against our results for the corresponding prior year period, as well as against the performance of our peers.

Current wording

The following table sets forth our operating statistics for the three and nine months ended September 30, 2024 and 2023. These operating statistics are provided because they are commonly used in the airline industry and, as such, allow readers to compare our performance against our results for the corresponding prior year period, as well as against the performance of our peers.

Previous wording

As of June 30, 2024, we had $658 million in total available liquidity, made up of cash and cash equivalents. We had $452 million of total debt, net, of which $263 million is short-term and consists primarily of amounts outstanding under our pre-delivery deposit payment (“PDP”) facility (as amended from time to time, the “PDP Financing Facility”). Our total debt, net is comprised of $300 million outstanding under our PDP Financing Facility, $83 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), $66 million in 10-year, low-interest loans from the U.S. Department of the Treasury (the “Treasury,” and such loans, the “PSP Promissory Notes”) and $6 million in secured indebtedness for our headquarters building, partially offset by $3 million in deferred debt acquisition costs and other discounts.

Current wording

As of September 30, 2024, our total available liquidity was $576 million, made up of cash and cash equivalents, and we have $205 million of funds available to be drawn under our Revolving Loan Facility. We had $469 million of total debt, net, of which $190 million is short-term and consists primarily of amounts outstanding under our Pre-delivery Credit Facilities. Our total debt, net is comprised of $296 million outstanding under our Pre-delivery Credit Facilities, $100 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), $66 million in 10-year, low-interest loans from the U.S. Department of the Treasury (the “Treasury,” and such loans, the “PSP Promissory Notes”) and $12 million in secured indebtedness for our headquarters building, partially offset by $5 million in deferred debt acquisition costs.

Previous wording

The previous note related to our headquarters had a maturity date in June 2024 and we repaid the remaining outstanding balance, inclusive of any unpaid principal, interest, and other amounts, during the three months ended June 30, 2024. Subsequent to the payoff of the loan, we entered into a loan agreement in the amount of $6 million, with a maturity date in June 2031, which was outstanding on our condensed consolidated balance sheet as of June 30, 2024. Please refer to “Notes to Condensed Consolidated Financial Statements—6. Debt” for additional information.

Current wording

During the nine months ended September 30, 2024, we increased our borrowings under the Barclays agreement by an additional $20 million. Additionally, during the nine months ended September 30, 2024, we repaid the remaining outstanding balance, inclusive of any unpaid principal, interest and other amounts related to our previous headquarters note and subsequent to the payoff of the headquarters note, we entered into multiple loan agreements in the total amount of $12 million with a different lender secured by our headquarters. Please refer to “Notes to Condensed Consolidated Financial Statements—6. Debt” for additional information.

Previous wording

We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our PDP Financing Facility and cash flows from operating activities. We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings under the PDP Financing Facility and/or potential issuances of debt or equity. We also have unencumbered loyalty and brand related assets, which we believe could generate significant additional liquidity, if desired. Our primary uses of cash are for working capital, aircraft PDPs, debt repayments and capital expenditures.

Current wording

We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our Pre-delivery Credit Facilities, and cash flows from operating activities. We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings under the Pre-delivery Credit Facilities, our undrawn Revolving Loan Facility and/or potential issuances of debt or equity. The Revolving Loan Facility also permits us to enter into additional indebtedness secured by our loyalty program and brand-related assets, to the extent such indebtedness is pari passu to that of the Revolving Loan Facility. Our primary uses of cash are for working capital, aircraft PDPs, debt repayments and capital expenditures.

Previous wording

Our single largest capital commitment relates to the acquisition of aircraft. As of June 30, 2024, we operated all of our 148 aircraft under operating leases. PDPs relating to future deliveries under our agreement with Airbus are required at various times prior to each aircraft’s delivery date. As of June 30, 2024, we had $392 million of PDPs held by Airbus which have been partially financed by our PDP Financing Facility. As of June 30, 2024, our PDP Financing Facility, which allows us to draw up to an aggregate of $365 million, had $300 million outstanding. As of June 30, 2024, we had a firm obligation to purchase 198 A320neo family aircraft and 14 additional spare engines to be delivered by 2029. Of our aircraft commitments, 13 had committed operating leases for 2024 and 2025 deliveries, and 15 were subject to non-binding letters of intent to provide operating lease financing for 2025 and 2026 deliveries. We intend to evaluate financing options for the remaining aircraft.

Current wording

Our single largest capital commitment relates to the acquisition of aircraft. As of September 30, 2024, we operated all of our 153 aircraft under operating leases. PDPs relating to future deliveries under our agreement with Airbus are required at various times prior to each aircraft’s delivery date. As of September 30, 2024, our Pre-delivery Credit Facilities, which allow us to draw up to an aggregate of $478 million, had $296 million outstanding. As of September 30, 2024, we had $390 million of PDPs held by Airbus which have been partially financed by our Pre-delivery Credit Facilities.

Previous wording

During the three months ended June 30, 2024, we reached an agreement with one of our aircraft lessors which eliminated requirements to pay maintenance reserves held as collateral in advance of our required performance of major maintenance activities on its aircraft leases. As a result of the agreement, the lessor disbursed back to us previously paid aircraft maintenance deposits of approximately $104 million, resulting in us no longer having any aircraft maintenance deposits with any of our lessors as of June 30, 2024.

Current wording

During the nine months ended September 30, 2024, we reached an agreement with one of our aircraft lessors which eliminated requirements to pay maintenance reserves held as collateral in advance of our required performance of major maintenance activities on its aircraft leases. As a result of the agreement, the lessor disbursed back to us previously paid aircraft maintenance deposits of approximately $104 million, resulting in us no longer having any aircraft maintenance deposits with any of our lessors as of September 30, 2024.

Previous wording

(a)Includes principal commitments only associated with our PDP Financing Facility with borrowings as of June 30, 2024 pertaining to aircraft with deliveries through 2025, our affinity card unsecured debt due through 2029, our building note through June 2031 and the PSP Promissory Notes due through 2031. See “Notes to Condensed Consolidated Financial Statements — 6. Debt”.

Current wording

(a)Includes principal commitments only associated with our Pre-delivery Credit Facilities with borrowings as of September 30, 2024 pertaining to aircraft with deliveries through 2027 and certain deliveries in 2028, our affinity card unsecured debt due through 2029, our building notes through September 2031 and the PSP Promissory Notes due through 2031. See “Notes to Condensed Consolidated Financial Statements — 6. Debt”.

Previous wording

(b)Represents interest on debt obligations.

Current wording

(b)Represents interest and commitment fees on debt obligations and our undrawn Revolving Loan Facility.

Previous wording

(d)Represents purchase commitments for aircraft and engines. In August 2024, Airbus agreed to an amended delivery schedule which delays previously scheduled firm aircraft delivery dates from 2025 through 2028 to later years. The table above reflects our commitments as of June 30, 2024 and does not reflect our aircraft purchase commitments after giving effect to this revised delivery schedule. See “Notes to Condensed Consolidated Financial Statements — 9. Commitments and Contingencies” and “Notes to Condensed Consolidated Financial Statements — 14. Subsequent Events” for further detail.

Current wording

(d)Represents purchase commitments for aircraft and engines. See “Notes to Condensed Consolidated Financial Statements — 9. Commitments and Contingencies”.

Previous wording

The following table presents information regarding our cash flows in the six months ended June 30, 2024 and 2023 (in millions):

Current wording

The following table presents information regarding our cash flows in the nine months ended September 30, 2024 and 2023 (in millions):