Transcript Standard EPS Shell Chart Files and Instructions

The Ups and Downs, Ins and Outs of
Transportation
10th Annual Rocky Mountain Commercial Real
Estate Expo
November 12, 2004
Current State of The Airline Industry
Who’s in Charge of the Airlines?
“The industry doesn’t attract the most able minds in the
business world…Who in their right mind would work
for an airline?”
Sam Addoms, Chairman – Frontier Airlines
Denver Post (September 19, 2004)
Historical “Earnings” of the Airline Industry
Net Loss for 2001-2003 Exceeded Net Profit for
Previous 5 Years
Net Profit/Loss ($Billions)
$30.0
$23.0
$20.0
$10.0
$5.4
$2.8
$0.0
($5.1)
($3.6)
($10.0)
($8.3)
($12.4)
($11.3)
($13.1)
($20.0)
($30.0)
1947-78 1979-89 1990-94 1995-00
2001
2002
2003
Total
Notes: 1) 2001 and 2002 include Federal Compensation remitted to carriers under P.L. 107-42 (roughly $5B pre-tax over two calendar
years)
2) 2003 includes Federal reimbursements (roughly $2.3B pre-tax) for security costs imposed and estimates for concessions, offset by
SARS and Iraqi War
Industry Overview
“We believe the next 12 months will see more change in the industry than the past
three years combined.” Morgan Stanley – September 7, 2004
“High oil prices will only accelerate the inevitable – i.e. an industry restructuring –
and we believe some carriers will be forced to retrench further or may even go
out of business.” Merrill Lynch – September 8, 2004

Delta: Announced restructuring on September 8, 2004
— Dallas/Ft. Worth flights to be reduced from 254 flights to 21
— Song to increase from 36 to 48 aircraft

United: Continues to operate in bankruptcy and is seeking pension relief

US Airways: Seeking further concessions; second bankruptcy filing

ATA: Announced bankruptcy and likely Chapter 7
Trends. . .where are we heading
Trends. . .where are we heading
Trends. . .where are we heading
Trends. . .where are we heading
Distribution
Trends. . .where are we heading
Trends. . .where are we heading
Trends. . .where are we heading
As Colorado Grows. . .
Forecasted Population for Colorado
2004 - 2030
8.0
7.5
7.2 Million
7.0
Population (Millions)
6.5
6.0
5.5
5.0
4.5
4.6 Million
4.0
3.5
3.0
2005
2010
2015
2020
2025
2030
. . . So Must Air Service
Denver International Airport
Average Daily Departures
700
Non-Stop Markets Served
130
651
119
115
120
600
110
533
100
64%
500
90
80
396
400
61%
74
70
60
300
1995
2000
2004
50
1995
2000
2004
Growing Carrier with Proven Track Record
Frontier Market Share
At Denver International Airport

Commenced operations in 1994
(%)


Well-positioned at Denver
International Airport
August
20
16.5
Over 6.0 million passengers carried
in last twelve months

Increased market share at DIA by
20% year over year for the twelve
months ended August 2004

Significant growth opportunities
15
10
13.7
2003
Celebrated our Tenth Anniversary
2004
Frontier Growth in Denver Markets
Increased Frontier Frequencies Since January 2004
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Albuquerque
Atlanta
Austin
Chicago
Dallas/Ft.
Worth
El Paso
Ft. Meyers
Kansas City
Las Vegas
Minneapolis
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New Orleans
Oklahoma City
Phoenix
San Diego
San Francisco
San Jose
Seattle
St. Louis
Tucson
Frontier Growth in Denver

April 2004
2 daily non-stops between Denver and Dulles

May 2004
New non-stop between Denver and Anchorage

May 2004
2 daily non-stops between Denver and Philadelphia and one
“Red-eye” between Los Angeles and Philadelphia

May 2004
2 daily non-stops between Denver and both Billings, MT, and
Spokane, WA.

June 2004
2 daily non-stops between Denver and Nashville

July 2004
2 Additional non-stops between Denver and Washington DC’s
Ronald Reagan Airport

October 2004 2 daily non-stops between Denver and Little Rock, AK
Frontier Airlines’ Route Map
The Benefits of Competition
Pax Share in Top 1,000 Domestic City Pairs
Low Fare Airlines Penetration is Growing and Diversifying
30%
Network
Overlap – 60%; Share in Top Domestic Markets – 30%
25%
20%
15%
10%
5%
0%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Frontier’s Focus on Markets for Colorado
The Top Travel Destinations to/from Denver
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Los Angeles
Phoenix
Dallas/Ft. Worth
Chicago/O’Hare
Las Vegas
Atlanta
San Francisco
Seattle/Tacoma
Minneapolis
NY/LaGuardia
Houston
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Newark
Orlando
Boston
San Diego
Washington DC
(Dulles)
Detroit
Ft. Lauderdale
Salt Lake City
Portland
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Philadelphia
Baltimore
Chicago/Midway
Orange County
Kansas City
San Jose
Tampa
St. Louis
Washington DC
(Reagan)
Sacramento
Frontier Serves 26 of Denver’s Top 30 Travel Destinations
Frontier Sets the Pricing Standard in Denver
Average Fare from Denver
Quarter Ending December 2003
$300
$250
$225
$222
$200
$182
$169
$154
$150
$146
$119
$155
$128
$124
$100
$50
-31%
-19%
-24%
-31%
-32%
$0
New York
Phoenix
San Francisco
Frontier
United
Baltimore
Los Angeles
Impact of Increased Competition…Lower Fares
LCC Growth at Denver International Airport
And Effect on Fares
Departures
2001
10.5%
2002
15.0%
2003
17.5%
03 v 01
65.3%
Seats
12.4%
16.8%
19.8%
51.7%
Average Fares:
Top 50 Markets
$188
$163
$144
-23.5%
Other Markets
$192
$168
$153
-20.1%
Total
$189
$164
$145
-22.9%
Fleet Plan in Place to Support Colorado Growth
80
70
9
9
60
50
7
40
30
20
9.0 AAGR
9
9
1
7
18
17
18
28
44
50
57
62
16
10
11
4
3
0
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008
7
7
737-200
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737-300
A319/A318
Table excludes an additional 23 Airbus purchase rights
Note: Frontier’s Fiscal Year Ends March 31
CRJ-700
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
What does the future hold. . .
The New Air Traffic Growth Belts
What does the future hold. . .
Potentially Service Blighted Regions
Why are Airports, Airlines and Frontier Important to
Real Estate?
National Economic Impact
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Aviation Facilitates Economic Growth
—
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2000 GDP Contribution: $900B or 9% of GDP
Employment
—
Job Contribution: 11MM or 7% of US Employment
—
Half of Post-9/11 U.S. Job Loss is Aviation and
Travel Related
Investments
—
From 2000 to 2012: Investments in Airports could
mean and additional $31B for the US Economy
Why are Airports, Airlines and Frontier Important to
Real Estate?
State of Colorado Economic Impact

Jobs:
280,156

Wages:
$9.8B

Economic Activity: $23.5B
Jobs represent the total number of individuals employed. A job may
represent either a full- or part-time position. Consequently, an airport with
10 jobs may have two full-time and eight part-time employees.
Wages are the full payroll expended for employees, including all
taxes and benefits.
Economic Activity represents business sales. For government or non-
profit entities, economic activity represents their annual budget. For visitor
spending, economic activity represents visitor expenditures.
Why are Airports, Airlines and Frontier Important to
Real Estate?
Total Aircraft
Travelers to Colorado on Frontier
Cities Served
Daily Departures
Employees
Colorado Wages & Salaries
Payments to DIA
Colorado Taxes
City/County of Denver Taxes
Total Infusion to Colorado
2004
2008 Estimated
39 + 5
3.9MM
40
102
3,600
$75.2MM
$22.0MM
$3.5MM
$2.2MM
$102.9MM
62 + 9
6.7MM
60
190
6,000
$140.0MM
$40.0MM
$5.4MM
$4.0MM
$189.4MM
Why are Airports, Airlines and Frontier Important to
Real Estate?
BECAUSE:
1.
AIRLINES, AIRPORTS, AND FRONTIER ARE ECONOMIC
DRIVERS
2.
THEY ARE ECONOMIC BELLWEATHERS THAT SIGNIFY
GOOD TIMES AND BAD
3.
GOOD PREDICTORS FOR FUTURE DEVELOPMENT (the
more air travel access, the more development is likely)
4.
THEY OFFER EXTENSIVE DEVELOPMENT
OPPORTUNITIES ALL BY THEMSELVES (new facilities to
support airline growth, DIA Partnership/NE Corridor,
physical build-outs by airlines such as maintenance
hangars)
5.
CITIES THAT HAVE GOOD AIR SERVICE HAVE AN
ECONOMIC DEVELOMENT ADVANTAGE—attracts
business, money and consumers.
Why are Airports, Airlines and Frontier Important to
Real Estate?
Opportunities:
1.
Airport expansions to handle capacity growth
2.
New airline facilities (although in Denver, Frontier is the
only one looking at new facilities)
3.
Land development near non-hub, secondary airports
4.
Continued development of the NE Corridor spurred by
on-going growth of DIA
5.
Sustained airport growth will continue to build the
Colorado/Denver economies offering new opportunities
for development during next population boom.
Just for Fun
American Cuisine
Binoculars
Just for Fun
EarlyReturns
Mexico
Just for Fun
Snow
Underwear