Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Feb. 18, 2022 | Jun. 30, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2021 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-40304 | ||
Entity Registrant Name | Frontier Group Holdings, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 46-3681866 | ||
Entity Address, Address Line One | 4545 Airport Way | ||
Entity Address, City or Town | Denver | ||
Entity Address, State or Province | CO | ||
Entity Address, Postal Zip Code | 80239 | ||
City Area Code | 720 | ||
Local Phone Number | 374-4490 | ||
Title of 12(b) Security | Common Stock, $0.001 par value | ||
Trading Symbol | ULCC | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 588,000,000 | ||
Entity Common Stock, Shares Outstanding | 217,101,433 | ||
Documents Incorporated by Reference | Portions of the registrant's definitive Proxy Statement relating to the 2022 Annual Meeting of Stockholders are incorporated herein by references in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, 2021. | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Central Index Key | 0001670076 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2021 | |
Audit Information [Abstract] | |
Auditor Firm ID | 42 |
Auditor Name | Ernst & Young LLP |
Auditor Location | Denver, Colorado |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 918,000 | $ 378,000 |
Accounts receivable, net | 50,000 | 28,000 |
Supplies, net | 29,000 | 18,000 |
Other current assets | 40,000 | 226,000 |
Total current assets | 1,037,000 | 650,000 |
Property and equipment, net | 186,000 | 176,000 |
Operating lease right-of-use assets | 2,426,000 | 2,250,000 |
Pre-delivery deposits for flight equipment | 260,000 | 224,000 |
Aircraft maintenance deposits | 98,000 | 82,000 |
Intangible assets, net | 29,000 | 29,000 |
Other assets | 199,000 | 143,000 |
Total assets | 4,235,000 | 3,554,000 |
Liabilities and stockholders’ equity | ||
Accounts payable | 86,000 | 71,000 |
Air traffic liability | 273,000 | 135,000 |
Frequent flyer liability | 13,000 | 13,000 |
Current maturities of long-term debt, net | 127,000 | 101,000 |
Current maturities of operating leases | 444,000 | 416,000 |
Other current liabilities | 383,000 | 267,000 |
Total current liabilities | 1,326,000 | 1,003,000 |
Long-term debt, net | 287,000 | 247,000 |
Long-term operating leases | 1,991,000 | 1,848,000 |
Long-term frequent flyer liability | 41,000 | 50,000 |
Other long-term liabilities | 60,000 | 96,000 |
Total liabilities | 3,705,000 | 3,244,000 |
Commitments and contingencies | ||
Stockholders' equity | ||
Common stock, $0.001 par value per share, with 217,065,096 and 199,438,098 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively | 0 | 0 |
Additional paid-in capital | 381,000 | 60,000 |
Retained earnings | 159,000 | 261,000 |
Accumulated other comprehensive income (loss) | (10,000) | (11,000) |
Total stockholders’ equity | 530,000 | 310,000 |
Total liabilities and stockholders’ equity | $ 4,235,000 | $ 3,554,000 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Common stock, stated par (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 217,065,096 | 199,438,098 |
Common stock outstanding (in shares) | 217,065,096 | 199,438,098 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Operating revenues: | |||
Total operating revenues | $ 2,060,000 | $ 1,250,000 | $ 2,508,000 |
Operating expenses: | |||
Aircraft fuel | 575,000 | 338,000 | 640,000 |
Salaries, wages and benefits | 616,000 | 533,000 | 529,000 |
Aircraft rent | 530,000 | 396,000 | 368,000 |
Station operations | 384,000 | 257,000 | 336,000 |
Sales and marketing | 109,000 | 78,000 | 130,000 |
Maintenance materials and repairs | 119,000 | 83,000 | 86,000 |
Depreciation and amortization | 38,000 | 33,000 | 46,000 |
CARES Act credits | (295,000) | (193,000) | 0 |
Other operating | 101,000 | 90,000 | 64,000 |
Total operating expenses | 2,177,000 | 1,615,000 | 2,199,000 |
Operating income (loss) | (117,000) | (365,000) | 309,000 |
Other income (expense): | |||
Interest expense | (33,000) | (18,000) | (11,000) |
Capitalized interest | 4,000 | 6,000 | 11,000 |
Interest income and other | 2,000 | 5,000 | 16,000 |
Total other income (expense) | (27,000) | (7,000) | 16,000 |
Income (loss) before income taxes | (144,000) | (372,000) | 325,000 |
Income tax expense (benefit) | (42,000) | (147,000) | 74,000 |
Net income (loss) | $ (102,000) | $ (225,000) | $ 251,000 |
Earnings (loss) per share: | |||
Basic (in dollars per share) | $ (0.48) | $ (1.13) | $ 1.19 |
Diluted (in dollars per share) | $ (0.48) | $ (1.13) | $ 1.19 |
Passenger | |||
Operating revenues: | |||
Total operating revenues | $ 2,000,000 | $ 1,207,000 | $ 2,445,000 |
Other | |||
Operating revenues: | |||
Total operating revenues | $ 60,000 | $ 43,000 | $ 63,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (102,000) | $ (225,000) | $ 251,000 |
Other comprehensive loss | |||
Unrealized gains (losses) and amortization from cash flow hedges net of adjustment for de-designation of fuel hedges, net of deferred tax benefit/(expense) | 1,000 | (15,000) | 21,000 |
Other comprehensive income (loss) | 1,000 | (15,000) | 21,000 |
Comprehensive income (loss) | $ (101,000) | $ (240,000) | $ 272,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (102,000,000) | $ (225,000,000) | $ 251,000,000 |
Deferred income taxes | (32,000,000) | (14,000,000) | 52,000,000 |
Depreciation and amortization | 38,000,000 | 33,000,000 | 46,000,000 |
Gains recognized on sale-leaseback transactions | (60,000,000) | (48,000,000) | (107,000,000) |
Warrant liability unrealized loss | 22,000,000 | 9,000,000 | 0 |
Stock-based compensation | 11,000,000 | 8,000,000 | 8,000,000 |
Amortization of swaption cash flow hedges, net of tax | 1,000,000 | 0 | 0 |
Cash flows for derivative instruments, net | 0 | (4,000,000) | (1,000,000) |
Cash flows from operating leases | 0 | 17,000,000 | 0 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (14,000,000) | 61,000,000 | (6,000,000) |
Supplies and other current assets | 174,000,000 | (166,000,000) | (18,000,000) |
Aircraft maintenance deposits | (20,000,000) | (15,000,000) | (18,000,000) |
Other long-term assets | (37,000,000) | (32,000,000) | (29,000,000) |
Accounts payable | 13,000,000 | 0 | 24,000,000 |
Air traffic liability | 138,000,000 | (114,000,000) | 36,000,000 |
Other liabilities | 84,000,000 | (67,000,000) | (67,000,000) |
Cash provided by (used in) operating activities | 216,000,000 | (557,000,000) | 171,000,000 |
Cash flows from investing activities: | |||
Capital expenditures | (27,000,000) | (16,000,000) | (45,000,000) |
Pre-delivery deposits for flight equipment, net of refunds | (36,000,000) | 28,000,000 | (17,000,000) |
Other | (4,000,000) | (1,000,000) | 0 |
Cash provided by (used in) investing activities | (67,000,000) | 11,000,000 | (62,000,000) |
Cash flows from financing activities: | |||
Proceeds from issuance of debt | 163,000,000 | 236,000,000 | 170,000,000 |
Principal repayments on debt | (97,000,000) | (126,000,000) | (139,000,000) |
Proceeds from sale-leaseback transactions | 59,000,000 | 47,000,000 | 92,000,000 |
Proceeds from initial public offering, net of offering costs, underwriting discounts and commissions | 266,000,000 | 0 | 0 |
Proceeds from the exercise of stock options | 3,000,000 | 0 | 0 |
Dividends paid | 0 | 0 | (159,000,000) |
Tax withholdings on share-based awards | (3,000,000) | (1,000,000) | 0 |
Other | 0 | 0 | (3,000,000) |
Cash provided by (used in) financing activities | 391,000,000 | 156,000,000 | (39,000,000) |
Net increase (decrease) in cash, cash equivalents and restricted cash | 540,000,000 | (390,000,000) | 70,000,000 |
Cash, cash equivalents and restricted cash, beginning of period | 378,000,000 | 768,000,000 | 698,000,000 |
Cash, cash equivalents and restricted cash, end of period | $ 918,000,000 | $ 378,000,000 | $ 768,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Stockholders’ Equity - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional paid-in capital | Retained earnings | Retained earningsCumulative Effect, Period of Adoption, Adjustment | Accumulated other comprehensive income (loss) |
Beginning balance (in shares) at Dec. 31, 2018 | 199,143,218 | ||||||
Beginning balance at Dec. 31, 2018 | $ 280,000 | $ 149,000 | $ 0 | $ 52,000 | $ 245,000 | $ 149,000 | $ (17,000) |
Net income (loss) | 251,000 | 251,000 | |||||
Dividend and dividend equivalent rights | (159,000) | (159,000) | |||||
Restricted stock issued (in shares) | 55,632 | ||||||
Shares issued in connection with vesting of restricted stock units (in shares) | 61,940 | ||||||
Shares withheld to cover employee taxes on vested restricted stock units (in shares) | (17,936) | ||||||
Unrealized gain (loss) from cash flow hedges, net of tax | 21,000 | 21,000 | |||||
Stock option repurchases | $ (3,000) | (3,000) | |||||
Stock option exercised (in shares) | 0 | ||||||
Stock-based compensation | $ 3,000 | 3,000 | |||||
Ending balance (in shares) at Dec. 31, 2019 | 199,242,854 | ||||||
Ending balance at Dec. 31, 2019 | 542,000 | $ 0 | 52,000 | 486,000 | 4,000 | ||
Net income (loss) | (225,000) | (225,000) | |||||
Restricted stock issued (in shares) | 99,408 | ||||||
Shares issued in connection with vesting of restricted stock units (in shares) | 134,900 | ||||||
Shares withheld to cover employee taxes on vested restricted stock units (in shares) | (39,064) | ||||||
Unrealized gain (loss) from cash flow hedges, net of tax | $ (15,000) | (15,000) | |||||
Stock option exercised (in shares) | 0 | ||||||
Stock-based compensation | $ 8,000 | 8,000 | |||||
Ending balance (in shares) at Dec. 31, 2020 | 199,438,098 | 199,438,098 | |||||
Ending balance at Dec. 31, 2020 | $ 310,000 | $ 0 | 60,000 | 261,000 | (11,000) | ||
Net income (loss) | (102,000) | (102,000) | |||||
Shares issued in connection with vesting of restricted stock units (in shares) | 645,206 | ||||||
Shares withheld to cover employee taxes on vested restricted stock units (in shares) | (200,735) | ||||||
Shares withheld to cover employee taxes on vested restricted stock units | (3,000) | (3,000) | |||||
Unrealized gain (loss) from cash flow hedges, net of tax | $ 1,000 | 1,000 | |||||
Restricted stock unit repurchases (in shares) | (20,368) | ||||||
Stock option exercised (in shares) | 2,202,895 | 2,202,895 | |||||
Stock option exercises | $ 3,000 | 3,000 | |||||
Stock-based compensation | 11,000 | 11,000 | |||||
Issuance of common stock upon initial public offering, net of offering costs, underwriting discounts and commissions (in shares) | 15,000,000 | ||||||
Issuance of common stock upon initial public offering, net of offering costs, underwriting discounts and commissions | 267,000 | 267,000 | |||||
CARES Act warrants | $ 43,000 | 43,000 | |||||
Ending balance (in shares) at Dec. 31, 2021 | 217,065,096 | 217,065,096 | |||||
Ending balance at Dec. 31, 2021 | $ 530,000 | $ 0 | $ 381,000 | $ 159,000 | $ (10,000) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | |||
Unrealized losses from cash flow hedges net of adjustment for de-designation of fuel hedges, tax benefit/(expense) | $ (1) | $ 4 | $ (6) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) and include the accounts of Frontier Group Holdings, Inc. (“FGHI” or the “Company”) and its wholly-owned direct and indirect subsidiaries, including Frontier Airlines Holdings, Inc. (“FAH”) and Frontier Airlines, Inc. (“Frontier”). All wholly-owned subsidiaries are consolidated, with all intercompany transactions and balances being eliminated. The Company is headquartered in Denver, Colorado. Frontier is an ultra low-cost, low-fare airline that offers flights throughout the United States and to select international destinations in the Americas, serving approximately 120 airports. The Company is managed as a single business unit that primarily provides air transportation for passengers. Management has concluded there is only one reportable segment. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. Initial Public Offering On March 31, 2021, the Company’s registration statement on Form S-1 relating to the Company’s initial public offering (“IPO”) was declared effective by the SEC, and the Company’s common stock began trading on the NASDAQ Global Select Market on April 1, 2021 under the symbol “ULCC”. The Company completed its IPO on April 6, 2021 at an offering price of $19.00 per share, pursuant to the Company’s registration statement. The Company issued and sold 15 million shares of common stock and the Company’s selling stockholders sold 15 million shares of common stock in the IPO. The underwriters were granted an over-allotment option to purchase up to 4.5 million additional shares of common stock from the selling shareholders, at the IPO price of $19.00 per share, less the underwriting discount, for 30 days from the date of the prospectus, which was exercised in full in April 2021. The Company did not receive any of the proceeds from the sale of shares by the Company’s selling stockholders. In April 2021, the Company received net proceeds of $266 million after deducting underwriting discounts and commissions of $14 million and offering costs of $5 million, which consisted of direct incremental legal, accounting, consulting and other fees relating to the IPO, and exclusive of any income tax benefits from the transaction. Leases Effective January 1, 2019 the Company adopted ASU 2016-02, Leases (“ASU 2016-02”) using the modified retrospective transition method, with the cumulative-effect adjustment to the opening balance of retained earnings as of the effective date. Under the modified retrospective approach, financial results reported in periods prior to 2019 are unchanged. The Company also elected the package of practical expedients included in the new standard, which among other things, does not require a reassessment of lease classifications. The adoption of ASU 2016-02 had a significant impact on the Company’s consolidated balance sheets due to the recognition of $2 billion of lease liabilities with corresponding right-of-use assets for operating leases (see Note 10). Additionally, the Company recognized a $149 million cumulative effect adjustment, net of tax, to retained earnings. The adjustment to retained earnings was driven by the recognition of unamortized deferred sale-leaseback gains, net of tax. Prior to the adoption of ASU 2016-02, gains on sale-leaseback transactions were generally deferred and recognized in the income statement over the lease term. Under ASU 2016-02, to the extent control of the asset has transferred upon the sale, gains on sale-leaseback transactions are recognized immediately. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash and cash equivalents. Additionally, any items with maturities greater than three months that are readily convertible to known amounts of cash are considered cash and cash equivalents. Investments included in this category primarily consist of money market funds and time deposits. Restricted Cash Restricted cash may include certificates of deposit that secure letters of credit issued for particular airport authorities as required in certain lease agreements. The Company holds restricted cash to secure medical claims paid. Restricted cash may also include funds held as collateral for future travel paid with a credit card. These funds may be held by credit card processors directly under contracts that require a holdback of funds equal to a certain percentage of the related air traffic liability. If the Company fails to maintain certain liquidity and other financial covenants, the credit card processors’ rights to holdback would apply, which would result in a decrease of unrestricted cash. Restricted cash is carried at cost, which management believes approximates fair value. As of as of December 31, 2021 and 2020, the Company had less than $1 million of restricted cash. Accounts Receivable, net Receivables primarily consist of amounts due from credit card receivables, amounts due from aircraft lessors for maintenance performed, amounts due from select airport locations under revenue share agreements and incentives due from vendors. The Company records an allowance for credit losses for amounts not expected to be collected. The Company estimates the allowance based on aging trends. The allowance for doubtful accounts was $1 million and $3 million as of December 31, 2021 and 2020, respectively. Supplies, net Supplies consist of expendable aircraft spare parts, aircraft fuel and other supplies and are stated at the lower of cost or net realizable value. Supplies are accounted for on a first-in, first-out basis and are charged to expense as they are used. An allowance for obsolescence on expendable aircraft spare parts is provided over the remaining lease term or the estimated useful life of the related aircraft fleet to reduce the carrying cost of spare parts currently identified as excess to the lower of amortized cost or net realizable value. The allowance for obsolescence was $12 million and $8 million as of December 31, 2021 and 2020, respectively. Property and Equipment, net Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives to their estimated residual values. The Company capitalizes additions, modifications enhancing the operating performance of its assets, and the interest related to payments used to acquire new aircraft and the construction of its facilities. The Company capitalizes interest attributable to pre-delivery payments (“PDPs”) as an additional cost of the related asset beginning when activities necessary to get the asset ready for its intended use commence. Estimated useful lives and residual values for the Company’s property and equipment are as follows: Estimated Useful Life Residual Value Aircraft 25 years 10% Flight equipment leasehold improvements Lesser of lease term or economic life 0% Aircraft rotable parts Fleet life 10% Ground property and equipment 3 – 10 years 0% Ground equipment leasehold improvements Lesser of lease term or 10 years 0% Internal use software 3 – 10 years 0% Capitalized maintenance Lesser of lease term or economic life 0% Buildings Lesser of 40 years or economic life 10% The components of depreciation and amortization expense are as follows (in millions): Year Ended December 31, 2021 2020 2019 Depreciation $ 38 $ 32 $ 45 Intangible amortization — 1 1 Total depreciation and amortization $ 38 $ 33 $ 46 The Company capitalizes certain internal and external costs associated with the acquisition and development of internal-use software for new products and enhancements to existing products that have reached the application development stage and are deemed feasible. Capitalized costs include external direct costs of materials and services utilized in developing or obtaining internal-use software, and labor cost for employees who are directly associated with, and devote time to, internal-use software projects. Capitalized computer software, net is included within ground and other equipment, which is a component of property and equipment, net on the accompanying consolidated balance sheets and totaled $9 million and $8 million as of December 31, 2021 and 2020, respectively. Asset Impairment The Company applies a fair value-based impairment test to the carrying amount of indefinite-lived intangible assets annually, or more frequently if certain events or circumstances indicate impairment. The Company assesses the value of indefinite-lived assets under a qualitative and quantitative approach, as required. Under a qualitative approach, the Company considers various market factors, including applicable key assumptions listed below. These factors are analyzed to determine if events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset's fair value is less than its carrying value. The quantitative approach is used to assess the asset’s fair value and the amount of the impairment. If the asset’s carrying amount exceeds its fair value calculated using the quantitative approach, an impairment charge is recorded for the difference in fair value and carrying amount. Indefinite-lived intangible assets are comprised of certain landing slot rights and the trademark of the Company. Factors that could result in future impairment of landing slot rights, holding other assumptions constant, include, but are not limited to: (i) significant reduction in demand for air travel, (ii) competitive activity in the slotted airport, (iii) anticipated changes to the regulatory environment such as diminished slot access and (iv) increased competition at a nearby airport. As part of this evaluation, the Company assesses whether changes in (i) macroeconomic conditions, (ii) industry and market conditions, (iii) cost factors, (iv) overall financial performance and (v) certain events specific to the Company, have occurred which would impact the use and/or fair value of these assets. As a result of the coronavirus (“COVID-19”) pandemic the Company performed a quantitative assessment on its indefinite lived intangibles during 2020 and determined no impairment charges were necessary. As a result of the continued recovery during 2021 and the substantial headroom between the book values and fair values of its indefinite lived intangibles assets determined as part of the 2020 quantitative assessment, the Company performed a qualitative assessment during 2021, which resulted in no impairments. The Company records impairment charges on long-lived assets used in operations and finite-lived intangible assets when events and circumstances indicate that the assets may be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets, and the net book value of the assets exceeds their estimated fair value. In making these determinations, the Company uses certain assumptions, including, but not limited to: (i) estimated fair value of the assets; and (ii) estimated undiscounted future cash flows expected to be generated by these assets, which are based on additional assumptions such as asset utilization including macroeconomic factors impacting future demand, length of service the asset will be used in the Company’s operations and estimated salvage values. There were no events or circumstances identified during 2021 that required the Company to perform a quantitative impairment assessment. Aircraft Maintenance The Company accounts for heavy maintenance and major overhauls under the deferral method, whereby the cost of heavy maintenance and major overhauls is deferred and recorded as flight equipment and depreciated over the lesser of the remaining lease term or the period until the next scheduled heavy maintenance event. The Company has separate maintenance cost-per-hour contracts for the repair of certain rotable parts to support airframe and engine maintenance and repair, as well as heavy maintenance and major overhauls. These agreements require monthly payments based upon utilization, such as flight hours, cycles and age of the aircraft. For the contracts in which risk has been determined to transfer to the service provider, expense is recognized based on the contractual terms of the cost-per-hour arrangement. For those contracts in which risk has not been determined to transfer to the service provider, the Company initially records monthly payments as a deposit and then accounts for the underlying maintenance event when it occurs, in accordance with the Company’s maintenance accounting policy. Certain of the Company’s aircraft lease agreements require the Company to pay maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. At lease inception and at each balance sheet date, the Company assesses whether the maintenance reserve payments required by its leases are substantively and contractually related to the maintenance of the leased asset. Maintenance reserve payments that are determined to be related to the maintenance of the leased asset are accounted for as maintenance deposits, to the extent they are expected to be recoverable, and are reflected as aircraft maintenance deposits on the Company’s consolidated balance sheets. When it is not probable that the Company will recover amounts currently on deposit with a lessor, such amounts are expensed as supplemental rent within aircraft rent in the Company’s consolidated statements of operations. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments and are not included within the right-of-use asset and respective lease liability. The Company makes certain assumptions at the inception of the lease and at each balance sheet date to determine the recoverability of maintenance deposits. These assumptions are based on various factors, such as the estimated time between the maintenance events, the cost of such maintenance events, the date the aircraft is due to be returned to the lessor and the number of flight hours and cycles the aircraft is estimated to be utilized before it is returned to the lessor. Changes in estimates are accounted for on a cumulative catch-up basis. On a regular basis, the Company assesses the credit worthiness of the Company’s lessors to ensure deposits are collectible. The Company continues to evaluate the creditworthiness of its lessors as a result of the COVID-19 pandemic downturns and specifically whether any credit losses existed for aircraft maintenance deposits and determined no allowance was necessary as of December 31, 2021 and 2020. Certain of the Company’s lease agreements provide that maintenance reserves held by the lessor at the expiration of the lease are nonrefundable to the Company and will be retained by the lessor. Consequently, any usage-based maintenance reserve payments after the last major maintenance event are not substantively related to the maintenance of the leased asset and, therefore, are accounted for as supplemental rent. Leased Aircraft Return Costs The Company’s aircraft lease agreements generally contain provisions that require the Company to return aircraft airframes and engines to the lessor in a specified condition or pay an amount to the lessor based on the airframe and engine’s actual return condition. Lease return costs include all costs that would be incurred at the return of the aircraft, including costs incurred to repair the airframe and engines to the condition required by the lease. Lease return costs could include, but are not limited to, redelivery cost, redelivery crew cost, fuel, final inspections, reconfiguration of the cabin, repairs to the airframe, painting, overhaul of engines, replacement of components and checks. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost, there are various other factors which need to be considered such as current condition of the aircraft, the age of the aircraft at lease expiration, number of hours run on the engines, number of cycles run on the airframe, projected number of hours run on the engine at the time of return, the projected number of cycles run on the airframe at the time of return, the extent of repairs needed, if any, upon return, return locations, current configuration of the aircraft, current paint of the aircraft, estimated escalation of cost of repairs and materials at the time of return, current flight hour agreement rates and future flight hour agreement rates. In addition, typically near the lease return date, the lessors may allow maintenance reserves to be applied as return condition consideration or pass on certain return provisions if they do not align with their current plans to remarket the aircraft. As a result of the different factors listed above, management assesses the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. When costs become both probable and estimable, lease return costs are expensed as a component of aircraft rent in the consolidated statements of operations through the remaining lease term. Derivative Instruments Fuel Hedging Activities Variability in jet fuel prices impacts the Company’s results of operations. In order to reduce the risk of exposure to fuel price increases, the Company may enter into derivative contracts such as swaps, call options and collars. Derivative instruments are stated at fair value, net of any collateral postings. The Company formally designates and accounts for the derivative instruments that meet established accounting criteria under ASC 815, Derivatives and Hedging , as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instruments is recorded in accumulated other comprehensive income/loss (“AOCI/L”), a component of stockholders’ equity on the consolidated balance sheets. In general, the Company recognizes the associated gains or losses deferred in AOCI/L as a component of aircraft fuel expense within the consolidated statements of operations in the period that the aircraft fuel is consumed. For derivative instruments that are not designated as cash flow hedges, the gain or loss on the instrument is recognized in current period earnings. The Company presents its fuel derivative instruments net on the consolidated balance sheets. Refer to Note 7 for additional information regarding the Company’s hedge accounting and derivative instruments. Aircraft Purchase Hedging Activities The Company is party to certain interest rate swaption agreements that are accounted for as cash flow hedges, as defined under ASC 815, Derivatives and Hedging . Some of the Company’s aircraft purchase commitments can expose it to interest rate risk as, depending on the agreement, rental payments are adjusted and become fixed based on the seven Aircraft Fuel Aircraft fuel expense includes jet fuel and associated into-plane costs, federal and state taxes and the amortized gains, losses and premiums associated with effective fuel hedge contracts within AOCI/L and gains and losses from ineffective or dedesignated fuel hedge contracts. Sales and Marketing Sales and marketing expense includes credit card processing fees, system booking fees, sponsorship and distribution costs such as the costs of the Company’s call center and advertising costs. Advertising and the related production costs are expensed as incurred, and for the years ended December 31, 2021, 2020 and 2019 represented $7 million, $4 million and $10 million, respectively, of sales and marketing expense reported within the consolidated statements of operations. Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized for the tax consequences of temporary differences between the tax and financial statement reporting bases of assets and liabilities. The Company periodically assesses whether it is more likely than not that sufficient taxable income will be generated to realize deferred income tax assets, and a valuation allowance is established if it is not likely that deferred income tax assets will be realized. The Company considers sources of taxable income from prior period carryback periods, future reversals of existing taxable temporary differences, tax planning strategies and future projected taxable income when assessing the future realization of deferred tax assets. In assessing the sources of income and the need for a valuation allowance, the Company considers all available positive and negative evidence, which includes a recent history of cumulative losses. As of December 31, 2021, the Company has recorded an $8 million valuation allowance against its foreign and certain state net operating loss deferred tax assets. No valuation allowances were recorded during the years ended December 31, 2020 or 2019. Refer to Note 17 for additional information regarding the Company’s valuation allowance recorded during the year ended December 31, 2021. Stock-Based Compensation The Company recognizes cost of employee services received in exchange for awards of equity instruments based on the fair value of each instrument at the date of grant. Compensation expense is recognized over the period during which an employee is required to provide service in exchange for an award, with forfeitures accounted for as they occur. The fair value of stock option awards is estimated on the date of grant using the Black-Scholes valuation model. Restricted stock awards and units are valued at the fair value of the shares on the date of grant. The exercise price of all stock awards is determined by the Company’s board of directors based, in part, on the ending stock price on the grant date. Prior to the Company’s IPO, there were significant judgments and estimates inherent in these valuations which included assumptions regarding the Company’s future operating performance, the time to complete potential liquidity events and the determinations of the appropriate valuation methods to be applied. Refer to Note 11 for additional disclosures regarding details of the Company’s stock-based compensation plans. Gains on Sale-Leaseback Transactions The Company enters into sale-leaseback transactions for its aircraft and aircraft engine assets, whereby the Company sells one or more aircraft or aircraft engine assets to a third-party and simultaneously enters into an operating lease for a right to use such assets for a fixed period of time. Gains on sale-leaseback transactions are recognized in the period in which title to the asset transfers to the buyer-lessor and the lease commences, as a component of other operating expenses within the consolidated statements of operations. Gains on sale-leaseback transactions are calculated as the excess of the sale price of the asset over its carrying value. The carrying value of the assets sold will generally include the price paid for the asset, net of the amount of cash or the fair value of non-cash credits and incentives received from equipment and component manufacturers, the costs associated with delivery of the asset including any taxes or tariffs, financing costs capitalized in connection with the construction of the asset, capitalized maintenance and other improvements, and accumulated depreciation. Gains on sale-leaseback transactions may also be adjusted if it is determined that the terms of the sale transaction or the lease agreement are at a price other than fair value. Concentrations of Risk The Company’s business has been, and may continue to be, adversely affected by increases in the price of aircraft fuel, the volatility of the price of aircraft fuel, or both. Aircraft fuel represented approximately 26%, 21% and 29% of total operating expenses for the years ended December 31, 2021, 2020 and 2019, respectively. Gulf Coast Jet indexed fuel is the Company’s basis for the majority of aircraft fuel purchases. Any disruption to the oil production or refinery capacity in the Gulf Coast, as a result of weather or any other disaster, or disruptions in the supply chain of jet fuel, dramatic escalations in the cost of jet fuel and/or the failure of fuel providers to perform under fuel arrangements for other reasons could have a material adverse effect on the Company’s financial condition and results of operations. The air transportation business is volatile and highly affected by economic cycles and trends. Global pandemics and related health scares, consumer confidence and discretionary spending, fear of terrorism or war, weakening economic conditions, fare initiatives, fluctuations in fuel prices, labor actions, changes in governmental regulations on taxes and fees, weather, and other factors can result in significant fluctuations in revenue and results of operations. As of December 31, 2021, the Company had seven union-represented employee groups that together represented approximately 88% of all employees. Additional disclosure relating to the Company’s union-represented employee groups is included in Note 14. As of December 31, 2021, the Company had all capitalized maintenance deposits with two lessors, and all pre-delivery deposits for flight equipment with one vendor. Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This ASU and subsequently issued amendments requiring most leases with durations greater than 12 months to be recognized on the balance sheet. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. The standard was adopted using the modified retrospective approach with an effective date as of the beginning of the Company’s fiscal year, January 1, 2019. See Note 10 for more information. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology with an “expected loss” model which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance is effective for annual periods beginning after December 15, 2019 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2020, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also enhances the existing guidance for consistent application of Topic 740. The new guidance is effective for annual periods beginning after December 15, 2020 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2021, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting and measurement of convertible instruments and also adds disclosure requirements. Further, ASU 2020-06 simplifies the settlement assessment performed to determine whether a contract in the Company’s own equity qualifies for equity classification. The Company early adopted the standard effective January 1, 2021 using the modified retrospective approach, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. Given the Company’s IPO in April 2021, and based in part on the provisions of ASU 2020-06, warrants issued in conjunction with the CARES Act that may be settled in the Company’s own equity if publicly traded, were classified into equity during the second quarter of 2021. In November 2021, the FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). ASU 2021-10 details financial reporting disclosure requirements that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy. The new guidance is effective for annual periods beginning after December 15, 2021 and interim reporting periods within those reporting periods. The Company adopted the new standard as of December 15, 2021, which did not have an impact on the Company’s disclosures related to governmental grants or an impact to the results of operations and financial position as of the adoption date. |
Impact of COVID-19
Impact of COVID-19 | 12 Months Ended |
Dec. 31, 2021 | |
Unusual or Infrequent Items, or Both [Abstract] | |
Impact of COVID-19 | Impact of COVID-19 Impact of the COVID-19 Pandemic Beginning in March 2020, the rapid spread of COVID-19, along with government-mandated restrictions on travel, required stay-in-place orders, and other social distancing measures, resulted in a drastic decline in near-term air travel demand in the United States, and caused reductions in revenues and income levels as compared to corresponding pre-pandemic periods. The decline in demand for air travel has had a material adverse effect on the Company’s business and results of operations for the years ended December 31, 2021 and 2020. Although the Company has seen significant recovery of demand through the year ended December 31, 2021 as compared to the corresponding prior year period, the Company is unable to predict the future spread and impact of COVID-19, including future variants of the virus such as the recent Delta and Omicron variants, nor the efficacy and adherence rates of vaccines and other therapeutics and the resulting measures that may be introduced by governments or other parties and what impact those measures may have on the demand for air travel. Beginning in December 2020, the Food and Drug Administration issued emergency use authorizations for various vaccines for COVID-19. Widespread distribution of the vaccines has led to increased confidence in travel, particularly in the domestic leisure market on which the Company’s business is focused. While the Company has experienced a meaningful increase in passenger volumes as well as bookings since the vaccines became widely available, demand recovery slowed during the second half of the third quarter and into the fourth quarter of 2021 due to the rise in cases from the Delta and Omicron variants. The Company continues to closely monitor the COVID-19 pandemic and the need to adjust capacity and deploy other operational and cost-control measures as necessary to preserve short-term liquidity needs and ensure long-term viability of the Company and its strategies. Any anticipated adjustments to capacity and other cost savings initiatives implemented by the Company may vary from actual demand and capacity needs. The Company continues to monitor covenant compliance with various parties, including, but not limited to, its lenders and credit card processors and, as of December 31, 2021, and through the date of this report, the Company is in compliance with all of its covenants, except the Company has obtained a waiver of relief for the covenant provisions through the second quarter of 2022 related to one of its credit card processors that represents less than 10% of total revenues, which may require future waivers or an amendment to the existing covenants to reflect any additional COVID-19 pandemic impacts. COVID-19 Relief Funding The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) became law on March 27, 2020 and includes various provisions to protect the U.S. airline industry, its employees, and many other stakeholders. The CARES Act is a relief package intended to assist many aspects of the American economy, including providing the airline industry with up to $25 billion for a Payroll Support Program (“PSP”) to be used for employee wages, salaries, and benefits and up to $25 billion in loans. On April 30, 2020, the Company reached an agreement with the U.S. Department of the Treasury (the “Treasury”) under which the Company received $211 million of installment funding comprised of a $178 million grant (the “PSP Grant”) for payroll support for the period from April 2020 through September 2020, and a $33 million unsecured 10-year, low-interest loan (the “PSP Promissory Note”), all of which was received as of December 31, 2020. The PSP Grant was recognized over the period it was intended to support payroll, including the full $178 million net of $1 million in deferred financing costs during the year ended December 31, 2020, within CARES Act credits in the Company’s consolidated statements of operations. In conjunction with the PSP Promissory Note, the Company issued to the Treasury warrants to purchase up to 522,576 shares of common stock of FGHI at an exercise price of $6.36 per share. On January 15, 2021, as a result of the Consolidated Appropriations Act, 2021 (the “PSP Extension Law”), which extended the PSP provisions of the CARES Act, the Company entered into an agreement with the Treasury for installment funding under a second Payroll Support Program (“PSP2”), under which the Company received $161 million, comprised of a $143 million grant (the “PSP2 Grant”) for the continuation of payroll support from the date of the agreement through March 31, 2021, and an $18 million unsecured 10-year, low-interest loan (the “PSP2 Promissory Note”), all of which has been received as of December 31, 2021. The Company recognized the full $143 million PSP2 Grant during the year ended December 31, 2021, net of deferred financing costs within CARES Act credits in the Company’s consolidated statements of operations. In conjunction with the PSP2 Promissory Note, the Company issued to the Treasury warrants to purchase up to 157,313 shares of common stock of FGHI at an exercise price of $11.65 per share. The American Rescue Plan Act (“ARP”), enacted on March 11, 2021, provided for additional assistance to passenger air carriers that received financial relief under PSP2. On April 29, 2021, the Company entered into an agreement with the Treasury for installment funding under a third Payroll Support Program (“PSP3”), under which the Company received $150 million, comprised of a $135 million grant (the “PSP3 Grant”) for the continuation of payroll support through September 30, 2021, and a $15 million unsecured 10-year, low-interest loan (the “PSP3 Promissory Note”), all of which has been received as of December 31, 2021. The Company recognized the full $135 million received under the PSP3 Grant during the year ended December 31, 2021 within CARES Act credits in the Company’s consolidated statements of operations. In conjunction with the PSP3 Promissory Note, the Company issued to the Treasury warrants to purchase up to 79,961 shares of common stock of FGHI at an exercise price of $18.85 per share. On September 28, 2020, the Company entered into a loan agreement with the Treasury for a term loan facility of up to $574 million pursuant to the secured loan program established under the CARES Act (the “Treasury Loan”). In conjunction with the Treasury Loan, the Company issued to the Treasury warrants to purchase up to 2,358,090 shares of common stock of FGHI at an exercise price of $6.36 per share. As of December 31, 2021 and 2020, the Company had borrowed $150 million under the Treasury Loan, for which the right to draw any further funds lapsed in May 2021. On February 2, 2022, the Company repaid the Treasury Loan which included the $150 million principal balance along with accrued interest of $1 million. The repayment terminated the loan agreement with the Treasury and unencumbered the Company’s co-branded credit card program and related brand assets that secured the loan. Certain limitations, including restrictions on stock repurchases and the payment of dividends, will continue to apply for one year after repayment as indicated below. In connection with the Company’s participation in the PSP, PSP2, PSP3 and the Treasury Loan, the Company has been and will continue to be subject to certain restrictions and limitations, including, but not limited to: • restrictions on repurchases of equity securities listed on a national securities exchange or payment of dividends until February 2, 2023; • requirements to maintain certain levels of scheduled services through March 31, 2022 (including to destinations where there may currently be significantly reduced or no demand); • a prohibition on involuntary terminations or furloughs of employees (except for health, disability, cause, or certain disciplinary reasons) through September 30, 2021; • a prohibition on reducing the salary, wages or benefits of employees (other than executive officers or independent contractors, or as otherwise permitted under the terms of the PSP, PSP2 and PSP3) through September 30, 2021; • limits on certain executive compensation, including limiting pay increases and severance pay or other benefits upon terminations, until April 1, 2023; • limitations on the use of the grant funds exclusively for the continuation of payment of employee wages, salaries and benefits; and • additional reporting and recordkeeping requirements. As outlined above, as part of the PSP Promissory Note, the PSP2 Promissory Note, the PSP3 Promissory Note (collectively, the “PSP Promissory Notes”) and the Treasury Loan, the Company issued to the Treasury warrants to purchase shares of common stock of FGHI, which have a five-year term and can be settled in cash or shares at the election of the Company. The warrants do not have any voting rights and are freely transferable, with registration rights. The initial fair value of these warrants upon issuance is treated as a loan discount, which reduces the carrying value of the loan, and is amortized utilizing the effective interest method as interest expense in the Company’s consolidated statements of operations over the term of the loan. These awards were originally classified as liability-based awards within other current liabilities on the consolidated balance sheets, with periodic mark to market remeasurements being included in interest expense in the Company’s consolidated statements of operations given the Company only had the option of settling in cash before being publicly traded. As a result of the IPO, the Company has the intent and ability to settle the warrants issued to the Treasury in shares and as a result, as of April 6, 2021, the Company reclassified the warrant liability to additional paid-in capital on the consolidated balance sheet and is no longer required to mark to market the warrants. Subsequent warrants issued after the IPO date were recorded at fair value as a reduction to the related debt they were issued with and recorded to additional paid-in capital on the consolidated balance sheet. The Company recorded $22 million and $9 million in mark to market adjustments during the years ended December 31, 2021 and 2020, respectively, to interest expense within the Company’s consolidated statements of operations. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Passenger Revenues Fare revenues. Tickets sold in advance of the flight date are initially recorded as an air traffic liability on the Company’s consolidated balance sheets. Fare revenues are recognized in passenger revenues within the consolidated statements of operations at the time of departure when transportation is provided. As of December 31, 2020, the Company’s current air traffic liability balance was $135 million. During the year ended December 31, 2021, 89% of the air traffic liability as of December 31, 2020 has been recognized as passenger revenue within the consolidated statements of operations. As of December 31, 2021, the Company’s current air traffic liability is $273 million, of which $59 million is related to customer rights to book future travel, which either expire within 3 or 12 months after issuance if not redeemed by the customer. The amounts expected not to be redeemed are recognized over the historical pattern of rights exercised by customers to fare revenues in passenger revenues within the consolidated statements of operations. During the years ended December 31, 2021, 2020 and 2019, the Company recognized $58 million, $126 million and $26 million of revenue, respectively, in passenger revenues within the consolidated statements of operations, primarily related to expected and actual expiration of customer rights to book future travel. Estimated and actual expiration of customer rights to book future travel during the year ended December 31, 2020 was mainly due to the large amount of modifications of travel initiated by customers during late March through June 30, 2020 as a result of the COVID-19 pandemic. Non-fare passenger revenues. Certain ancillary items such as service fees, baggage and seat selection deemed part of providing passenger transportation are recognized to non-fare passenger revenues in passenger revenues within the consolidated statements of operations. Service fees include, among other things, convenience fees, charges for nonrefundable ticket expiration, cancellation charges and service charges assessed for itinerary changes made prior to the date of departure. Such change fees are recognized at the time of departure of the newly scheduled travel. Beginning in March 2020, resulting from the reduction in demand from the COVID-19 pandemic, the Company waived cancellation and change fees for customers for most of 2020 and the first quarter of 2021. Passenger Taxes and Fees. The Company is required to collect certain taxes and fees from customers on behalf of government agencies and airports and remit these back to the applicable governmental entity or airport on a periodic basis. These taxes and fees include U.S. federal transportation taxes, federal security charges, airport passenger facility charges, and foreign arrival and departure taxes. These taxes and fees are collected from customers at the time they purchase their tickets but are not included in passenger revenues at that time. The Company records a liability upon collection from the customer and reduces the liability when payments are remitted to the applicable governmental agency or airport. Other Revenues Other revenues primarily consists of services not directly related to providing transportation, such as the advertising, marketing and brand elements of the Frontier Miles affinity credit card program and commissions revenue from the third-party sale of items such as rental cars and hotels. Frequent Flyer Program The Company’s Frontier Miles frequent flyer program provides frequent flyer travel awards to program members based on accumulated mileage credits. Mileage credits are generally accumulated as a result of travel, purchases using the co-branded credit card and purchases from other participating partners. The Company defers revenue for mileage credits earned by passengers under its Frontier Miles program based on the equivalent ticket value (“ETV”) a passenger receives by redeeming mileage credits for a ticket rather than paying cash. Mileage credits are also sold to participating companies, including credit card companies and other third parties. Sales to credit card companies include multiple promised goods and services, which the Company evaluates to determine whether they represent performance obligations. The Company determined these arrangements have three separate performance obligations: (i) mileage credits to be awarded, (ii) licensing of brand and access to member lists and (iii) advertising and marketing efforts. Total arrangement consideration is allocated to each performance obligation on the basis of the deliverables relative standalone selling price. For mileage credits, the Company considers a number of entity-specific factors when developing the best estimate of the standalone selling price, including the number of mileage credits needed to redeem an award, average fare of comparable segments, breakage and restrictions. For licensing of brand and access to member lists, the Company considers both market-specific factors and entity-specific factors, including general profit margins realized in the marketplace and industry, brand power, market royalty rates and size of customer base. For the advertising and marketing performance obligation, the Company considers market-specific factors and entity-specific factors, including the Company’s internal costs of providing services, volume of marketing efforts and overall advertising plan. Consideration allocated based on the relative standalone selling price to both the brand licensing and access to member lists and advertising and marketing elements is recognized as other revenue in the Company’s consolidated statements of operations over time as mileage credits are delivered. The consideration allocated to the transportation portion of these mileage credit sales is deferred and recognized as a component of passenger revenue in the Company’s consolidated statements of operations at the time of travel for mileage credits redeemed. Mileage credits that the Company estimates are not likely to be redeemed are subject to breakage and are recognized as a portion of passenger revenues in the Company’s consolidated statements of operations in proportion to the pattern of rights exercised by customers. Management uses statistical models to estimate breakage based on historical redemption patterns. A change in assumptions as to the period over which mileage credits are expected to be redeemed, the actual redemption activity for mileage credits or the estimated fair value of mileage credits expected to be redeemed could have an impact on revenues in the year in which the change occurs and in future years. Redemptions are allocated between sold and flown mileage credits based on historical patterns. As a result of the reduction in demand due to the COVID-19 pandemic, beginning in March 2020, the Company extended the expiration dates of mileage credits issued under its frequent flyer program. During September 2020, the Company amended its credit card affinity agreement with its credit card partner Barclays. The amended and restated agreement, similar to the previous arrangement, provides for joint marketing, grants certain benefits to co-branded credit card holders, and allows Barclays to market using the Company’s customer database. Cardholders earn mileage credits under the Frontier Miles program and the Company sells mileage credits at agreed-upon rates to Barclays and earns fees from Barclays for the acquisition, retention and use of the co-branded credit card by consumers. The amended and restated agreement extended the term from 2023 to 2029 and provided for an up-front non-refundable payment of $25 million to the Company, of which the unamortized portion is recorded within other current liabilities, other long-term liabilities, and long-term frequent flyer liability on the consolidated balance sheets. The non-refundable payment will be recognized as other revenue in the Company’s consolidated statements of operations over the contact period as the Company performs its performance obligations under the amended agreement. Operating revenues are comprised of passenger revenues, which includes fare and non-fare passenger revenues, and other revenues. Disaggregated operating revenues are as follows (in millions): Year Ended December 31, 2021 2020 2019 Passenger revenues: Fare $ 806 $ 548 $ 1,205 Non-fare passenger revenues: Baggage 457 229 496 Service fees 521 303 488 Seat selection 170 84 187 Other 46 43 69 Total non-fare passenger revenue 1,194 659 1,240 Total passenger revenues 2,000 1,207 2,445 Other revenues 60 43 63 Total operating revenues $ 2,060 $ 1,250 $ 2,508 The Company is managed as a single business unit that provides air transportation for passengers. Operating revenues by principal geographic region, as defined by the U.S. Department of Transportation (the “DOT”), are as follows (in millions): Year Ended December 31, 2021 2020 2019 Domestic $ 1,950 $ 1,201 $ 2,362 Latin America 110 49 146 Total operating revenues $ 2,060 $ 1,250 $ 2,508 During the years ended December 31, 2021, 2020 and 2019, no revenue from any one foreign country represented greater than 5% of the Company’s total operating revenue. The Company attributes operating revenues by geographic region based upon the origin and destination of each passenger flight segment. The Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets. Accordingly, assets are not allocated to specific geographic regions. |
Other Current Assets
Other Current Assets | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Current Assets | Other Current Assets Other current assets consist of the following (in millions): December 31, 2021 2020 Prepaid expenses $ 14 $ 24 Passenger and other taxes receivable 9 26 Income tax receivable 3 161 Other 14 15 Total other current assets $ 40 $ 226 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net The components of property and equipment, net are as follows (in millions): December 31, 2021 2020 Flight equipment $ 212 $ 182 Ground and other equipment 104 101 Less: accumulated depreciation (130) (107) Total property and equipment, net $ 186 $ 176 During the years ended December 31, 2021, 2020 and 2019 the Company deferred $18 million, $9 million and $14 million of costs for heavy maintenance, respectively. |
Intangible Assets, net
Intangible Assets, net | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, net | Intangible Assets, net The following table summarizes the Company’s intangible assets, net (in millions): December 31, 2021 2020 Amortization Gross Accumulated Net Carrying Amount Gross Accumulated Net Carrying Amount Indefinite-lived: Airport slots Indefinite $ 20 $ — $ 20 $ 20 $ — $ 20 Trademarks Indefinite 6 — 6 6 — 6 26 — 26 26 — 26 Finite-lived: Affinity credit card program (1) 16 years 16 (13) 3 16 (13) 3 Total intangible assets, net $ 42 $ (13) $ 29 $ 42 $ (13) $ 29 _____________ (1) During September of 2020, the Company extended the term of the underlying agreement for its affinity credit card program (refer to Note 9). As a result, the Company extended the amortization period for its respective intangible asset from 10 years to 16 years on a prospective basis. |
Financial Derivative Instrument
Financial Derivative Instruments and Risk Management | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Financial Derivative Instruments and Risk Management | Financial Derivative Instruments and Risk Management The Company is exposed to variability in jet fuel prices. Aircraft fuel is one of the Company’s largest operating expenses. Increases in jet fuel prices may adversely impact its financial performance, operating cash flow and financial position. As part of its risk management program, the Company may enter into derivative contracts in order to limit exposure to the fluctuations in jet fuel price s. There were no fuel hedges entered into during the year ended December 31, 2021. The types of instruments the Company utilized in its 2020 hedging program were call options and collar structures, which include both a purchased call option and sold put option. A lthough the use of collar structures can reduce the overall cost of hedging, these instruments carry more risk than purchased call options alone in that these instruments may result in a net liability for the Company upon settlement. Additionally, the Company may be exposed to interest rate risk through aircraft lease contracts for the time period between agreement of terms and commencement of the lease, when portions of rental payments can be adjusted and become fixed based on the seven The Company formally designates and accounts for derivative instruments that meet established accounting criteria under ASC 815, Derivatives and Hedging , as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instruments is recorded in AOCI/L, a component of stockholders’ equity on the consolidated balance sheets. The Company recognizes the associated gains or losses deferred in AOCI/L, as well as the amounts that are paid or received in connection with the purchase or sale of fuel-related financial derivative instruments (i.e., premium costs of option contracts), as a component of aircraft fuel expense within the consolidated statements of operations in the period that the jet fuel subject to hedging is consumed. For interest rate derivatives, the Company recognizes the associated gains or losses deferred in AOCI/L, as well as amounts that are paid or received in connection with the purchase or sale of interest rate derivative instruments (i.e., premium costs of swaption contracts), as a component of aircraft rent expense within the consolidated statements of operations over the period of the related aircraft lease. The Company does not enter into derivative instruments for speculative purposes. In March 2020, the Company determined that it was no longer probable that estimated future fuel consumption for gallons subjected to fuel hedges would occur, primarily related to second quarter 2020 settled trades as the Company reduced scheduled flights as a result of the decline in customer demand from the COVID-19 pandemic, and, therefore, the Company was required to de-designate certain fuel hedges associated with estimated future consumption declines. The impacts of the de-designation in the Company’s results of operations are reflected in the tables below. The Company is exposed to credit losses in the event of nonperformance by counterparties to its derivative instruments but does not expect any of its counterparties will fail to meet their obligations. The amount of such credit exposure is generally the fair value of the Company’s outstanding contracts in a receivable position. To manage credit risks, the Company selects counterparties based on credit assessments, limits its overall exposure to any single counterparty and monitors the market position with each counterparty. Based on the fair value of the Company’s fuel derivative instruments, its counterparties may require it to post collateral when the price of the underlying commodity decreases, and the Company may require its counterparties to provide collateral when the price of the underlying commodity increases. The amount of collateral posted, if any, is periodically adjusted based on the fair value of the hedge contracts. The Company’s policy is to offset the liabilities represented by these contracts with any cash collateral paid to the counterparties. The assets and liabilities associated with the Company’s fuel and interest rate derivative instruments are presented on a gross basis and include upfront premiums paid. These assets and liabilities are recorded as a component of other current assets and other current liabilities, respectively, on the Company’s consolidated balance sheets and there were none as of December 31, 2021 and these assets and liabilities were less than $1 million as of December 31, 2020. The following table summarizes the effect of fuel and interest rate derivative instruments reflected in aircraft fuel and rent expense, respectively, within the consolidated statements of operations (in millions): Year Ended December 31, 2021 2020 2019 Derivatives designated as cash flow hedges Losses on fuel derivative contracts $ — $ (26) $ (17) Amortization of swaption cash flow hedges $ (1) $ (1) $ — Derivatives not designated as cash flow hedges Losses on fuel derivative contracts $ — $ (56) $ — The following table presents the net of tax impact of the overall effectiveness of derivative instruments designated as cash flow hedging instruments within the consolidated statements of comprehensive income (loss) (in millions): Year Ended December 31, 2021 2020 2019 Derivatives designated as cash flow hedges Fuel derivative contract gains (losses) – net of tax impact $ — $ (16) $ 22 Fuel derivative losses reclassified to earnings due to de-designation – net of tax impact — 11 — Interest rate derivative contract losses – net of tax impact — (10) (1) Amortization of swaption cash flow hedges, net of tax 1 — — Total $ 1 $ (15) $ 21 As of December 31, 2021, $10 million is included in AOCI/L related to interest rate hedging instruments that is expected to be reclassified into aircraft rent within the consolidated statements of operations over the aircraft lease term of the hedging instrument. |
Other Current Liabilities
Other Current Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Current Liabilities | Other Current Liabilities Other current liabilities consist of the following (in millions): December 31, 2021 2020 Salaries, wages and benefits $ 89 $ 97 Passenger and other taxes and fees payable 84 41 Station obligations 64 33 Aircraft maintenance 36 22 Current portion of phantom equity units (Note 11) 26 — Leased aircraft return costs 25 20 Fuel liabilities 23 6 Warrant liability (Note 2) — 18 Other current liabilities 36 30 Total other current liabilities $ 383 $ 267 Other long-term liabilities consist of the following (in millions): December 31, 2021 2020 Deferred revenue $ 21 $ 23 Phantom equity interest (Note 11) — 26 Deferred tax liability — 9 Other 39 38 Total other long-term liabilities $ 60 $ 96 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt The Company’s debt obligations are as follows (in millions): December 31, 2021 2020 Secured debt: Pre-delivery credit facility (1) $ 174 $ 141 Treasury Loan (2) 150 150 Floating rate building note (3) 18 18 Unsecured debt: PSP Promissory Notes (4) 66 33 Affinity card advance purchase of mileage credits (5) 15 15 Total debt 423 357 Less current maturities of long-term debt, net (127) (101) Less long-term debt acquisition costs and other discounts (9) (9) Long-term debt, net $ 287 $ 247 __________________ (1) The Company, through an affiliate, entered into the pre-delivery payment (“PDP”) facility with Citibank, N.A. in December 2014 (“PDP Financing Facility”). The PDP Financing Facility is collateralized by the Company’s purchase agreement for Airbus A320neo and A321neo aircraft deliveries through the term of the facility (see Note 14). In December 2020, the PDP Financing Facility was amended and restated to reduce the commitment of Citibank, N.A., as initial lender, to $150 million, remove the ability to draw further unsecured borrowings and to provide collateral for the borrowings not secured by aircraft outstanding as of that date. During May 2021, the Company amended the facility to increase the total available capacity to $200 million and expanded the number of financial institution participants as lenders. During December 2021, the facility was further amended and restated to extend the availability of the facility through December 2024 to include additional 2023 and 2024 aircraft deliveries. Interest is paid every 90 days based on a three-month LIBOR plus a margin for each individual tranche. The PDP Financing Facility consists of separate loans for each PDP aircraft. Each separate loan matures upon the earlier of (i) delivery of that aircraft to the Company by Airbus, (ii) the date one month following the last day of the scheduled delivery month of such aircraft and (iii) if there is a delay in delivery of aircraft, depending on the cause of the delivery delay, up to six months following the last day of the scheduled delivery month of such aircraft. The PDP Financing Facility will be repaid periodically according to the preceding sentence with the last scheduled delivery of aircraft contemplated in the PDP Financing Facility, as currently in effect, expected to be in the fourth quarter of 2024. (2) On September 28, 2020, the Company entered into the Treasury Loan with the Treasury for a term loan facility of up to $574 million. The Treasury Loan has a five-year term and includes an annual interest rate based on adjusted LIBOR plus 2.5%. The Company could not draw any further funds from its Treasury Loan facility after May 2021, as the right to draw any further funds lapsed, and the Company did not draw any further funds from its Treasury Loan facility during the year ended December 31, 2021. The loan can be prepaid at par at any time without incurring a penalty. The Treasury Loan is collateralized by the Company’s co-branded credit card arrangement and related assets. In conjunction with the Treasury Loan, the Company issued to the Treasury warrants to acquire the common stock of FGHI, which have a five-year term and are settled in cash or shares, at the election of the Company, upon notice from the Treasury. The initial fair value of these warrants upon issuance is treated as a loan discount, which reduces the carrying value of the loan, and is amortized utilizing the effective interest method as interest expense in the Company’s consolidated statements of operations over the term of the loan. (3) Represents a note with a commercial bank related to the Company’s headquarters building. Under the terms of the agreement, the Company will repay the outstanding principal balance in quarterly payments beginning in January 2022 until the maturity date in December 2023. On the maturity date, one final balloon payment will be made to cover all unpaid principal, accrued unpaid interest and other amounts due. The interest rate of one-month LIBOR plus a margin is payable monthly. (4) On April 30, 2020, the Company executed the PSP Promissory Note with the Treasury as part of the original payroll support program from which the Company received a $33 million unsecured 10-year, low-interest loan. Subsequently, the Company entered into a second PSP agreement with the Treasury in January 2021 and a third PSP agreement with the Treasury in April 2021, from which the Company received an additional $18 million and $15 million, respectively, of proceeds with the same terms as the original PSP Promissory Note. The PSP Promissory Notes include an annual interest rate of 1.00% for the first five years and the Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. The loans can be prepaid at par any time without incurring a penalty. In conjunction with the PSP Promissory Notes, the Company issued to the Treasury warrants to acquire the common stock of FGHI, which have a five-year term and are settled in cash or shares, at the election of the Company, upon notice from the Treasury. The initial fair value of these warrants upon issuance is treated as a loan discount, which reduces the carrying value of the loan, and is amortized utilizing the effective interest method as interest expense in the Company’s consolidated statements of operations over the term of the loan. (5) The Company entered into an agreement with Barclays in 2003 to provide for joint marketing, grant certain benefits to co-branded credit card holders (“Cardholders”), and allow Barclays to market using the Company’s customer database. Cardholders earn mileage credits under the Frontier Miles program and the Company sells mileage credits at agreed-upon rates to Barclays and earns fees from Barclays for the acquisition, retention and use of the co-branded credit card by consumers. In addition, Barclays will pre-purchase miles if the Company meets certain conditions precedent. On September 15, 2020 the Company entered into a new agreement with Barclays to amend and extend the agreement to 2029. The pre-purchased miles facility amount is to be reset on January 15 of each calendar year through and including January 15, 2028 based on the aggregate amount of fees payable by Barclays to the Company on a calendar year basis, up to an aggregate maximum facility amount of $200 million. The facility amount cannot be extended above $15 million until full extinguishment of the Treasury Loan, which occurred in February 2022. The Company pays interest on a monthly basis, which is based on a one-month LIBOR plus a margin. Beginning March 31, 2028, the facility will be repaid in 12 equal monthly installments. Cash payments for interest related to debt was $9 million, $7 million and $10 million for the years ended December 31, 2021, 2020 and 2019, respectively. On February 2, 2022, the Company repaid the Treasury Loan which included the $150 million principal balance along with accrued interest of $1 million. The repayment terminated the loan agreement with the Treasury and unencumbered the Company’s co-branded credit card program and related brand assets that secured the loan. The Company has issued standby letters of credit and surety bonds to various airport authorities and vendors that are collateralized by restricted cash and as of December 31, 2021, 2020 and 2019, the Company did not have any outstanding letters of credit that were drawn upon. As of December 31, 2021, future maturities of debt are payable as follows (in millions): December 31, 2021 2022 $ 127 2023 61 2024 4 2025 150 2026 — Thereafter 81 Total debt principal payments $ 423 |
Operating Leases
Operating Leases | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Operating Leases | Operating Leases The Company leases property and equipment under operating leases. For leases with initial terms greater than 12 months, the related operating lease right-of-use asset and corresponding operating lease liability are recorded at the present value of lease payments over the term on the Company’s consolidated balance sheets. Some leases include rental escalation clauses, renewal options, termination options, and/or other items that cause variability that are factored into the determination of lease payments when appropriate. The Company does not separate lease and non-lease components of contracts, except for certain flight training equipment, for which consideration is allocated between lease and non-lease components. When available, the rate implicit in the lease is used to discount lease payments to present value; however, most leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate (“IBR”) to discount the lease payments based on information available at lease commencement. The IBR utilized by the Company is first determined using an unsecured recourse borrowing rate over a tenor that matches the period of lease payments for each individual lease and then is adjusted to arrive at a rate that is representative of a collateralized rate (secured rate). Given the Company does not have an established unsecured public credit rating, the Company utilizes current period and projected financial information to simulate an unsecured credit rating. The Company then determines its secured rate (IBR) using a combination of several valuation methods that take into account the lower amount of risk of collateralized borrowings along with observable implied credit ratings from its current outstanding secured debt obligations. Aircraft As of December 31, 2021, the Company leased 110 aircraft with remaining terms ranging from three months to twelve years, all of which are under operating leases and are included within right-of-use asset and lease liabilities on the Company’s consolidated balance sheets. In addition, as of December 31, 2021, the Company leased 21 spare engines which are all under operating leases. As of December 31, 2021, the lease rates for seven of the engines depend on usage-based metrics which are variable and as such, these leases are not recorded on the Company’s consolidated balance sheets as a right-of-use asset and lease liability. As of December 31, 2021, the remaining terms for engines range from one month to twelve years. During the years ended December 31, 2021, 2020 and 2019, the Company executed sale-leaseback transactions with third-party lessors for 13, 9, and 18 new Airbus A320 family aircraft, respectively. Additionally, the Company completed sale-leaseback transactions for two engines, one engine and two engines during the years ended December 31, 2021, 2020 and 2019, respectively. All of the leases from the sale-leaseback transactions are accounted for as operating leases. The Company recognized net sale-leaseback gains from those sale-leaseback transactions of $60 million, $48 million and $107 million during the years ended December 31, 2021, 2020 and 2019, respectively, which are included as a component of other operating expenses within the consolidated statements of operations. In March 2020, the Company entered into two amendments with one lessor that were treated as one combined contract. One amendment extended the remaining lease terms on two aircraft from three In May 2021, the Company entered into an early termination and buyout agreement with one of its lessors for six aircraft that were previously owned by the Company. Of the four A319 aircraft originally slated to be returned in December 2021, two were returned during the second quarter of 2021 and two were returned during the third quarter of 2021, and the two A320ceo aircraft were returned as scheduled during the fourth quarter of 2021. The early returns of these aircraft retired the remaining A319 aircraft in the Company’s fleet. As a result of this early termination and buyout arrangement, the Company recorded a $10 million charge included as a component of rent expense within the consolidated statements of operations for the year ended December 31, 2021 related to the accelerated rent and lease return obligations of the A319 aircraft returned early. Aircraft Rent Expense and Maintenance Obligations During the years ended December 31, 2021, 2020 and 2019, aircraft rent expense was $530 million, $396 million and $368 million, respectively. Aircraft rent expense includes supplemental rent, which is made up of maintenance reserves paid or to be paid that are not probable of being reimbursed and probable lease return condition obligations. Supplemental rent expense (benefit), which includes payments for maintenance-related reserves that were deemed non-recoverable and any impact from changes in estimate, was $(3) million, $2 million and $6 million for each of the years ended December 31, 2021, 2020 and 2019, respectively. The portion of supplemental rent expense related to probable lease return condition obligations was $61 million, $25 million and $5 million, for years ended December 31, 2021, 2020 and 2019, respectively. Additionally, certain of the Company’s aircraft lease agreements require the Company to pay maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. As of December 31, 2021 and December 31, 2020, the Company had aircraft maintenance deposits that are expected to be recoverable of $108 million and $82 million, respectively, on the Company’s consolidated balance sheets of which $10 million and less than $1 million, respectively, are included in accounts receivable, net on the consolidated balance sheet as the eligible maintenance has been performed. The remaining $98 million and $82 million are included within aircraft maintenance deposits on the consolidated balance sheets as of December 31, 2021 and December 31, 2020, respectively. A majority of these maintenance reserve payments are calculated based on a utilization measure, such as flight hours or cycles. Maintenance reserves collateralize the lessor for maintenance time run off the aircraft until the completion of the maintenance of the aircraft. As of December 31, 2021, fixed maintenance reserve payments for aircraft and spare engines, including estimated amounts for contractual price escalations, were expected to be approximately $3 million per year for the years 2022 through 2026 and $9 million thereafter before consideration of reimbursements. Airport Facilities The Company’s facility leases are primarily for space at approximately 120 airports that are served and are primarily located in the United States. These leases are classified as operating leases and reflect the use of airport terminals, ticket counters, office space, and maintenance facilities. Generally, this space is leased from government agencies that control the use of the airport. The majority of these leases are short-term in nature and renew on an evergreen basis. For these leases, the contractual term is used as the lease term. As of December 31, 2021, the remaining lease terms vary from one month to eleven years. At the majority of the U.S. airports, the lease rates depend on airport operating costs or use of the facilities and are reset at least annually. Because of the variable nature of the rates, these leases are not recorded on the consolidated balance sheets as a right-of-use assets and lease liabilities. Other Ground Property and Equipment The Company leases certain other assets such as flight training equipment, building space, and various other equipment. Certain of the Company’s leases for other assets are deemed to contain fixed rental payments and, as such, are classified as operating leases and are recorded on the consolidated balance sheets as a right-of-use asset and liability. The remaining lease terms range from one month to seven years as of December 31, 2021. Lessor Concessions In response to the COVID-19 pandemic, beginning in 2020, the Company was granted payment deferrals on leases included in the Company’s right-of-use assets for certain aircraft and engines from lessors along with airport facilities and other vendors that are not included in the Company’s right-of-use assets. As these deferred payments are made, the Company will recognize the deferred payments in aircraft rent or station operations, as applicable, in the consolidated statements of operations. These deferrals changed operating cash flows and unfavorably impacted the Company’s results of operations by $22 million, net, for the year ended December 31, 2021, which was made up of a $31 million unfavorable impact to aircraft rent within the consolidated statements of operations and a $9 million favorable impact to station operations within the consolidated statements of operations resulting from additional deferrals granted for the year ended December 31, 2021. Expenses for these deferrals will be recognized throughout future years as such amounts are paid. The impact of the deferrals on the comparable prior year period was a favorable $33 million to operating cash flows for the year ended December 31, 2020, which included a $31 million favorable impact to aircraft rent and a $2 million favorable impact to station operations within the consolidated statements of operations for the year ended December 31, 2020. Lease Position The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheets as of December 31, 2021 and 2020 (in millions): December 31 Classification on the Balance Sheet 2021 2020 Assets Operating lease assets Operating lease right-of-use assets $ 2,426 $ 2,250 Liabilities Current Operating Current maturities of operating leases $ 444 $ 416 Long-term operating leases Operating Long-term operating leases 1,991 1,848 Total lease liabilities $ 2,435 $ 2,264 Weighted-average remaining lease term Operating leases 7 years 7 years Weighted-average discount rate Operating leases (1) 5.08 % 5.15 % ______________ (1) Upon adoption of ASU 2016-02, discount rates used for existing leases were established as of January 1, 2019. Lease Costs The table below presents certain information related to lease costs for operating leases during the years ended December 31, 2021, 2020 and 2019 (in millions): Year Ended December 31, 2021 2020 2019 Operating lease cost (1) $ 454 $ 337 $ 363 Variable lease cost (1) 284 220 186 Total lease costs $ 738 $ 557 $ 549 ______________ (1) Expenses are included within aircraft rent, station operations, maintenance materials and repairs and other operating within the Company’s consolidated statements of operations. Undiscounted Cash Flows The table below reconciles the undiscounted cash flows as of December 31, 2021 (in millions) for each of the next five years and total of the remaining years to the operating lease liability recorded on the consolidated balance sheet. December 31, 2021 Operating Leases Year 1 $ 456 Year 2 435 Year 3 419 Year 4 396 Year 5 332 Thereafter 915 Total undiscounted minimum lease rentals 2,953 Less: amount of lease payments representing interest (518) Present value of future minimum lease rentals 2,435 Less: current obligations under leases (444) Long-term lease obligations $ 1,991 During the years ended December 31, 2021 and 2020, the Company acquired, through new operating leases, operating lease assets totaling $500 million and $274 million, respectively, which are included in operating lease right-of-use assets on the consolidated balance sheets. During the years ended December 31, 2021, 2020 and 2019, the Company paid cash of $461 million, $340 million and $374 million, respectively, for amounts included in the measurement of lease liabilities. |
Stock-Based Compensation and St
Stock-Based Compensation and Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation and Stockholders’ Equity | Stock-Based Compensation and Stockholders’ Equity During the years ended December 31, 2021, 2020 and 2019, the Company recognized $11 million, $8 million and $8 million , respectively, in stock-based compensation expense, which is included as a component of salaries, wages and benefits within the consolidated statements of operations. A summary of the Company’s stock-based compensation expense is presented below (in millions): Year Ended December 31, 2021 2020 2019 Liability-classified awards $ — $ — $ 5 Stock options and restricted awards 11 8 3 Total stock-based compensation expense $ 11 $ 8 $ 8 Stock Options and Restricted Awards In April 2014, FGHI approved the 2014 Equity Incentive Plan (the “2014 Plan”). Under the terms of the 2014 Plan, 38 million shares of FGHI common stock are reserved for issuance. Concurrently with the Company’s IPO on April 1, 2021, the Company approved the 2021 Incentive Award Plan (the “2021 Plan”), which reserved 7 million shares of FGHI common stock, as well as the 11 million issued awards from the 2014 Plan that were still outstanding plus any subsequently forfeited awards or awards that lapse unexercised after April 1, 2021, to be available for future issuances of stock-based compensation awards to be granted to members of the Board of Directors and certain employees and consultants. Additionally, shares available for issuance under the 2021 Plan will be subject to an annual increase on the first day of each fiscal year beginning in 2022 and ending in 2031, equal to the lesser of (i) one percent (1%) of the shares of stock outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of shares of stock as determined by the Company’s Board of Directors; provided, however, that no more than 30 million shares of stock may be issued upon the exercise of incentive stock options. Stock Options Stock option awards are granted with an exercise price equal to the fair market value of FGHI’s common stock on the date of grant, and generally vest evenly over four years of continuous service. Compensation expense related to stock options is recognized on a straight-line basis over the requisite service period, net of forfeitures, which are recognized on a specific-identification basis. A summary of stock option activity during the year ended December 31, 2021 is presented below: Number of Shares Weighted Average Exercise Price Aggregate Grant Date Fair Value (in millions) Outstanding at December 31, 2020 9,879,240 $ 1.93 $ 10 Issued — — — Exercised (2,202,895) $ 1.62 (2) Forfeited (24,938) $ 11.15 — Outstanding at December 31, 2021 7,651,407 $ 1.99 $ 8 Exercisable at December 31, 2021 7,480,088 $ 1.79 $ 7 There were no options granted during the years ended December 31, 2021 and 2020, and during the year ended December 31, 2019, there were 454,100 shares granted at a weighted average grant date fair value of $4.46. During the year ended December 31, 2021, 2,202,895 vested stock options were exercised with an intrinsic value of $32 million; while there were no exercises during the year ended December 31, 2020 and 2019, respectively. As of December 31, 2021, the aggregate intrinsic value of outstanding options was $89 million. As of December 31, 2021, there was $1 million of unrecognized compensation cost related to unvested stock options which is expected to be recognized over a weighted average period of 1.1 years. Additionally, as of December 31, 2021, exercisable options and outstanding options have a remaining contractual term of 3.1 years and 3.2 years, respectively. Restricted Awards Restricted stock awards and restricted stock units in FGHI (collectively, “Restricted Awards”) are valued at the fair value of FGHI’s common stock on the date of grant. Restricted stock awards generally vest on the one-year anniversary from the date of issuance based upon time-based service conditions. Each restricted stock unit represents the right to receive one share of common stock upon vesting of such restricted stock unit. Vesting of restricted stock units is based on time-based service conditions, generally over three A summary of Restricted Award activity during the year ended December 31, 2021 is presented below: Number of Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 2,020,650 $ 10.54 Issued 899,800 $ 14.70 Vested (543,879) $ 10.23 Forfeited (205,542) $ 10.62 Repurchased (1) (200,735) $ 11.00 Outstanding at December 31, 2021 1,970,294 $ 12.47 __________________ (1) Represents withholdings to cover tax obligations on vested shares when applicable For the years ended December 31, 2020 and 2019, 1,869,372 and 261,326 of restricted stock units were issued with a weighted average grant date fair value of $10.39 and $12.71 per share, respectively. Additionally, 151,430 and 84,892 of restricted stock units vested with a weighted average grant date fair value of $12.22 and $11.85 per share, for the years ended December 31, 2020 and 2019, respectively . In connection with vesting, the Company withheld 39,064 and 17,936, restricted stock units with a weighted average grant date fair value of $11.82 and $11.52, pe r share to cover employee taxes upon award vesting for the years ended December 31, 2020 and 2019, respectively . The total fair value of restricted stock units vested was $11 million, $2 million, and $1 million, during the years ended December 31, 2021, 2020, and 2019, respectively. As of December 31, 2021, there was $16 million of unrecognized compensation cost related to unvested Restricted Awards which is expected to be recognized over a weighted average period of 1.9 years. Liability-Classified Awards |
Employee Retirement Plans
Employee Retirement Plans | 12 Months Ended |
Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employee Retirement Plans | Employee Retirement Plans The Company recorded $46 million, $37 million and $32 million in expense related to matching contributions to employee retirement plans for the years ended December 31, 2021, 2020 and 2019, respectively. This is recorded as a component of salaries, wages and benefits in the Company’s consolidated statements of operations. Frontier 401(k) Plan The Company sponsors The Frontier Airlines, Inc. 401(k) Retirement Plan (the “Frontier 401(k) Plan”) under Section 401(k) of the Internal Revenue Code. Under this plan, the Company matches 50% of each participant’s contribution up to 2% of each eligible maintenance employees’ compensation and up to 6% of all other employees, including flight attendants, whose contributions previously followed this structure, however, effective April 2019, flight attendants are matched at 100% up to 6% of each eligible employees’ compensation. This plan excludes pilots, who are covered under a separate plan discussed below. Contributions for employees begin after one year of employment and vest 25% per year over four years. Participants are entitled to receive distributions of all vested amounts beginning at age 59 1/2. Assets were transferred into The Frontier Airlines, Inc. 401(k) Retirement Plan from the Republic 401(k) plan shortly after the purchase of the Company in 2013. The plan is subject to the annual IRS elective deferral limit of $19,500 for 2021 and 2020 and $19,000 for 2019. FAPA Plan The Company also established the Frontier Airlines, Inc. Pilots Retirement Plan (the “FAPA Plan”), a defined contribution retirement plan for pilots covered under the collective bargaining agreement with the Frontier Airlines Pilots Association (“FAPA”). Effective September 1, 2016, pilots are no longer represented by FAPA and are represented by the Air Line Pilots Association (“ALPA”), however the FAPA Plan remained in effect under the collective bargaining agreement with ALPA. Under this plan, the Company immediately matched 50% of each participant’s contribution up to 10% of each eligible and active participant’s compensation. Contributions vested 25% per year over four years. Additionally, the Company made nonelective contributions based on the longevity of service, ranging from 0% of eligible compensation for less than three years of service, and up to 6% of eligible compensation for seven years or more of service. Nonelective contributions vest immediately. Under the new collective bargaining agreement with the pilots effective as of January 2019 for a five year period, the Company match no longer occurs, and instead, the Company makes nonelective contributions on behalf of each eligible Pilot equal to a percentage of the Pilot’s compensation, ranging from 12% to 15% over the term of the collective bargaining agreement (see Note 14). The nonelective contributions are subject to vesting based on years of service. Participants are entitled to receive distributions of all vested amounts beginning at age 59 1/2. The plan is subject to the annual IRS elective deferral limit of $19,500 for 2021 and 2020 and $19,000 for 2019. |
Other Long-Term Liabilities
Other Long-Term Liabilities | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Long-Term Liabilities | Other Current Liabilities Other current liabilities consist of the following (in millions): December 31, 2021 2020 Salaries, wages and benefits $ 89 $ 97 Passenger and other taxes and fees payable 84 41 Station obligations 64 33 Aircraft maintenance 36 22 Current portion of phantom equity units (Note 11) 26 — Leased aircraft return costs 25 20 Fuel liabilities 23 6 Warrant liability (Note 2) — 18 Other current liabilities 36 30 Total other current liabilities $ 383 $ 267 Other long-term liabilities consist of the following (in millions): December 31, 2021 2020 Deferred revenue $ 21 $ 23 Phantom equity interest (Note 11) — 26 Deferred tax liability — 9 Other 39 38 Total other long-term liabilities $ 60 $ 96 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Flight Equipment Commitments As of December 31, 2021, the Company’s firm aircraft and engine orders consisted of the following: A320neo A321neo Total Engines Year Ending 2022 9 5 14 5 2023 — 21 21 2 2024 — 24 24 2 2025 17 13 30 3 2026 19 22 41 3 Thereafter 31 73 104 6 Total 76 158 234 21 During December 2017, the Company entered into an amendment to the previously existing master purchase agreement with Airbus. Pursuant to this amendment and subsequent amendments, the Company has a commitment to purchase an incremental 67 A320neo and 67 A321neo aircraft (“incremental aircraft”) which were originally scheduled to be delivered through 2026, and further extended through 2028. In November 2021, the Company entered into an amendment with Airbus to add an additional 91 A321neo aircraft to the committed purchase agreement (“supplemental aircraft”). The order of these 91 Airbus A321neo aircraft are expected to be delivered starting in 2023 and continuing through 2029, and are reflected in the table above. The Company, at its option, has the right to convert 18 A320neo aircraft to A321XLR aircraft. The conversion right is available until December 31, 2022 and is not reflected in the table above as this option has not been exercised. The Company’s agreements with Airbus provide for, among other things, varying purchase incentives, which have been allocated proportionally and are accounted for as an offsetting reduction to the cost of the backlog aircraft and increase to the cost of the incremental aircraft. As a result, cash paid for backlog aircraft will be more than the associated capitalized cost of the aircraft and results in the recognition of a deferred purchase incentive within other assets on the consolidated balance sheets, which will ultimately be offset by the lower cash payments in connection with the purchase of the incremental aircraft. As of December 31, 2021, purchase commitments for the Company’s firm aircraft and engine orders, including estimated amounts for contractual price escalations and PDPs, were approximately $784 million in 2022, $1,215 million in 2023, $1,450 million in 2024, $1,754 million in 2025, $2,345 million in 2026, and $6,218 million thereafter. During July 2021, the Company signed a letter of intent with two of its leasing partners to add ten additional A321neo aircraft through direct leases, with deliveries beginning in the second half of 2022 and continuing into the first half of 2023. As of December 31, 2021, the Company has entered into a signed direct lease agreement for seven of the additional aircraft, while the remaining three are covered under a non-binding letter of intent. None of these ten aircraft that will be acquired through direct leases are reflected in the table above given these are not committed purchase agreements. Litigation and Other Contingencies On March 12, 2021, the DOT advised the Company that it was in receipt of information indicating that the Company had failed to comply with certain DOT consumer protection requirements relating to consumer refund and credit practices and requested that the Company provide certain information to the DOT. The original DOT request for information and subsequent correspondence and requests have been focused on the Company’s refund practices on Frontier initiated flight cancellations and/or significant schedule changes in flights as a result of the COVID-19 pandemic. The Company is fully cooperating with the DOT request and the review of this matter is still in process. The Company is subject to commercial litigation claims and to administrative and regulatory proceedings and reviews that may be asserted or maintained from time to time. The Company regularly evaluates the status of such matters to assess whether a loss is probable and reasonably estimable in determining whether an accrual is appropriate. Furthermore, in determining whether disclosure is appropriate, the Company evaluates each matter to assess if there is at least a reasonable possibility that a loss or additional losses may have been incurred and whether an estimate of possible loss or range of loss can be made. The Company believes the ultimate outcome of such lawsuits, proceedings, and reviews will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position, liquidity, or results of operations and that the Company’s current accruals cover matters where loss is deemed probable and can be reasonably estimated. The ultimate outcome of legal actions is unpredictable and can be subject to significant uncertainties, and it is difficult to determine whether any loss is probable or even possible. Additionally, it is also difficult to estimate the amount of loss and there may be matters for which a loss is probable or reasonably possible but not currently estimable. Thus, actual losses may be in excess of any recorded liability or the range of reasonably possible loss. Employees The Company has seven union-represented employee groups that together represent approximately 88% of all employees at December 31, 2021. The table below sets forth the Company’s employee groups and status of the collective bargaining agreements as of December 31, 2021: Percentage of Workforce Employee Group Representative Amendable Date December 31, 2021 Pilots Air Line Pilots Association (ALPA) January 2024 31% Flight Attendants Association of Flight Attendants (AFA-CWA) May 2024 52% Aircraft Technicians International Brotherhood of Teamsters (IBT) March 2024 2% Aircraft Appearance IBT October 2023 1% Dispatchers Transport Workers Union (TWU) December 2021 (1) 1% Material Specialists IBT March 2022 <1% Maintenance Control IBT October 2023 <1% __________________ (1) In December 2021, the Company’s collective bargaining agreements with its dispatchers, represented by TWU, became amendable. Negotiations are set to begin in March 2022. The Company is self-insured for health care claims, subject to a stop-loss policy, for eligible participating employees and qualified dependent medical and dental claims, subject to deductibles and limitations. The Company’s liabilities for claims incurred but not reported are determined based on an estimate of the ultimate aggregate liability for claims incurred. The estimate is calculated from actual claim rates and adjusted periodically as necessary. The Company has accrued $5 million and $4 million for health care claims estimated to be incurred but not yet paid as of December 31, 2021 and December 31, 2020, respectively, which is included as a component of other current liabilities on the consolidated balance sheets. General Indemnifications The Company has various leases with respect to real property as well as various agreements among airlines relating to fuel consortia or fuel farms at airports. Under some of these contracts, the Company is party to joint and several liability regarding environmental damages. Under others, where the Company is a member of an LLC or other entity that contracts directly with the airport operator, liabilities are borne through the fuel consortia structure. The Company’s aircraft, services, equipment lease and sale and financing agreements typically contain provisions requiring us, as the lessee, obligor or recipient of services, to indemnify the other parties to those agreements, including certain of those parties’ related persons, against virtually any liabilities that might arise from the use or operation of the aircraft or such other equipment. The Company believes that its insurance would cover most of its exposure to liabilities and related indemnities associated with the commercial real estate leases and aircraft, services, equipment lease and sale and financing agreements described above. Certain of the Company’s aircraft and other financing transactions include provisions that require payments to preserve an expected economic return to the lenders if that economic return is diminished due to certain changes in law or regulations. In certain of these financing transactions and other agreements, the Company also bears the risk of certain changes in tax laws that would subject payments to non-U.S. entities to withholding taxes. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Dec. 31, 2021 | |
Equity [Abstract] | |
Stockholders’ Equity | Stockholders’ Equity As of December 31, 2021, the Company has authorized common stock (voting), common stock (non-voting) and preferred stock of 750,000,000, 150,000,000 and 10,000,000 shares, respectively, of which only common stock (voting) were issued and outstanding. As of December 31, 2020, the Company had authorized common stock (voting), common stock (non-voting) and preferred stock of 456,000,000, 76,000,000 and 1,000,000 shares, respectively, of which only common stock (voting) were issued and outstanding. All classes of equity have a par value of $0.001 per share. The Company had 217,065,096 and 199,438,098 shares of common stock outstanding as of December 31, 2021 and 2020, respectively. All of the Company’s issued and outstanding shares of common stock are duly authorized, validly issued, fully paid and nonassessable. Each holder of the Company’s common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Holders of the Company’s common stock have no preemptive, subscription or other rights, and no redemption or sinking fund provisions applicable to the Company’s common stock exist. |
Net Earnings (Loss) per Share
Net Earnings (Loss) per Share | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Net Earnings (Loss) per Share | Net Earnings (Loss) per Share Basic and diluted earnings (loss) per share are computed pursuant to the two-class method. Under the two-class method, the Company attributes net income to common stock and other participating rights (including those with vested share-based awards). Basic net earnings per share is calculated by taking net income, less earnings allocated to participating rights, divided by the basic weighted average common stock outstanding. Net loss per share is calculated by taking net loss divided by basic weighted average common stock outstanding as participating rights do not share in losses. In accordance with the two-class method, diluted net earnings (loss) per share is calculated using the more dilutive impact of the treasury-stock method or from reducing net income for the earnings allocated to participating rights. The following table sets forth the computation of net earnings (loss) per share on a basic and diluted basis pursuant to the two-class method for the periods indicated (in millions, except for share and per share data): Year Ended December 31, 2021 2020 2019 Basic: Net income (loss) $ (102) $ (225) $ 251 Less: net income attributable to participating rights — — (14) Net income (loss) attributable to common stockholders $ (102) $ (225) $ 237 Weighted average common shares outstanding, basic 211,436,542 199,260,410 199,141,090 Net earnings (loss) per share, basic $ (0.48) $ (1.13) $ 1.19 Diluted: Net income (loss) $ (102) $ (225) $ 251 Less: net income attributable to participating rights — — (14) Net income (loss) attributable to common stockholders $ (102) $ (225) $ 237 Weighted average common shares outstanding, basic 211,436,542 199,260,410 199,141,090 Effect of dilutive potential common shares — — 452,010 Weighted average common shares outstanding, diluted 211,436,542 199,260,410 199,593,100 Net earnings (loss) per share, diluted $ (0.48) $ (1.13) $ 1.19 Due to the net loss for the years ended December 31, 2021 and 2020, diluted weighted average shares outstanding are equal to basic weighted average shares outstanding because the effect of all equity awards is anti-dilutive. Approximately 233,700 shares were excluded from the computation of diluted shares for the year ended December 31, 2019 as their impact would have been anti-dilutive. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income tax expense are as follows (in millions): Year Ended December 31, 2021 2020 2019 Current: Federal $ (10) $ (134) $ 19 State and local — 1 3 Current income tax expense (benefit) (10) (133) 22 Deferred: Federal (32) (5) 49 State and local (1) (9) 4 Foreign 1 — (1) Deferred income tax expense (benefit) (32) (14) 52 Total income tax expense (benefit) $ (42) $ (147) $ 74 The income tax provision differs from that computed at the federal statutory corporate tax rate as follows: Year Ended December 31, 2021 2020 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Reserves for uncertain tax positions, net 6.2 % (0.2) % 0.1 % Stock-based compensation 5.2 % — % (0.2) % State taxes, net of federal benefit 1.6 % 2.1 % 1.8 % Nondeductible warrants (3.5) % (0.5) % — % Impact of CARES Act — % 16.9 % — % Other (1.3) % 0.2 % 0.1 % Effective income tax rate 29.2 % 39.5 % 22.8 % The effective tax rate for the year ended December 31, 2021 is higher than the statutory rate primarily due to the release of the reserves related to uncertain tax positions for which the statute of limitations has expired, excess tax benefits associated with the Company’s stock-based compensation arrangements and a return to provision adjustment related to the Company’s foreign net operating loss carryforward; these are partially offset by the recognition of a valuation allowance against certain foreign and state net operating loss carryforwards and non-deductible interest from the mark to market adjustments from the warrants issued to the Treasury as part of the Company’s participation in the PSP, PSP2, PSP3, and the Treasury Loan. On March 27, 2020, the CARES Act was enacted in response to the COVID-19 pandemic. The CARES Act permits a net operating loss (“NOL”) generated in 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. As a result, the Company’s taxable losses for 2020 were fully absorbed in the 2015 and 2016 tax years (pre-Tax Cuts and Jobs Act) in which a federal 35% tax rate applies, resulting in a permanent benefit of the 14% rate differential which was favorability impacted by the inclusion of the tax deduction for the payments made to FAPAInvest, LLC, as described in Note 11. The Company had net tax payments/(refunds) of $(158) million, $9 million and $56 million for the years ended December 31, 2021, 2020 and 2019, respectively. Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial statement and income tax purposes. The following table shows the components of the Company’s deferred tax assets and liabilities (in millions): December 31, 2021 2020 Deferred tax assets: Operating lease liability $ 551 $ 514 Net operating losses 47 9 Nondeductible accruals 32 25 Deferred revenue 12 12 Income tax credits 2 — Valuation allowance (8) — Other 10 11 Deferred tax assets $ 646 $ 571 Deferred tax liabilities: Right of use asset $ (545) $ (507) Property and equipment (36) (34) Maintenance deposits (22) (19) Intangibles (6) (7) Leasehold interests — (6) Other (12) (7) Deferred tax liabilities (621) (580) Net deferred tax assets (liabilities) $ 25 $ (9) As of December 31, 2021, the Company’s net deferred tax asset balance was $25 million, including $47 million of deferred tax assets related net operating loss carry forwards which are made up of a $30 million of federal net operating losses, which do not expire, $10 million of state net operating losses, which expire from two years to having no expiration, and $7 million of foreign net operating losses, which expire in nine years. The Company recognizes a valuation allowance when it is more likely than not that some portion, or all, of the Company’s deferred tax assets, will not be realized. The Company considers sources of taxable income from prior period carryback periods, future reversals of existing taxable temporary differences, tax planning strategies and future taxable income when assessing the future utilization of deferred tax assets. The Company considers all available positive and negative evidence in determining the need for a valuation allowance. The Company updated this assessment as of December 31, 2021, noting that in part as a result of the significant impacts from the COVID-19 pandemic, the Company was in a cumulative three-year loss position. Prior to the pandemic, the Company has a consistent history of generating significant earnings and resulting taxable income and has typically utilized significant deferred tax assets such as net operating losses prior to expiration. The main sources of taxable income that supported realization of the Company’s deferred tax assets were from the projected reversal of existing temporary differences and the Company’s projected future taxable income. The Company expects to generate significant positive earnings in the near term as the recovery from the pandemic is expected to continue which would support the realization of substantially all of the Company’s federal and state deferred tax assets. As a result of the assessment as of December 31, 2021, the Company recorded a valuation allowance related to its foreign deferred tax assets of $7 million, which was fully offset by a corresponding reversal of a U.S. federal deferred tax liability, and state deferred tax assets of $1 million as these are more likely than not to not be realized given the short expiry periods in foreign and certain state jurisdictions. The following table shows the components of the Company’s unrecognized tax benefits related to uncertain tax positions (in millions): 2021 2020 2019 Unrecognized tax benefits at January 1 $ 10 $ 9 $ 9 Increase for tax positions taken during prior period — — — Decrease for tax positions taken during prior period (9) — — Increase for tax positions taken during current period — 1 — Unrecognized tax benefits at December 31 $ 1 $ 10 $ 9 In December of 2021 the Company received its federal tax refund related to the Company carrying back its 2020 losses to previous year’s tax returns that included certain unrecognized tax positions. Upon receipt of the 2020 tax year refund, the previous year’s tax returns effectively are considered closed and, as the statute of limitations reverted back at that time to its original expiry, the Company released any reserve related to tax periods where the statute of limitations would have lapsed. It is reasonably possible that the amount of unrecognized tax benefit could change significantly within the next 12 months pending the outcome of any cases currently in litigation, which could reduce income tax expense by $1 million. A lapse in the statute of limitations could also reduce income tax expense by less than $1 million within the next 12 months. The total amount of unrecognized benefit, if recognized, would reduce income tax expense by $1 million. The Company accrues interest related to unrecognized tax benefits in its provision for income taxes, and any associated penalties in other operating expenses. The amounts recorded in the Company’s consolidated financial statements related to interest and penalties is less than $1 million for the year ended December 31, 2021. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Under ASC 820, Fair Value Measurements and Disclosures , disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of its financial assets and liabilities. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents are comprised of liquid money market funds, time deposits and cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. Cash, cash equivalents and restricted cash are carried at cost, which management believes approximates fair value. Warrants The estimated fair value of the warrants issued in conjunction with the loans from the CARES Act, described in Note 2, was previously determined to be Level 3 measurement as of December 31, 2020. As a result of the Company’s IPO, the Company has the intent and ability to settle the warrants issued to the Treasury in shares and thus, as of April 6, 2021, the Company reclassified the warrant liability to additional paid-in capital on the consolidated balance sheet. Subsequent warrants issued after the IPO date were recorded at fair value as a reduction to the related debt they were issued with and recorded to additional paid-in capital on the consolidated balance sheet. As the warrants issued under the CARES Act will no longer be subject to recurring fair value measurements, they have been excluded from the table below as of December 31, 2021. Debt The estimated fair value of the Company’s debt agreements has been determined to be Level 3 measurement, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 long-term debt. The carrying amounts and estimated fair values of the Company’s debt are as follows (in millions): December 31, 2021 December 31, 2020 Carrying Estimated Fair Value Carrying Value Estimated Fair Value Secured debt: Pre-delivery credit facility $ 174 $ 175 $ 141 $ 139 Treasury Loan 150 156 150 148 Floating rate building note 18 19 18 18 Unsecured debt: PSP Promissory Note 66 58 33 25 Affinity card advance purchase of mileage credits 15 14 15 11 Total debt $ 423 $ 422 $ 357 $ 341 The tables below present disclosures about the fair value of assets and liabilities measured at fair value on a recurring basis in the Company’s consolidated financial statements (in millions): Fair Value Measurements as of December 31, 2021 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 918 $ 918 $ — $ — Fair Value Measurements as of December 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 378 $ 378 $ — $ — Warrants $ 18 $ — $ — $ 18 The Company had no transfers of assets or liabilities between fair value hierarchy levels during the years ended December 31, 2021 and 2020, other than the warrants discussed above. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties Management Services The Company is assessed a quarterly fee to Indigo Partners, LLC (“Indigo Partners”) for management services, plus expense reimbursements and the annual fees of each member of the Company’s board of directors that is affiliated with Indigo Partners. Indigo Partners manages an investment fund that is the controlling stockholder in FGHI. The expenses related to Indigo Partners’ management fees, expense reimbursements and director compensation were $2 million for the years ended December 31, 2021, 2020 and 2019, which is included in other operating expenses within the Company’s consolidated statement of operations. Codeshare Arrangement The Company entered into a codeshare agreement with Controladora Vuela Compañía de Aviación, S.A.B. de C.V. (an airline based in Mexico doing business as Volaris) during 2018, under which sales began in July 2018. Two of the Company’s directors are members of the board of directors of Volaris. As of December 31, 2021, Indigo Partners holds approximately 18% of the total outstanding common stock shares of Volaris. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn February 2, 2022, the Company repaid the Treasury Loan which included the $150 million principal balance along with accrued interest of $1 million. The repayment terminated the loan agreement with the Treasury and unencumbered the Company’s co-branded credit card program and related brand assets that secured the loan. Certain limitations, including restrictions on stock repurchases and the payment of dividends, will continue to apply for one year after repayment. See Note 2 for more information. On February 5, 2022, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Top Gun Acquisition Corp., a direct wholly owned subsidiary of the Company (“Merger Sub”) and Spirit Airlines, Inc. (“Spirit”). The Merger Agreement provides that, among other things, the Merger Sub will be merged with and into Spirit (the “Merger”), with Spirit surviving the Merger and continuing as a wholly owned subsidiary of the Company. The closing of the Merger is subject to the satisfaction of customary conditions, including, but not limited to: (1) the adoption of the Merger Agreement by Spirit’s stockholders; (2) the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other required regulatory approvals including the receipt of all consents, registrations, notices, waivers, exemptions, approvals, confirmations, clearances, permits, certificates, orders, and authorizations of the U.S. Federal Aviation Administration (“FAA”), the DOT, or the Federal Communications Commission (“FCC”); (3) the absence of any law or order prohibiting the consummation of the transactions; (4) the effectiveness of a registration statement on Form S-4 filed by Frontier registering shares of Frontier common stock to be issued in the Merger; (5) the authorization and approval for listing on NASDAQ of the Company’s shares to be issued to holders of Spirit’s common stock in the Merger; (6) the accuracy of the parties’ respective representations and warranties in the Merger Agreement, subject to specified materiality qualifications; and (7) compliance by the parties with their respective covenants in the Merger Agreement in all material respects. Subsequent to the closing of the Merger and at the effective time of the Merger, each share of common stock of Spirit, par value $0.0001 per share, issued and outstanding (other than shares owned by the Company, Spirit, or their respective subsidiaries immediately prior to the effective time) will be converted into the right to receive 1.9126 shares of common stock, par value $0.001 per share, of the Company and $2.13 per share in cash, without interest. The Merger Agreement also specifies termination rights for both Spirit and the Company including, without limitation, a right for either party to terminate the Merger if it is not consummated on or before February 5, 2023, subject to certain extensions if needed to obtain regulatory approvals. If the Merger Agreement were to be terminated in specified circumstances, Spirit would be required to pay the Company a termination fee of $94.2 million. The Company currently expects the Merger to occur in second half of 2022, although there can be no assurance regarding timing of completion of regulatory processes. The Merger Agreement also includes a methodology by which certain expenses will be borne by each company. During the year ended December 31, 2021, the Company did not incur any transaction or integration planning costs related to the planned Merger. The Company evaluated subsequent events and transactions through the date the consolidated financial statements were issued, and other than what has been noted above, no subsequent events requiring disclosure were identified. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of PresentationThe consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) |
Consolidation, Policy | The consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States (“GAAP”) and include the accounts of Frontier Group Holdings, Inc. (“FGHI” or the “Company”) and its wholly-owned direct and indirect subsidiaries, including Frontier Airlines Holdings, Inc. (“FAH”) and Frontier Airlines, Inc. (“Frontier”). All wholly-owned subsidiaries are consolidated, with all intercompany transactions and balances being eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Leases | Leases Effective January 1, 2019 the Company adopted ASU 2016-02, Leases Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This ASU and subsequently issued amendments requiring most leases with durations greater than 12 months to be recognized on the balance sheet. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. The standard was adopted using the modified retrospective approach with an effective date as of the beginning of the Company’s fiscal year, January 1, 2019. See Note 10 for more information. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology with an “expected loss” model which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance is effective for annual periods beginning after December 15, 2019 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2020, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also enhances the existing guidance for consistent application of Topic 740. The new guidance is effective for annual periods beginning after December 15, 2020 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2021, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting and measurement of convertible instruments and also adds disclosure requirements. Further, ASU 2020-06 simplifies the settlement assessment performed to determine whether a contract in the Company’s own equity qualifies for equity classification. The Company early adopted the standard effective January 1, 2021 using the modified retrospective approach, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. Given the Company’s IPO in April 2021, and based in part on the provisions of ASU 2020-06, warrants issued in conjunction with the CARES Act that may be settled in the Company’s own equity if publicly traded, were classified into equity during the second quarter of 2021. In November 2021, the FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). ASU 2021-10 details financial reporting disclosure requirements that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy. The new guidance is effective for annual periods beginning after December 15, 2021 and interim reporting periods within those reporting periods. The Company adopted the new standard as of December 15, 2021, which did not have an impact on the Company’s disclosures related to governmental grants or an impact to the results of operations and financial position as of the adoption date. |
Cash and Cash Equivalents, Restricted Cash | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of acquisition to be cash and cash equivalents. Additionally, any items with maturities greater than three months that are readily convertible to known amounts of cash are considered cash and cash equivalents. Investments included in this category primarily consist of money market funds and time deposits. Restricted Cash |
Accounts Receivable, net | Accounts Receivable, netReceivables primarily consist of amounts due from credit card receivables, amounts due from aircraft lessors for maintenance performed, amounts due from select airport locations under revenue share agreements and incentives due from vendors. The Company records an allowance for credit losses for amounts not expected to be collected. |
Supplies, net | Supplies, netSupplies consist of expendable aircraft spare parts, aircraft fuel and other supplies and are stated at the lower of cost or net realizable value. Supplies are accounted for on a first-in, first-out basis and are charged to expense as they are used. An allowance for obsolescence on expendable aircraft spare parts is provided over the remaining lease term or the estimated useful life of the related aircraft fleet to reduce the carrying cost of spare parts currently identified as excess to the lower of amortized cost or net realizable value. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives to their estimated residual values. The Company capitalizes additions, modifications enhancing the operating performance of its assets, and the interest related to payments used to acquire new aircraft and the construction of its facilities. The Company capitalizes interest attributable to pre-delivery payments (“PDPs”) as an additional cost of the related asset beginning when activities necessary to get the asset ready for its intended use commence. |
Asset Impairment | Asset Impairment The Company applies a fair value-based impairment test to the carrying amount of indefinite-lived intangible assets annually, or more frequently if certain events or circumstances indicate impairment. The Company assesses the value of indefinite-lived assets under a qualitative and quantitative approach, as required. Under a qualitative approach, the Company considers various market factors, including applicable key assumptions listed below. These factors are analyzed to determine if events and circumstances indicate that it is more likely than not that an indefinite-lived intangible asset's fair value is less than its carrying value. The quantitative approach is used to assess the asset’s fair value and the amount of the impairment. If the asset’s carrying amount exceeds its fair value calculated using the quantitative approach, an impairment charge is recorded for the difference in fair value and carrying amount. Indefinite-lived intangible assets are comprised of certain landing slot rights and the trademark of the Company. Factors that could result in future impairment of landing slot rights, holding other assumptions constant, include, but are not limited to: (i) significant reduction in demand for air travel, (ii) competitive activity in the slotted airport, (iii) anticipated changes to the regulatory environment such as diminished slot access and (iv) increased competition at a nearby airport. As part of this evaluation, the Company assesses whether changes in (i) macroeconomic conditions, (ii) industry and market conditions, (iii) cost factors, (iv) overall financial performance and (v) certain events specific to the Company, have occurred which would impact the use and/or fair value of these assets. |
Aircraft Maintenance | Aircraft Maintenance The Company accounts for heavy maintenance and major overhauls under the deferral method, whereby the cost of heavy maintenance and major overhauls is deferred and recorded as flight equipment and depreciated over the lesser of the remaining lease term or the period until the next scheduled heavy maintenance event. The Company has separate maintenance cost-per-hour contracts for the repair of certain rotable parts to support airframe and engine maintenance and repair, as well as heavy maintenance and major overhauls. These agreements require monthly payments based upon utilization, such as flight hours, cycles and age of the aircraft. For the contracts in which risk has been determined to transfer to the service provider, expense is recognized based on the contractual terms of the cost-per-hour arrangement. For those contracts in which risk has not been determined to transfer to the service provider, the Company initially records monthly payments as a deposit and then accounts for the underlying maintenance event when it occurs, in accordance with the Company’s maintenance accounting policy. Certain of the Company’s aircraft lease agreements require the Company to pay maintenance reserves to aircraft lessors to be held as collateral in advance of the Company’s required performance of major maintenance activities. At lease inception and at each balance sheet date, the Company assesses whether the maintenance reserve payments required by its leases are substantively and contractually related to the maintenance of the leased asset. Maintenance reserve payments that are determined to be related to the maintenance of the leased asset are accounted for as maintenance deposits, to the extent they are expected to be recoverable, and are reflected as aircraft maintenance deposits on the Company’s consolidated balance sheets. When it is not probable that the Company will recover amounts currently on deposit with a lessor, such amounts are expensed as supplemental rent within aircraft rent in the Company’s consolidated statements of operations. Maintenance reserve payments that are based on a utilization measure and are not probable of being recovered are considered variable lease payments and are not included within the right-of-use asset and respective lease liability. The Company makes certain assumptions at the inception of the lease and at each balance sheet date to determine the recoverability of maintenance deposits. These assumptions are based on various factors, such as the estimated time between the maintenance events, the cost of such maintenance events, the date the aircraft is due to be returned to the lessor and the number of flight hours and cycles the aircraft is estimated to be utilized before it is returned to the lessor. Changes in estimates are accounted for on a cumulative catch-up basis. On a regular basis, the Company assesses the credit worthiness of the Company’s lessors to ensure deposits are collectible. The Company continues to evaluate the creditworthiness of its lessors as a result of the COVID-19 pandemic downturns and specifically whether any credit losses existed for aircraft maintenance deposits and determined no allowance was necessary as of December 31, 2021 and 2020. |
Leased Aircraft Return Costs | Leased Aircraft Return Costs The Company’s aircraft lease agreements generally contain provisions that require the Company to return aircraft airframes and engines to the lessor in a specified condition or pay an amount to the lessor based on the airframe and engine’s actual return condition. Lease return costs include all costs that would be incurred at the return of the aircraft, including costs incurred to repair the airframe and engines to the condition required by the lease. Lease return costs could include, but are not limited to, redelivery cost, redelivery crew cost, fuel, final inspections, reconfiguration of the cabin, repairs to the airframe, painting, overhaul of engines, replacement of components and checks. These return provisions are evaluated at inception of the lease and throughout the lease terms and are accounted for as either fixed or variable lease payments (depending on the nature of the lease return condition) when it is probable that such amounts will be incurred. When determining probability and estimated cost, there are various other factors which need to be considered such as current condition of the aircraft, the age of the aircraft at lease expiration, number of hours run on the engines, number of cycles run on the airframe, projected number of hours run on the engine at the time of return, the projected number of cycles run on the airframe at the time of return, the extent of repairs needed, if any, upon return, return locations, current configuration of the aircraft, current paint of the aircraft, estimated escalation of cost of repairs and materials at the time of return, current flight hour agreement rates and future flight hour agreement rates. In addition, typically near the lease return date, the lessors may allow maintenance reserves to be applied as return condition consideration or pass on certain return provisions if they do not align with their current plans to remarket the aircraft. As a result of the different factors listed above, management assesses the need to accrue lease return costs throughout the lease as facts and circumstances warrant an assessment. When costs become both probable and estimable, lease return costs are expensed as a component of aircraft rent in the consolidated statements of operations through the remaining lease term. |
Derivative Instruments | Derivative Instruments Fuel Hedging Activities Variability in jet fuel prices impacts the Company’s results of operations. In order to reduce the risk of exposure to fuel price increases, the Company may enter into derivative contracts such as swaps, call options and collars. Derivative instruments are stated at fair value, net of any collateral postings. The Company formally designates and accounts for the derivative instruments that meet established accounting criteria under ASC 815, Derivatives and Hedging , as cash flow hedges. For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss on the derivative instruments is recorded in accumulated other comprehensive income/loss (“AOCI/L”), a component of stockholders’ equity on the consolidated balance sheets. In general, the Company recognizes the associated gains or losses deferred in AOCI/L as a component of aircraft fuel expense within the consolidated statements of operations in the period that the aircraft fuel is consumed. For derivative instruments that are not designated as cash flow hedges, the gain or loss on the instrument is recognized in current period earnings. The Company presents its fuel derivative instruments net on the consolidated balance sheets. Refer to Note 7 for additional information regarding the Company’s hedge accounting and derivative instruments. The Company is party to certain interest rate swaption agreements that are accounted for as cash flow hedges, as defined under ASC 815, Derivatives and Hedging seven |
Aircraft Fuel | Aircraft FuelAircraft fuel expense includes jet fuel and associated into-plane costs, federal and state taxes and the amortized gains, losses and premiums associated with effective fuel hedge contracts within AOCI/L and gains and losses from ineffective or dedesignated fuel hedge contracts. |
Sales and Marketing | Sales and MarketingSales and marketing expense includes credit card processing fees, system booking fees, sponsorship and distribution costs such as the costs of the Company’s call center and advertising costs. Advertising and the related production costs are expensed as incurred |
Income Taxes | Income TaxesThe Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized for the tax consequences of temporary differences between the tax and financial statement reporting bases of assets and liabilities. The Company periodically assesses whether it is more likely than not that sufficient taxable income will be generated to realize deferred income tax assets, and a valuation allowance is established if it is not likely that deferred income tax assets will be realized. The Company considers sources of taxable income from prior period carryback periods, future reversals of existing taxable temporary differences, tax planning strategies and future projected taxable income when assessing the future realization of deferred tax assets. In assessing the sources of income and the need for a valuation allowance, the Company considers all available positive and negative evidence, which includes a recent history of cumulative losses. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes cost of employee services received in exchange for awards of equity instruments based on the fair value of each instrument at the date of grant. Compensation expense is recognized over the period during which an employee is required to provide service in exchange for an award, with forfeitures accounted for as they occur. The fair value of stock option awards is estimated on the date of grant using the Black-Scholes valuation |
Recently Adopted Accounting Pronouncements | Leases Effective January 1, 2019 the Company adopted ASU 2016-02, Leases Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). This ASU and subsequently issued amendments requiring most leases with durations greater than 12 months to be recognized on the balance sheet. The standard is effective for interim and annual reporting periods beginning after December 15, 2018. The standard was adopted using the modified retrospective approach with an effective date as of the beginning of the Company’s fiscal year, January 1, 2019. See Note 10 for more information. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , (“ASU 2016-13”). ASU 2016-13 replaces the incurred loss impairment methodology with an “expected loss” model which requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The new guidance is effective for annual periods beginning after December 15, 2019 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2020, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and also enhances the existing guidance for consistent application of Topic 740. The new guidance is effective for annual periods beginning after December 15, 2020 and interim reporting periods within those reporting periods. The Company adopted the new standard as of January 1, 2021, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. In August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting and measurement of convertible instruments and also adds disclosure requirements. Further, ASU 2020-06 simplifies the settlement assessment performed to determine whether a contract in the Company’s own equity qualifies for equity classification. The Company early adopted the standard effective January 1, 2021 using the modified retrospective approach, which did not have a material impact on the Company’s results of operations or financial position as of the adoption date. Given the Company’s IPO in April 2021, and based in part on the provisions of ASU 2020-06, warrants issued in conjunction with the CARES Act that may be settled in the Company’s own equity if publicly traded, were classified into equity during the second quarter of 2021. In November 2021, the FASB issued ASU 2021-10, Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). ASU 2021-10 details financial reporting disclosure requirements that increase the transparency of transactions with a government accounted for by applying a grant or contribution accounting model by analogy. The new guidance is effective for annual periods beginning after December 15, 2021 and interim reporting periods within those reporting periods. The Company adopted the new standard as of December 15, 2021, which did not have an impact on the Company’s disclosures related to governmental grants or an impact to the results of operations and financial position as of the adoption date. |
Revenue from contract with customer | Passenger Revenues Fare revenues. Tickets sold in advance of the flight date are initially recorded as an air traffic liability on the Company’s consolidated balance sheets. Fare revenues are recognized in passenger revenues within the consolidated statements of operations at the time of departure when transportation is provided. As of December 31, 2020, the Company’s current air traffic liability balance was $135 million. During the year ended December 31, 2021, 89% of the air traffic liability as of December 31, 2020 has been recognized as passenger revenue within the consolidated statements of operations. As of December 31, 2021, the Company’s current air traffic liability is $273 million, of which $59 million is related to customer rights to book future travel, which either expire within 3 or 12 months after issuance if not redeemed by the customer. The amounts expected not to be redeemed are recognized over the historical pattern of rights exercised by customers to fare revenues in passenger revenues within the consolidated statements of operations. During the years ended December 31, 2021, 2020 and 2019, the Company recognized $58 million, $126 million and $26 million of revenue, respectively, in passenger revenues within the consolidated statements of operations, primarily related to expected and actual expiration of customer rights to book future travel. Estimated and actual expiration of customer rights to book future travel during the year ended December 31, 2020 was mainly due to the large amount of modifications of travel initiated by customers during late March through June 30, 2020 as a result of the COVID-19 pandemic. Non-fare passenger revenues. Certain ancillary items such as service fees, baggage and seat selection deemed part of providing passenger transportation are recognized to non-fare passenger revenues in passenger revenues within the consolidated statements of operations. Service fees include, among other things, convenience fees, charges for nonrefundable ticket expiration, cancellation charges and service charges assessed for itinerary changes made prior to the date of departure. Such change fees are recognized at the time of departure of the newly scheduled travel. Beginning in March 2020, resulting from the reduction in demand from the COVID-19 pandemic, the Company waived cancellation and change fees for customers for most of 2020 and the first quarter of 2021. Passenger Taxes and Fees. The Company is required to collect certain taxes and fees from customers on behalf of government agencies and airports and remit these back to the applicable governmental entity or airport on a periodic basis. These taxes and fees include U.S. federal transportation taxes, federal security charges, airport passenger facility charges, and foreign arrival and departure taxes. These taxes and fees are collected from customers at the time they purchase their tickets but are not included in passenger revenues at that time. The Company records a liability upon collection from the customer and reduces the liability when payments are remitted to the applicable governmental agency or airport. Other Revenues Other revenues primarily consists of services not directly related to providing transportation, such as the advertising, marketing and brand elements of the Frontier Miles affinity credit card program and commissions revenue from the third-party sale of items such as rental cars and hotels. Frequent Flyer Program The Company’s Frontier Miles frequent flyer program provides frequent flyer travel awards to program members based on accumulated mileage credits. Mileage credits are generally accumulated as a result of travel, purchases using the co-branded credit card and purchases from other participating partners. The Company defers revenue for mileage credits earned by passengers under its Frontier Miles program based on the equivalent ticket value (“ETV”) a passenger receives by redeeming mileage credits for a ticket rather than paying cash. Mileage credits are also sold to participating companies, including credit card companies and other third parties. Sales to credit card companies include multiple promised goods and services, which the Company evaluates to determine whether they represent performance obligations. The Company determined these arrangements have three separate performance obligations: (i) mileage credits to be awarded, (ii) licensing of brand and access to member lists and (iii) advertising and marketing efforts. Total arrangement consideration is allocated to each performance obligation on the basis of the deliverables relative standalone selling price. For mileage credits, the Company considers a number of entity-specific factors when developing the best estimate of the standalone selling price, including the number of mileage credits needed to redeem an award, average fare of comparable segments, breakage and restrictions. For licensing of brand and access to member lists, the Company considers both market-specific factors and entity-specific factors, including general profit margins realized in the marketplace and industry, brand power, market royalty rates and size of customer base. For the advertising and marketing performance obligation, the Company considers market-specific factors and entity-specific factors, including the Company’s internal costs of providing services, volume of marketing efforts and overall advertising plan. Consideration allocated based on the relative standalone selling price to both the brand licensing and access to member lists and advertising and marketing elements is recognized as other revenue in the Company’s consolidated statements of operations over time as mileage credits are delivered. The consideration allocated to the transportation portion of these mileage credit sales is deferred and recognized as a component of passenger revenue in the Company’s consolidated statements of operations at the time of travel for mileage credits redeemed. Mileage credits that the Company estimates are not likely to be redeemed are subject to breakage and are recognized as a portion of passenger revenues in the Company’s consolidated statements of operations in proportion to the pattern of rights exercised by customers. Management uses statistical models to estimate breakage based on historical redemption patterns. A change in assumptions as to the period over which mileage credits are expected to be redeemed, the actual redemption activity for mileage credits or the estimated fair value of mileage credits expected to be redeemed could have an impact on revenues in the year in which the change occurs and in future years. Redemptions are allocated between sold and flown mileage credits based on historical patterns. As a result of the reduction in demand due to the COVID-19 pandemic, beginning in March 2020, the Company extended the expiration dates of mileage credits issued under its frequent flyer program. During September 2020, the Company amended its credit card affinity agreement with its credit card partner Barclays. The amended and restated agreement, similar to the previous arrangement, provides for joint marketing, grants certain benefits to co-branded credit card holders, and allows Barclays to market using the Company’s customer database. Cardholders earn mileage credits under the Frontier Miles program and the Company sells mileage credits at agreed-upon rates to Barclays and earns fees from Barclays for the acquisition, retention and use of the co-branded credit card by consumers. The amended and restated agreement extended the term from 2023 to 2029 and provided for an up-front non-refundable payment of $25 million to the Company, of which the unamortized portion is recorded within other current liabilities, other long-term liabilities, and long-term frequent flyer liability on the consolidated balance sheets. The non-refundable payment will be recognized as other revenue |
Gains on Sale-Leaseback Transactions | Gains on Sale-Leaseback TransactionsThe Company enters into sale-leaseback transactions for its aircraft and aircraft engine assets, whereby the Company sells one or more aircraft or aircraft engine assets to a third-party and simultaneously enters into an operating lease for a right to use such assets for a fixed period of time. Gains on sale-leaseback transactions are recognized in the period in which title to the asset transfers to the buyer-lessor and the lease commences, as a component of other operating expenses within the consolidated statements of operations. Gains on sale-leaseback transactions are calculated as the excess of the sale price of the asset over its carrying value. The carrying value of the assets sold will generally include the price paid for the asset, net of the amount of cash or the fair value of non-cash credits and incentives received from equipment and component manufacturers, the costs associated with delivery of the asset including any taxes or tariffs, financing costs capitalized in connection with the construction of the asset, capitalized maintenance and other improvements, and accumulated depreciation. Gains on sale-leaseback transactions may also be adjusted if it is determined that the terms of the sale transaction or the lease agreement are at a price other than fair value. |
Fair Value Measurement | Under ASC 820, Fair Value Measurements and Disclosures , disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of its financial assets and liabilities. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents are comprised of liquid money market funds, time deposits and cash and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. Cash, cash equivalents and restricted cash are carried at cost, which management believes approximates fair value. Warrants The estimated fair value of the warrants issued in conjunction with the loans from the CARES Act, described in Note 2, was previously determined to be Level 3 measurement as of December 31, 2020. As a result of the Company’s IPO, the Company has the intent and ability to settle the warrants issued to the Treasury in shares and thus, as of April 6, 2021, the Company reclassified the warrant liability to additional paid-in capital on the consolidated balance sheet. Subsequent warrants issued after the IPO date were recorded at fair value as a reduction to the related debt they were issued with and recorded to additional paid-in capital on the consolidated balance sheet. As the warrants issued under the CARES Act will no longer be subject to recurring fair value measurements, they have been excluded from the table below as of December 31, 2021. Debt |
Operating Leases | The Company leases property and equipment under operating leases. For leases with initial terms greater than 12 months, the related operating lease right-of-use asset and corresponding operating lease liability are recorded at the present value of lease payments over the term on the Company’s consolidated balance sheets. Some leases include rental escalation clauses, renewal options, termination options, and/or other items that cause variability that are factored into the determination of lease payments when appropriate. The Company does not separate lease and non-lease components of contracts, except for certain flight training equipment, for which consideration is allocated between lease and non-lease components. When available, the rate implicit in the lease is used to discount lease payments to present value; however, most leases do not provide a readily determinable implicit rate. Therefore, the Company estimates its incremental borrowing rate (“IBR”) to discount the lease payments based on information available at lease commencement. The IBR utilized by the Company is first determined using an unsecured recourse borrowing rate over a tenor that matches the period of lease payments for each individual lease and then is adjusted to arrive at a rate that is representative of a collateralized rate (secured rate). Given the Company does not have an established unsecured public credit rating, the Company utilizes current period and projected financial information to simulate an unsecured credit rating. The Company then determines its secured rate (IBR) using a combination of several valuation methods that take into account the lower amount of risk of collateralized borrowings along with observable implied credit ratings from its current outstanding secured debt obligations. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Accounting Policies [Abstract] | |
Estimated Useful Lives and Depreciation Expense For the Company’s Property and Equipment | Estimated useful lives and residual values for the Company’s property and equipment are as follows: Estimated Useful Life Residual Value Aircraft 25 years 10% Flight equipment leasehold improvements Lesser of lease term or economic life 0% Aircraft rotable parts Fleet life 10% Ground property and equipment 3 – 10 years 0% Ground equipment leasehold improvements Lesser of lease term or 10 years 0% Internal use software 3 – 10 years 0% Capitalized maintenance Lesser of lease term or economic life 0% Buildings Lesser of 40 years or economic life 10% The components of depreciation and amortization expense are as follows (in millions): Year Ended December 31, 2021 2020 2019 Depreciation $ 38 $ 32 $ 45 Intangible amortization — 1 1 Total depreciation and amortization $ 38 $ 33 $ 46 The components of property and equipment, net are as follows (in millions): December 31, 2021 2020 Flight equipment $ 212 $ 182 Ground and other equipment 104 101 Less: accumulated depreciation (130) (107) Total property and equipment, net $ 186 $ 176 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Disaggregated operating revenues are as follows (in millions): Year Ended December 31, 2021 2020 2019 Passenger revenues: Fare $ 806 $ 548 $ 1,205 Non-fare passenger revenues: Baggage 457 229 496 Service fees 521 303 488 Seat selection 170 84 187 Other 46 43 69 Total non-fare passenger revenue 1,194 659 1,240 Total passenger revenues 2,000 1,207 2,445 Other revenues 60 43 63 Total operating revenues $ 2,060 $ 1,250 $ 2,508 |
Revenue by Geographic Region | Operating revenues by principal geographic region, as defined by the U.S. Department of Transportation (the “DOT”), are as follows (in millions): Year Ended December 31, 2021 2020 2019 Domestic $ 1,950 $ 1,201 $ 2,362 Latin America 110 49 146 Total operating revenues $ 2,060 $ 1,250 $ 2,508 |
Other Current Assets (Tables)
Other Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Other Current Assets | Other current assets consist of the following (in millions): December 31, 2021 2020 Prepaid expenses $ 14 $ 24 Passenger and other taxes receivable 9 26 Income tax receivable 3 161 Other 14 15 Total other current assets $ 40 $ 226 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Components of Property and Equipment, Net | Estimated useful lives and residual values for the Company’s property and equipment are as follows: Estimated Useful Life Residual Value Aircraft 25 years 10% Flight equipment leasehold improvements Lesser of lease term or economic life 0% Aircraft rotable parts Fleet life 10% Ground property and equipment 3 – 10 years 0% Ground equipment leasehold improvements Lesser of lease term or 10 years 0% Internal use software 3 – 10 years 0% Capitalized maintenance Lesser of lease term or economic life 0% Buildings Lesser of 40 years or economic life 10% The components of depreciation and amortization expense are as follows (in millions): Year Ended December 31, 2021 2020 2019 Depreciation $ 38 $ 32 $ 45 Intangible amortization — 1 1 Total depreciation and amortization $ 38 $ 33 $ 46 The components of property and equipment, net are as follows (in millions): December 31, 2021 2020 Flight equipment $ 212 $ 182 Ground and other equipment 104 101 Less: accumulated depreciation (130) (107) Total property and equipment, net $ 186 $ 176 |
Intangible Assets, net (Tables)
Intangible Assets, net (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Intangible Assets | The following table summarizes the Company’s intangible assets, net (in millions): December 31, 2021 2020 Amortization Gross Accumulated Net Carrying Amount Gross Accumulated Net Carrying Amount Indefinite-lived: Airport slots Indefinite $ 20 $ — $ 20 $ 20 $ — $ 20 Trademarks Indefinite 6 — 6 6 — 6 26 — 26 26 — 26 Finite-lived: Affinity credit card program (1) 16 years 16 (13) 3 16 (13) 3 Total intangible assets, net $ 42 $ (13) $ 29 $ 42 $ (13) $ 29 _____________ |
Summary of Intangible Assets | The following table summarizes the Company’s intangible assets, net (in millions): December 31, 2021 2020 Amortization Gross Accumulated Net Carrying Amount Gross Accumulated Net Carrying Amount Indefinite-lived: Airport slots Indefinite $ 20 $ — $ 20 $ 20 $ — $ 20 Trademarks Indefinite 6 — 6 6 — 6 26 — 26 26 — 26 Finite-lived: Affinity credit card program (1) 16 years 16 (13) 3 16 (13) 3 Total intangible assets, net $ 42 $ (13) $ 29 $ 42 $ (13) $ 29 _____________ |
Financial Derivative Instrume_2
Financial Derivative Instruments and Risk Management (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Effect of Fuel and Interest Rate Derivative Instruments Reflected in Aircraft Fuel and Rent Expense | The following table summarizes the effect of fuel and interest rate derivative instruments reflected in aircraft fuel and rent expense, respectively, within the consolidated statements of operations (in millions): Year Ended December 31, 2021 2020 2019 Derivatives designated as cash flow hedges Losses on fuel derivative contracts $ — $ (26) $ (17) Amortization of swaption cash flow hedges $ (1) $ (1) $ — Derivatives not designated as cash flow hedges Losses on fuel derivative contracts $ — $ (56) $ — |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table presents the net of tax impact of the overall effectiveness of derivative instruments designated as cash flow hedging instruments within the consolidated statements of comprehensive income (loss) (in millions): Year Ended December 31, 2021 2020 2019 Derivatives designated as cash flow hedges Fuel derivative contract gains (losses) – net of tax impact $ — $ (16) $ 22 Fuel derivative losses reclassified to earnings due to de-designation – net of tax impact — 11 — Interest rate derivative contract losses – net of tax impact — (10) (1) Amortization of swaption cash flow hedges, net of tax 1 — — Total $ 1 $ (15) $ 21 |
Other Current Liabilities (Tabl
Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities consist of the following (in millions): December 31, 2021 2020 Salaries, wages and benefits $ 89 $ 97 Passenger and other taxes and fees payable 84 41 Station obligations 64 33 Aircraft maintenance 36 22 Current portion of phantom equity units (Note 11) 26 — Leased aircraft return costs 25 20 Fuel liabilities 23 6 Warrant liability (Note 2) — 18 Other current liabilities 36 30 Total other current liabilities $ 383 $ 267 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | The Company’s debt obligations are as follows (in millions): December 31, 2021 2020 Secured debt: Pre-delivery credit facility (1) $ 174 $ 141 Treasury Loan (2) 150 150 Floating rate building note (3) 18 18 Unsecured debt: PSP Promissory Notes (4) 66 33 Affinity card advance purchase of mileage credits (5) 15 15 Total debt 423 357 Less current maturities of long-term debt, net (127) (101) Less long-term debt acquisition costs and other discounts (9) (9) Long-term debt, net $ 287 $ 247 __________________ (1) The Company, through an affiliate, entered into the pre-delivery payment (“PDP”) facility with Citibank, N.A. in December 2014 (“PDP Financing Facility”). The PDP Financing Facility is collateralized by the Company’s purchase agreement for Airbus A320neo and A321neo aircraft deliveries through the term of the facility (see Note 14). In December 2020, the PDP Financing Facility was amended and restated to reduce the commitment of Citibank, N.A., as initial lender, to $150 million, remove the ability to draw further unsecured borrowings and to provide collateral for the borrowings not secured by aircraft outstanding as of that date. During May 2021, the Company amended the facility to increase the total available capacity to $200 million and expanded the number of financial institution participants as lenders. During December 2021, the facility was further amended and restated to extend the availability of the facility through December 2024 to include additional 2023 and 2024 aircraft deliveries. Interest is paid every 90 days based on a three-month LIBOR plus a margin for each individual tranche. The PDP Financing Facility consists of separate loans for each PDP aircraft. Each separate loan matures upon the earlier of (i) delivery of that aircraft to the Company by Airbus, (ii) the date one month following the last day of the scheduled delivery month of such aircraft and (iii) if there is a delay in delivery of aircraft, depending on the cause of the delivery delay, up to six months following the last day of the scheduled delivery month of such aircraft. The PDP Financing Facility will be repaid periodically according to the preceding sentence with the last scheduled delivery of aircraft contemplated in the PDP Financing Facility, as currently in effect, expected to be in the fourth quarter of 2024. (2) On September 28, 2020, the Company entered into the Treasury Loan with the Treasury for a term loan facility of up to $574 million. The Treasury Loan has a five-year term and includes an annual interest rate based on adjusted LIBOR plus 2.5%. The Company could not draw any further funds from its Treasury Loan facility after May 2021, as the right to draw any further funds lapsed, and the Company did not draw any further funds from its Treasury Loan facility during the year ended December 31, 2021. The loan can be prepaid at par at any time without incurring a penalty. The Treasury Loan is collateralized by the Company’s co-branded credit card arrangement and related assets. In conjunction with the Treasury Loan, the Company issued to the Treasury warrants to acquire the common stock of FGHI, which have a five-year term and are settled in cash or shares, at the election of the Company, upon notice from the Treasury. The initial fair value of these warrants upon issuance is treated as a loan discount, which reduces the carrying value of the loan, and is amortized utilizing the effective interest method as interest expense in the Company’s consolidated statements of operations over the term of the loan. (3) Represents a note with a commercial bank related to the Company’s headquarters building. Under the terms of the agreement, the Company will repay the outstanding principal balance in quarterly payments beginning in January 2022 until the maturity date in December 2023. On the maturity date, one final balloon payment will be made to cover all unpaid principal, accrued unpaid interest and other amounts due. The interest rate of one-month LIBOR plus a margin is payable monthly. (4) On April 30, 2020, the Company executed the PSP Promissory Note with the Treasury as part of the original payroll support program from which the Company received a $33 million unsecured 10-year, low-interest loan. Subsequently, the Company entered into a second PSP agreement with the Treasury in January 2021 and a third PSP agreement with the Treasury in April 2021, from which the Company received an additional $18 million and $15 million, respectively, of proceeds with the same terms as the original PSP Promissory Note. The PSP Promissory Notes include an annual interest rate of 1.00% for the first five years and the Secured Overnight Financing Rate ("SOFR") plus 2.00% in the final five years. The loans can be prepaid at par any time without incurring a penalty. In conjunction with the PSP Promissory Notes, the Company issued to the Treasury warrants to acquire the common stock of FGHI, which have a five-year term and are settled in cash or shares, at the election of the Company, upon notice from the Treasury. The initial fair value of these warrants upon issuance is treated as a loan discount, which reduces the carrying value of the loan, and is amortized utilizing the effective interest method as interest expense in the Company’s consolidated statements of operations over the term of the loan. (5) The Company entered into an agreement with Barclays in 2003 to provide for joint marketing, grant certain benefits to co-branded credit card holders (“Cardholders”), and allow Barclays to market using the Company’s customer database. Cardholders earn mileage credits under the Frontier Miles |
Schedule of Maturities of Long-term Debt | As of December 31, 2021, future maturities of debt are payable as follows (in millions): December 31, 2021 2022 $ 127 2023 61 2024 4 2025 150 2026 — Thereafter 81 Total debt principal payments $ 423 |
Operating Leases (Tables)
Operating Leases (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Leases [Abstract] | |
Supplemental Balance Sheet Information | The table below presents the lease-related assets and liabilities recorded on the consolidated balance sheets as of December 31, 2021 and 2020 (in millions): December 31 Classification on the Balance Sheet 2021 2020 Assets Operating lease assets Operating lease right-of-use assets $ 2,426 $ 2,250 Liabilities Current Operating Current maturities of operating leases $ 444 $ 416 Long-term operating leases Operating Long-term operating leases 1,991 1,848 Total lease liabilities $ 2,435 $ 2,264 Weighted-average remaining lease term Operating leases 7 years 7 years Weighted-average discount rate Operating leases (1) 5.08 % 5.15 % ______________ (1) Upon adoption of ASU 2016-02, discount rates used for existing leases were established as of January 1, 2019. |
Schedule of Lease Costs | The table below presents certain information related to lease costs for operating leases during the years ended December 31, 2021, 2020 and 2019 (in millions): Year Ended December 31, 2021 2020 2019 Operating lease cost (1) $ 454 $ 337 $ 363 Variable lease cost (1) 284 220 186 Total lease costs $ 738 $ 557 $ 549 ______________ |
Reconciliation of Undiscounted Cash Flows | The table below reconciles the undiscounted cash flows as of December 31, 2021 (in millions) for each of the next five years and total of the remaining years to the operating lease liability recorded on the consolidated balance sheet. December 31, 2021 Operating Leases Year 1 $ 456 Year 2 435 Year 3 419 Year 4 396 Year 5 332 Thereafter 915 Total undiscounted minimum lease rentals 2,953 Less: amount of lease payments representing interest (518) Present value of future minimum lease rentals 2,435 Less: current obligations under leases (444) Long-term lease obligations $ 1,991 |
Stock-Based Compensation and _2
Stock-Based Compensation and Stockholders’ Equity (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Company's Stock-Based Compensation Expense | A summary of the Company’s stock-based compensation expense is presented below (in millions): Year Ended December 31, 2021 2020 2019 Liability-classified awards $ — $ — $ 5 Stock options and restricted awards 11 8 3 Total stock-based compensation expense $ 11 $ 8 $ 8 |
Summary of Stock Option Activity | A summary of stock option activity during the year ended December 31, 2021 is presented below: Number of Shares Weighted Average Exercise Price Aggregate Grant Date Fair Value (in millions) Outstanding at December 31, 2020 9,879,240 $ 1.93 $ 10 Issued — — — Exercised (2,202,895) $ 1.62 (2) Forfeited (24,938) $ 11.15 — Outstanding at December 31, 2021 7,651,407 $ 1.99 $ 8 Exercisable at December 31, 2021 7,480,088 $ 1.79 $ 7 |
Summary of Restricted Stock Activity | A summary of Restricted Award activity during the year ended December 31, 2021 is presented below: Number of Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2020 2,020,650 $ 10.54 Issued 899,800 $ 14.70 Vested (543,879) $ 10.23 Forfeited (205,542) $ 10.62 Repurchased (1) (200,735) $ 11.00 Outstanding at December 31, 2021 1,970,294 $ 12.47 __________________ |
Other Long-Term Liabilities (Ta
Other Long-Term Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Other Liabilities Disclosure [Abstract] | |
Other Long-Term Liabilities | Other long-term liabilities consist of the following (in millions): December 31, 2021 2020 Deferred revenue $ 21 $ 23 Phantom equity interest (Note 11) — 26 Deferred tax liability — 9 Other 39 38 Total other long-term liabilities $ 60 $ 96 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Long-term Purchase Commitment | As of December 31, 2021, the Company’s firm aircraft and engine orders consisted of the following: A320neo A321neo Total Engines Year Ending 2022 9 5 14 5 2023 — 21 21 2 2024 — 24 24 2 2025 17 13 30 3 2026 19 22 41 3 Thereafter 31 73 104 6 Total 76 158 234 21 |
Multiemployer Plan | The table below sets forth the Company’s employee groups and status of the collective bargaining agreements as of December 31, 2021: Percentage of Workforce Employee Group Representative Amendable Date December 31, 2021 Pilots Air Line Pilots Association (ALPA) January 2024 31% Flight Attendants Association of Flight Attendants (AFA-CWA) May 2024 52% Aircraft Technicians International Brotherhood of Teamsters (IBT) March 2024 2% Aircraft Appearance IBT October 2023 1% Dispatchers Transport Workers Union (TWU) December 2021 (1) 1% Material Specialists IBT March 2022 <1% Maintenance Control IBT October 2023 <1% __________________ (1) In December 2021, the Company’s collective bargaining agreements with its dispatchers, represented by TWU, became amendable. Negotiations are set to begin in March 2022. |
Net Earnings (Loss) per Share (
Net Earnings (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Earnings Per Share [Abstract] | |
Schedule Of Earnings Per Share Basic And Diluted | The following table sets forth the computation of net earnings (loss) per share on a basic and diluted basis pursuant to the two-class method for the periods indicated (in millions, except for share and per share data): Year Ended December 31, 2021 2020 2019 Basic: Net income (loss) $ (102) $ (225) $ 251 Less: net income attributable to participating rights — — (14) Net income (loss) attributable to common stockholders $ (102) $ (225) $ 237 Weighted average common shares outstanding, basic 211,436,542 199,260,410 199,141,090 Net earnings (loss) per share, basic $ (0.48) $ (1.13) $ 1.19 Diluted: Net income (loss) $ (102) $ (225) $ 251 Less: net income attributable to participating rights — — (14) Net income (loss) attributable to common stockholders $ (102) $ (225) $ 237 Weighted average common shares outstanding, basic 211,436,542 199,260,410 199,141,090 Effect of dilutive potential common shares — — 452,010 Weighted average common shares outstanding, diluted 211,436,542 199,260,410 199,593,100 Net earnings (loss) per share, diluted $ (0.48) $ (1.13) $ 1.19 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense | The components of income tax expense are as follows (in millions): Year Ended December 31, 2021 2020 2019 Current: Federal $ (10) $ (134) $ 19 State and local — 1 3 Current income tax expense (benefit) (10) (133) 22 Deferred: Federal (32) (5) 49 State and local (1) (9) 4 Foreign 1 — (1) Deferred income tax expense (benefit) (32) (14) 52 Total income tax expense (benefit) $ (42) $ (147) $ 74 |
Schedule of Effective Income Tax Rate Reconciliation | The income tax provision differs from that computed at the federal statutory corporate tax rate as follows: Year Ended December 31, 2021 2020 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % Reserves for uncertain tax positions, net 6.2 % (0.2) % 0.1 % Stock-based compensation 5.2 % — % (0.2) % State taxes, net of federal benefit 1.6 % 2.1 % 1.8 % Nondeductible warrants (3.5) % (0.5) % — % Impact of CARES Act — % 16.9 % — % Other (1.3) % 0.2 % 0.1 % Effective income tax rate 29.2 % 39.5 % 22.8 % |
Schedule of Deferred Tax Assets and Liabilities | The following table shows the components of the Company’s deferred tax assets and liabilities (in millions): December 31, 2021 2020 Deferred tax assets: Operating lease liability $ 551 $ 514 Net operating losses 47 9 Nondeductible accruals 32 25 Deferred revenue 12 12 Income tax credits 2 — Valuation allowance (8) — Other 10 11 Deferred tax assets $ 646 $ 571 Deferred tax liabilities: Right of use asset $ (545) $ (507) Property and equipment (36) (34) Maintenance deposits (22) (19) Intangibles (6) (7) Leasehold interests — (6) Other (12) (7) Deferred tax liabilities (621) (580) Net deferred tax assets (liabilities) $ 25 $ (9) |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table shows the components of the Company’s unrecognized tax benefits related to uncertain tax positions (in millions): 2021 2020 2019 Unrecognized tax benefits at January 1 $ 10 $ 9 $ 9 Increase for tax positions taken during prior period — — — Decrease for tax positions taken during prior period (9) — — Increase for tax positions taken during current period — 1 — Unrecognized tax benefits at December 31 $ 1 $ 10 $ 9 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The carrying amounts and estimated fair values of the Company’s debt are as follows (in millions): December 31, 2021 December 31, 2020 Carrying Estimated Fair Value Carrying Value Estimated Fair Value Secured debt: Pre-delivery credit facility $ 174 $ 175 $ 141 $ 139 Treasury Loan 150 156 150 148 Floating rate building note 18 19 18 18 Unsecured debt: PSP Promissory Note 66 58 33 25 Affinity card advance purchase of mileage credits 15 14 15 11 Total debt $ 423 $ 422 $ 357 $ 341 |
Schedule of Fair Value of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The tables below present disclosures about the fair value of assets and liabilities measured at fair value on a recurring basis in the Company’s consolidated financial statements (in millions): Fair Value Measurements as of December 31, 2021 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 918 $ 918 $ — $ — Fair Value Measurements as of December 31, 2020 Total Level 1 Level 2 Level 3 Cash and cash equivalents $ 378 $ 378 $ — $ — Warrants $ 18 $ — $ — $ 18 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation (Details) | 12 Months Ended |
Dec. 31, 2021reportableSegmentairport | |
Accounting Policies [Abstract] | |
Number of airports served | airport | 120 |
Number of reportable segments | reportableSegment | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Millions | Apr. 06, 2021 | Apr. 30, 2021 |
Class of Stock [Line Items] | ||
Underwriting discounts and commissions | $ 14 | |
Offering costs | 5 | |
IPO | ||
Class of Stock [Line Items] | ||
Common stock issued (in dollars per share) | $ 19 | |
Common stock issued and sold (in shares) | 15,000,000 | |
Proceeds from initial public offering, net of underwriting discounts and offering expenses | $ 266 | |
Public Stock Offering - Shares From Existing Shareholders | ||
Class of Stock [Line Items] | ||
Common stock issued and sold (in shares) | 15,000,000 | |
Over-Allotment Option | ||
Class of Stock [Line Items] | ||
Common stock issued and sold (in shares) | 4,500,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Leases (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 | Dec. 31, 2018 |
Lessee, Lease, Description [Line Items] | ||||
Operating lease right-of-use assets | $ 2,426 | $ 2,250 | $ 2,000 | |
Operating lease liabilities | 2,435 | 2,264 | ||
Retained earnings | $ 159 | $ 261 | ||
Accounting Standards Update 2016-02 | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease liabilities | $ 2,000 | |||
Cumulative Effect, Period of Adoption, Adjustment | ||||
Lessee, Lease, Description [Line Items] | ||||
Retained earnings | $ 149 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 1 | $ 1 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Allowance for doubtful accounts | $ 1 | $ 3 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Supplies, net (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Allowance for obsolescence | $ 12 | $ 8 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation | $ 38,000 | $ 32,000 | $ 45,000 |
Intangible amortization | 0 | 1,000 | 1,000 |
Total depreciation and amortization | 38,000 | 33,000 | $ 46,000 |
Property and equipment, net | $ 186,000 | 176,000 | |
Aircraft | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 25 years | ||
Residual Value | 10.00% | ||
Aircraft rotable parts | |||
Property, Plant and Equipment [Line Items] | |||
Residual Value | 10.00% | ||
Ground property and equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Ground property and equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 10 years | ||
Ground equipment leasehold improvements | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 10 years | ||
Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, net | $ 9,000 | $ 8,000 | |
Capitalized software | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 3 years | ||
Capitalized software | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 10 years | ||
Buildings | |||
Property, Plant and Equipment [Line Items] | |||
Residual Value | 10.00% | ||
Buildings | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 40 years |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Aircraft Purchase Hedging Activities (Details) - Interest Rate Swap | 12 Months Ended |
Dec. 31, 2021 | |
Minimum | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Swap rate period | 7 years |
Maximum | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |
Swap rate period | 9 years |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Aircraft Maintenance (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Accounting Policies [Abstract] | ||
Allowance on deposits on aircraft maintenance | $ 0 | $ 0 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Advertising (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||
Advertising expenses | $ 7 | $ 4 | $ 10 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | |||
Valuation allowance | $ 8 | $ 0 | $ 0 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Concentrations of Risk (Details) | 12 Months Ended | ||
Dec. 31, 2021numberOfVendorsnumberOfLessorsemployee_group | Dec. 31, 2020 | Dec. 31, 2019 | |
Concentration Risk [Line Items] | |||
Number of union-represented employee groups | employee_group | 7 | ||
Amount of employees represented by unions | 88.00% | ||
Number of lessors with capitalized maintenance deposits | numberOfLessors | 2 | ||
Number of vendors with pre-delivery deposits for flight equipment | numberOfVendors | 1 | ||
Cost Risk | Operating Expense | Aircraft Fuel Cost | |||
Concentration Risk [Line Items] | |||
Concentration risk | 26.00% | 21.00% | 29.00% |
Impact of COVID-19 - COVID-19 R
Impact of COVID-19 - COVID-19 Relief Funding (Details) - USD ($) | Feb. 02, 2022 | Sep. 28, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 29, 2021 | Jan. 15, 2021 | Apr. 30, 2020 |
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Long-term debt, gross | $ 423,000,000 | $ 423,000,000 | $ 357,000,000 | $ 423,000,000 | $ 423,000,000 | $ 357,000,000 | ||||||||||
Principal repayments on debt | 97,000,000 | 126,000,000 | $ 139,000,000 | |||||||||||||
Interest paid | $ 9,000,000 | 7,000,000 | 10,000,000 | |||||||||||||
Warrants outstanding, term | 5 years | 5 years | 5 years | 5 years | 5 years | |||||||||||
Mark to market adjustment on warrant | $ 22,000,000 | 9,000,000 | $ 0 | |||||||||||||
Employee retention credit | 17,000,000 | 16,000,000 | ||||||||||||||
The Coronavirus Aid, Relief, and Economic Security Act | PSP1 Promissory Note | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Funding received | $ 211,000,000 | |||||||||||||||
Proceeds from Payroll Support Program grant | $ 178,000,000 | 178,000,000 | ||||||||||||||
Deferred financing costs | 1,000,000 | |||||||||||||||
The Coronavirus Aid, Relief, and Economic Security Act | Consolidated Appropriations Act of 2021 - PSP 2 | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Funding received | $ 161,000,000 | |||||||||||||||
Proceeds from Payroll Support Program grant | 143,000,000 | |||||||||||||||
The American Rescue Plan Act | American Rescue Plan Act - PSP 3 | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Funding received | $ 150,000,000 | |||||||||||||||
Proceeds from Payroll Support Program grant | $ 135,000,000 | $ 135,000,000 | ||||||||||||||
PSP Promissory Note Warrants | PSP1 Promissory Note | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Warrants to acquire common stock (in shares) | 522,576 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 6.36 | |||||||||||||||
PSP2 Promissory Note Warrants | Consolidated Appropriations Act of 2021 - PSP 2 | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Warrants to acquire common stock (in shares) | 157,313 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 11.65 | |||||||||||||||
PSP3 Promissory Note Warrants | American Rescue Plan Act - PSP 3 | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Warrants to acquire common stock (in shares) | 79,961 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 18.85 | |||||||||||||||
CARES Act Credit Agreement, Warrants | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Warrants to acquire common stock (in shares) | 2,358,090 | |||||||||||||||
Exercise price of warrants (in dollars per share) | $ 6.36 | |||||||||||||||
Warrants outstanding, term | 5 years | |||||||||||||||
Unsecured Debt | PSP1 Promissory Note | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Unsecured low interest loan amount | $ 33,000,000 | |||||||||||||||
Term of grant | 10 years | |||||||||||||||
Unsecured Debt | Consolidated Appropriations Act of 2021 - PSP 2 | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Unsecured low interest loan amount | $ 18,000,000 | |||||||||||||||
Term of grant | 10 years | |||||||||||||||
Unsecured Debt | PSP3 Promissory Note | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Unsecured low interest loan amount | $ 15,000,000 | |||||||||||||||
Term of grant | 10 years | |||||||||||||||
Line of Credit | CARES Credit Agreement | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Term of grant | 5 years | |||||||||||||||
Term loan amount | $ 574,000,000 | |||||||||||||||
Long-term debt, gross | 150,000,000 | 150,000,000 | 150,000,000 | 150,000,000 | $ 150,000,000 | 150,000,000 | ||||||||||
Line of Credit | CARES Credit Agreement | Subsequent Event | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Principal repayments on debt | $ 150,000,000 | |||||||||||||||
Interest paid | $ 1,000,000 | |||||||||||||||
Secured Debt | CARES Credit Agreement | ||||||||||||||||
Unusual Risk or Uncertainty [Line Items] | ||||||||||||||||
Long-term debt, gross | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Capitalized Contract Cost [Line Items] | ||||
Air traffic liability | $ 273 | $ 135 | ||
Customer rights to book future travel | $ 59 | |||
Non-refundable payment | $ 25 | |||
Minimum | ||||
Capitalized Contract Cost [Line Items] | ||||
Future travel credit balance, expiration period | 3 months | |||
Maximum | ||||
Capitalized Contract Cost [Line Items] | ||||
Future travel credit balance, expiration period | 12 months | |||
Passenger | ||||
Capitalized Contract Cost [Line Items] | ||||
Air traffic liability recognized as passenger revenue | 89.00% | |||
Passenger Revenue, From Expiration Of Customer Rights | ||||
Capitalized Contract Cost [Line Items] | ||||
Passenger revenue recongnized | $ 58 | $ 126 | $ 26 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Operating Revenues (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | $ 2,060 | $ 1,250 | $ 2,508 |
Total passenger revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 2,000 | 1,207 | 2,445 |
Fare | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 806 | 548 | 1,205 |
Total non-fare passenger revenue | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 1,194 | 659 | 1,240 |
Baggage | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 457 | 229 | 496 |
Service fees | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 521 | 303 | 488 |
Seat selection | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 170 | 84 | 187 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 46 | 43 | 69 |
Other revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | $ 60 | $ 43 | $ 63 |
Revenue Recognition - Operating
Revenue Recognition - Operating Revenues by Principal Geographic Region (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | $ 2,060 | $ 1,250 | $ 2,508 |
Domestic | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | 1,950 | 1,201 | 2,362 |
Latin America | |||
Disaggregation of Revenue [Line Items] | |||
Total operating revenues | $ 110 | $ 49 | $ 146 |
Other Current Assets (Details)
Other Current Assets (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid expenses | $ 14 | $ 24 |
Passenger and other taxes receivable | 9 | 26 |
Income tax receivable | 3 | 161 |
Other | 14 | 15 |
Total other current assets | $ 40 | $ 226 |
Property and Equipment, Net - C
Property and Equipment, Net - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (130,000) | $ (107,000) |
Total property and equipment, net | 186,000 | 176,000 |
Flight equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 212,000 | 182,000 |
Ground and other equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 104,000 | $ 101,000 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Property, Plant and Equipment [Line Items] | |||
Deferred costs for heavy maintenance, net | $ 186,000 | $ 176,000 | |
Capitalized maintenance | |||
Property, Plant and Equipment [Line Items] | |||
Deferred costs for heavy maintenance | 18,000 | 9,000 | $ 14,000 |
Deferred costs for heavy maintenance, net | $ 20,000 | $ 13,000 |
Intangible Assets, net - Summar
Intangible Assets, net - Summary of Intangible Assets (Details) - USD ($) $ in Millions | 1 Months Ended | 8 Months Ended | 12 Months Ended | |
Sep. 30, 2020 | Aug. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | |
Indefinite-lived Intangible Assets [Line Items] | ||||
Indefinite-lived intangible assets | $ 26 | $ 26 | ||
Finite-Lived Intangible Assets [Line Items] | ||||
Finite-lived intangible assets, Accumulated Amortization | (13) | (13) | ||
Total intangible assets, net, Gross Carrying Amount | 42 | 42 | ||
Intangible assets, net | 29 | 29 | ||
Airport slots | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Indefinite-lived intangible assets | 20 | 20 | ||
Trademarks | ||||
Indefinite-lived Intangible Assets [Line Items] | ||||
Indefinite-lived intangible assets | $ 6 | 6 | ||
Affinity credit card program | ||||
Finite-Lived Intangible Assets [Line Items] | ||||
Amortization Period | 16 years | 10 years | 16 years | |
Finite-lived intangible assets, Gross Carrying Amount | $ 16 | 16 | ||
Finite-lived intangible assets, Accumulated Amortization | (13) | (13) | ||
Finite-lived intangible assets, net, total | $ 3 | $ 3 |
Intangible Assets, net - Expect
Intangible Assets, net - Expected Future Amortization Expense (Details) $ in Millions | Dec. 31, 2021USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Expected future amortization expense, 2022 | $ 1 |
Expected future amortization expense, 2023 | 1 |
Expected future amortization expense, 2024 | 1 |
Expected future amortization expense, 2025 | 1 |
Expected future amortization expense, 2026 | 1 |
Expected future amortization expense, 2027 | 1 |
Expected future amortization expense, 2028 | 1 |
Expected future amortization expense, 2029 | $ 1 |
Financial Derivative Instrume_3
Financial Derivative Instruments and Risk Management - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Derivative [Line Items] | ||
Derivative, other current assets | $ 0 | $ 1,000,000 |
Derivative, other current liabilities | 0 | 1,000,000 |
Fuel Derivative Contracts | ||
Derivative [Line Items] | ||
Cost of swap | 0 | |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Cost of swap | 0 | $ 4,000,000 |
Unrealized losses from cash flow hedges net of adjustment for dedesignation of fuel hedges, net of deferred tax benefit | $ 10,000,000 | |
Minimum | ||
Derivative [Line Items] | ||
Interest rate risk, time period between agreements | 7 years | |
Maximum | ||
Derivative [Line Items] | ||
Interest rate risk, time period between agreements | 9 years |
Financial Derivative Instrume_4
Financial Derivative Instruments and Risk Management - Effect of Fuel and Interest Rate Derivative Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Fuel Derivative Contracts | |||
Derivative [Line Items] | |||
Losses on fuel derivative and interest rate derivative contracts | $ 0 | $ (26) | $ (17) |
Losses on fuel derivative contracts | 0 | (56) | 0 |
Cash flow hedge reclassification net of tax impact | 0 | (11) | 0 |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Losses on fuel derivative and interest rate derivative contracts | 1 | 1 | 0 |
Cash flow hedge reclassification net of tax impact | $ 1 | $ 0 | $ 0 |
Financial Derivative Instrume_5
Financial Derivative Instruments and Risk Management - Net of Tax Impact of the Overall Effectiveness of Derivative Instruments Designated as Cash Flow Hedging Instruments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative [Line Items] | |||
Derivative contract losses, net of tax impact | $ 1 | $ (15) | $ 21 |
Fuel Derivative Contracts | |||
Derivative [Line Items] | |||
Fuel derivative and interest rate contract gains (losses) - net of tax impact | 0 | (16) | 22 |
Cash flow hedge reclassification net of tax impact | 0 | (11) | 0 |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Fuel derivative and interest rate contract gains (losses) - net of tax impact | 0 | (10) | (1) |
Cash flow hedge reclassification net of tax impact | $ 1 | $ 0 | $ 0 |
Other Current Liabilities (Deta
Other Current Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Salaries, wages and benefits | $ 89 | $ 97 |
Passenger and other taxes and fees payable | 84 | 41 |
Station obligations | 64 | 33 |
Aircraft maintenance | 36 | 22 |
Current portion of phantom equity units | 26 | 0 |
Leased aircraft return costs | 25 | 20 |
Fuel liabilities | 23 | 6 |
Warrant liability | 0 | 18 |
Other current liabilities | 36 | 30 |
Total other current liabilities | $ 383 | $ 267 |
Debt - Schedule of Debt Obligat
Debt - Schedule of Debt Obligations (Details) - USD ($) | Sep. 28, 2020 | Sep. 30, 2020 | Dec. 31, 2021 | Dec. 31, 2021 | May 31, 2021 | Dec. 31, 2020 | Dec. 22, 2020 | Sep. 15, 2020 | Apr. 30, 2020 |
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | $ 423,000,000 | $ 423,000,000 | $ 357,000,000 | ||||||
Less current maturities of long-term debt, net | (127,000,000) | (127,000,000) | (101,000,000) | ||||||
Less long-term debt acquisition costs and other discounts | (9,000,000) | (9,000,000) | (9,000,000) | ||||||
Long-term debt, net | $ 287,000,000 | $ 287,000,000 | 247,000,000 | ||||||
Warrants outstanding, term | 5 years | 5 years | 5 years | ||||||
CARES Act Credit Agreement, Warrants | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants outstanding, term | 5 years | ||||||||
Secured Debt | Pre-delivery credit facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | $ 174,000,000 | $ 174,000,000 | 141,000,000 | ||||||
Amount of unsecured borrowings available | $ 200,000,000 | $ 150,000,000 | |||||||
Secured Debt | Treasury Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | 150,000,000 | 150,000,000 | 150,000,000 | ||||||
Secured Debt | Floating rate building note | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | 18,000,000 | 18,000,000 | 18,000,000 | ||||||
Unsecured Debt | PSP Promissory Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | $ 66,000,000 | $ 66,000,000 | 33,000,000 | ||||||
Interest rate | 1.00% | 1.00% | |||||||
Interest rate period | 5 years | ||||||||
Unsecured Debt | PSP Promissory Note | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, variable interest rate | 2.00% | ||||||||
Unsecured Debt | PSP1 Promissory Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan term | 10 years | ||||||||
Unsecured low interest loan amount | $ 33,000,000 | ||||||||
Unsecured Debt | Consolidated Appropriations Act of 2021 - PSP 2 | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan term | 10 years | ||||||||
Unsecured low interest loan amount | $ 18,000,000 | ||||||||
Unsecured Debt | Affinity card advance purchase of mileage credits | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | $ 15,000,000 | $ 15,000,000 | 15,000,000 | ||||||
Amount of unsecured borrowings available | $ 200,000,000 | ||||||||
Unsecured Debt | PSP3 Promissory Note | |||||||||
Debt Instrument [Line Items] | |||||||||
Loan term | 10 years | ||||||||
Unsecured low interest loan amount | 15,000,000 | ||||||||
Line of Credit | Treasury Loan | |||||||||
Debt Instrument [Line Items] | |||||||||
Long-term debt, gross | $ 150,000,000 | $ 150,000,000 | $ 150,000,000 | ||||||
Amount of unsecured borrowings available | $ 574,000,000 | ||||||||
Loan term | 5 years | ||||||||
Line of Credit | Treasury Loan | London Interbank Offered Rate (LIBOR) | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, variable interest rate | 2.50% |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Debt Disclosure [Abstract] | |||
Interest paid | $ 9 | $ 7 | $ 10 |
Principal repayments on debt | $ (97) | $ (126) | $ (139) |
Debt - Schedule of Maturity (De
Debt - Schedule of Maturity (Details) $ in Thousands | Dec. 31, 2021USD ($) |
Debt Disclosure [Abstract] | |
2022 | $ 127,000 |
2023 | 61,000 |
2024 | 4,000 |
2025 | 150,000 |
2026 | 0 |
Thereafter | 81,000 |
Total debt principal payments | $ 423,000 |
Operating Leases - Aircraft (De
Operating Leases - Aircraft (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||||||
Mar. 31, 2020USD ($)amendmentaircraft | Dec. 31, 2021USD ($)aircraftaircraftEngine | Dec. 31, 2020USD ($)aircraftEngineaircraft | Dec. 31, 2019USD ($)aircraftaircraftEngine | Sep. 30, 2021aircraft | Jun. 30, 2021aircraft | May 31, 2021aircraft | Feb. 28, 2020 | |
Lessee, Lease, Description [Line Items] | ||||||||
Gains recognized on sale-leaseback transactions | $ | $ 60 | $ 48 | $ 107 | |||||
Number of amendments | amendment | 2 | |||||||
Number of aircraft renewed | 2 | |||||||
Length of contract | 5 years | 3 years | ||||||
Cash flows from operating leases | $ | $ (17) | $ 0 | $ (17) | $ 0 | ||||
Number of aircraft terminated | 6 | |||||||
A-320 | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of aircraft returned | 2 | |||||||
A-319 | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of aircraft terminated | 4 | |||||||
Number of aircraft returned | 2 | 2 | ||||||
A-319, To Be Returned Early | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Charge included as a component of rent expense | $ | $ 10 | |||||||
Aircraft | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of leases | 110 | |||||||
Aircraft | Minimum | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Remaining lease terms | 3 months | |||||||
Aircraft | Maximum | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Remaining lease terms | 12 years | |||||||
Aircraft | A-320 | Aircraft Sale Leaseback | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of sale-leaseback transactions | 13 | 9 | 18 | |||||
Aircraft Engine | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of leases | aircraftEngine | 21 | |||||||
Number of engines dependent on usage-based metrics | aircraftEngine | 7 | |||||||
Aircraft Engine | Aircraft Sale Leaseback | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Number of sale-leaseback transactions | aircraftEngine | 2 | 1 | 2 | |||||
Aircraft Engine | Minimum | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Remaining lease terms | 1 month | |||||||
Aircraft Engine | Maximum | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Remaining lease terms | 12 years | |||||||
Aircraft and Aircraft Engines | ||||||||
Lessee, Lease, Description [Line Items] | ||||||||
Gains recognized on sale-leaseback transactions | $ | $ 60 | $ 48 | $ 107 | |||||
Acquired aircraft and engines through operating leases | $ | $ 500 | $ 274 |
Operating Leases - Aircraft Ren
Operating Leases - Aircraft Rent Expense and Maintenance Obligations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Aircraft rent expense | $ 530 | $ 396 | $ 368 |
Supplemental rent expense for maintenance-related reserves deemed non-recoverable | (3) | 2 | 6 |
Supplemental rent expense related to probable lease return condition obligations | 61 | 25 | $ 5 |
Aircraft maintenance deposits expected to be recoverable | 108 | 82 | |
Aircraft maintenance deposits expected to be recoverable, eligible maintenance performed | 10 | 1 | |
Aircraft maintenance deposits | 98 | $ 82 | |
Maintenance reserve payments, due in year one | 3 | ||
Maintenance reserve payments, due in year two | 3 | ||
Maintenance reserve payments, due in year three | 3 | ||
Maintenance reserve payments, due in year four | 3 | ||
Maintenance reserve payments, due in year five | 3 | ||
Maintenance reserve payments, due after year five | $ 9 |
Operating Leases - Airport Faci
Operating Leases - Airport Facilities (Details) | 12 Months Ended |
Dec. 31, 2021airport | |
Lessee, Lease, Description [Line Items] | |
Number of airports served | 120 |
Minimum | Airport Facility | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 month |
Maximum | Airport Facility | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 11 years |
Operating Leases - Other Ground
Operating Leases - Other Ground Property and Equipment (Details) - Other Ground Property And Equipment | Dec. 31, 2021 |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 1 month |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Remaining lease terms | 7 years |
Operating Leases - Lessor Conce
Operating Leases - Lessor Concessions (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Lessee, Lease, Description [Line Items] | ||
Increase (decrease) in deferrals related to leases | $ (22) | $ 33 |
Aircraft Rental | ||
Lessee, Lease, Description [Line Items] | ||
Deferrals related to leases | (31) | 31 |
Station Operations | ||
Lessee, Lease, Description [Line Items] | ||
Deferrals related to leases | $ 9 | $ 2 |
Operating Leases - Supplemental
Operating Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2019 |
Leases [Abstract] | |||
Operating lease right-of-use assets | $ 2,426 | $ 2,250 | $ 2,000 |
Current maturities of operating leases | 444 | 416 | |
Long-term operating leases | 1,991 | 1,848 | |
Total lease liabilities | $ 2,435 | $ 2,264 | |
Weighted-average remaining lease term | |||
Operating leases | 7 years | 7 years | |
Weighted-average discount rate | |||
Operating leases | 5.08% | 5.15% |
Operating Leases - Lease Cost (
Operating Leases - Lease Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Operating lease cost | $ 454 | $ 337 | $ 363 |
Variable lease cost | 284 | 220 | 186 |
Total lease costs | $ 738 | $ 557 | $ 549 |
Operating Leases - Undiscounted
Operating Leases - Undiscounted Cash Flows (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Leases [Abstract] | ||
Year 1 | $ 456 | |
Year 2 | 435 | |
Year 3 | 419 | |
Year 4 | 396 | |
Year 5 | 332 | |
Thereafter | 915 | |
Total undiscounted minimum lease rentals | 2,953 | |
Less: amount of lease payments representing interest | (518) | |
Total lease liabilities | 2,435 | $ 2,264 |
Current maturities of operating leases | (444) | (416) |
Long-term lease obligations | $ 1,991 | $ 1,848 |
Operating Leases - Additional I
Operating Leases - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Leases [Abstract] | |||
Cash paid for amounts included in measurement of lease liabilities | $ 461 | $ 340 | $ 374 |
Stock-Based Compensation and _3
Stock-Based Compensation and Stockholders’ Equity - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | |||
Stock-based compensation expense | $ 11 | $ 8 | $ 8 |
Stock-Based Compensation and _4
Stock-Based Compensation and Stockholders’ Equity - Summary of Stock-Based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 11 | $ 8 | $ 8 |
Liability-classified awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | 0 | 0 | 5 |
Stock options and restricted awards | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 11 | $ 8 | $ 3 |
Stock-Based Compensation and _5
Stock-Based Compensation and Stockholders’ Equity - Stock Options and Restricted Awards (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 01, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 30, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Options granted (in shares) | 0 | 0 | 454,100 | ||
Granted (in dollars per share) | $ 4.46 | ||||
Stock option exercised (in shares) | 2,202,895 | 0 | 0 | ||
Exercised, Aggregate Grant Date Fair Value | $ 32,000 | ||||
Aggregate Grant Date Fair Value | 89,000 | ||||
Unrecognized compensation cost related to unvested stock options | $ 1,000 | ||||
Unrecognized compensation cost, period for recognition | 1 year 1 month 6 days | ||||
Contractual term of exercisable options | 3 years 1 month 6 days | ||||
Contractual term of outstanding options | 3 years 2 months 12 days | ||||
2014 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for issuance (in shares) | 38,000,000 | ||||
2021 Equity Incentive Plan | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Common stock reserved for issuance (in shares) | 7,000,000 | ||||
Common stock issued (in shares) | 11,000,000 | ||||
Maximum number of shares of stock that may be issued upon the exercise of incentive stock options | 1.00% | ||||
Maximum number of shares of stock that may be issued upon the exercise of incentive stock options (in shares) | 30,000,000 | ||||
Stock option | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Service period | 4 years | ||||
Restricted Stock Units (RSUs) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Restricted stock units issued (in shares) | 1,869,372 | 261,326 | |||
Weighted average grant date fair value (in dollars per share) | $ 10.39 | $ 12.71 | |||
Vested (in shares) | 151,430 | 84,892 | |||
Vested (in dollars per share) | $ 12.22 | $ 11.85 | |||
Shares withheld to cover employee taxes on vested restricted stock units (in shares) | 39,064 | 17,936 | |||
Weighted average grant date fair value (in dollars per share) | $ 11.82 | $ 11.52 | |||
Aggregate fair value | $ 11,000 | $ 2,000 | $ 1,000 | ||
Restricted Stock Units (RSUs) | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Service period | 3 years | ||||
Restricted Stock Units (RSUs) | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Service period | 4 years | ||||
Restricted Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Service period | 1 year |
Stock-Based Compensation and _6
Stock-Based Compensation and Stockholders’ Equity - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Number of Shares | |||
Beginning balance (in shares) | 9,879,240 | ||
Granted (in shares) | 0 | 0 | 454,100 |
Exercised (in shares) | (2,202,895) | 0 | 0 |
Forfeited (in shares) | (24,938) | ||
Ending balance (in shares) | 7,651,407 | 9,879,240 | |
Exercisable (in shares) | 7,480,088 | ||
Weighted Average Exercise Price | |||
Beginning balance (in dollars per share) | $ 1.93 | ||
Granted (in dollars per share) | 0 | ||
Exercised (in dollars per share) | 1.62 | ||
Forfeited (in dollars per share) | 11.15 | ||
Ending balance (in dollars per share) | 1.99 | $ 1.93 | |
Exercisable (in dollars per share) | $ 1.79 | ||
Aggregate grant date fair value, outstanding at December 31, 2020 | $ 10,000 | ||
Issued, aggregate grant date fair value | 0 | ||
Exercised, aggregate grant date fair value | (2,000) | ||
Forfeited, aggregate grant date fair value | 0 | ||
Aggregate grant date fair value, outstanding at December 31, 2021 | 8,000 | $ 10,000 | |
Aggregate grant date fair value, exercisable | $ 7,000 |
Stock-Based Compensation and _7
Stock-Based Compensation and Stockholders’ Equity - Summary of Restricted Stock Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Weighted Average Grant Date Fair Value | |||
Unrecognized compensation cost, period for recognition | 1 year 1 month 6 days | ||
Restricted Stock Awards And Restricted Stock Units | |||
Number of Shares | |||
Beginning balance (in shares) | 2,020,650 | ||
Issued (in shares) | 899,800 | ||
Vested (in shares) | (543,879) | ||
Forfeited (in shares) | (205,542) | ||
Repurchased (in shares) | (200,735) | ||
Ending balance (in shares) | 1,970,294 | 2,020,650 | |
Weighted Average Grant Date Fair Value | |||
Beginning balance (in dollars per share) | $ 10.54 | ||
Issued (in dollars per share) | $ 14.70 | ||
Vested (in dollars per share) | 10.23 | ||
Forfeited (in dollars per share) | 10.62 | ||
Repurchased (in dollars per share) | 11 | ||
Ending balance (in dollars per share) | $ 12.47 | $ 10.54 | |
Unrecognized compensation cost | $ 16 | ||
Unrecognized compensation cost, period for recognition | 1 year 10 months 24 days | ||
Restricted Stock Units (RSUs) | |||
Number of Shares | |||
Issued (in shares) | 1,869,372 | 261,326 | |
Vested (in shares) | (151,430) | (84,892) | |
Weighted Average Grant Date Fair Value | |||
Issued (in dollars per share) | $ 10.39 | $ 12.71 | |
Vested (in dollars per share) | $ 12.22 | $ 11.85 |
Stock-Based Compensation and _8
Stock-Based Compensation and Stockholders’ Equity - Liability-Classified Awards (Details) - USD ($) $ in Millions | 1 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Current portion of phantom equity units | $ 26 | $ 0 | ||
Noncurrent portion of phantom equity units | 0 | 26 | ||
Phantom Share Units (PSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Associated liability, previous | $ 137 | |||
Associated liability | $ 111 | |||
Current portion of phantom equity units | $ 26 | |||
Noncurrent portion of phantom equity units | $ 26 |
Employee Retirement Plans - Fro
Employee Retirement Plans - Frontier 401(k) and FAPA Plan (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | 28 Months Ended | ||||
Apr. 30, 2019 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2018 | Jan. 31, 2019 | |
Defined Contribution Plan Disclosure [Line Items] | |||||||
Expense related to matching contributions | $ 46 | $ 37 | $ 32 | ||||
Frontier 401(k) Plan | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percent of match | 50.00% | ||||||
Minimum service period | 1 year | ||||||
Annual vesting percentage | 25.00% | ||||||
Vesting period | 4 years | ||||||
Frontier 401(k) Plan | Maintenance Employee | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Employer contribution, percent of employees' gross pay, initial percentage | 2.00% | ||||||
Frontier 401(k) Plan | All Employees Excluding Maintenance Employees | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Employer contribution, percent of employees' gross pay, initial percentage | 6.00% | ||||||
Frontier 401(k) Plan | Flight Attendant | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percent of match | 100.00% | ||||||
Employer contribution, percent of employees' gross pay, initial percentage | 6.00% | ||||||
Frontier Airlines, Inc. Pilots Retirement Plan | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Percent of match | 50.00% | ||||||
Employer contribution, percent of employees' gross pay, initial percentage | 10.00% | ||||||
Annual vesting percentage | 25.00% | ||||||
Vesting period | 4 years | ||||||
Period following collective bargaining agreement | 5 years | ||||||
Frontier Airlines, Inc. Pilots Retirement Plan | Three years of service | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Nonelective contribution amount | 0.00% | ||||||
Nonelective contribution, service period | 3 years | ||||||
Frontier Airlines, Inc. Pilots Retirement Plan | Seven years of service | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Nonelective contribution amount | 6.00% | ||||||
Nonelective contribution, service period | 7 years | ||||||
Frontier Airlines, Inc. Pilots Retirement Plan | Minimum | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Nonelective contribution amount | 12.00% | ||||||
Frontier Airlines, Inc. Pilots Retirement Plan | Maximum | |||||||
Defined Contribution Plan Disclosure [Line Items] | |||||||
Nonelective contribution amount | 15.00% |
Other Long-Term Liabilities (De
Other Long-Term Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Other Liabilities Disclosure [Abstract] | ||
Deferred revenue | $ 21 | $ 23 |
Phantom equity interest | 0 | 26 |
Deferred tax liability | 0 | 9 |
Other | 39 | 38 |
Total other long-term liabilities | $ 60 | $ 96 |
Commitments and Contingencies -
Commitments and Contingencies - Aircraft and Engine Orders (Details) | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2021aircraft | Jul. 31, 2021aircraft | Dec. 31, 2017aircraft | Dec. 31, 2021aircraftaircraftEngine | |
Air Transportation Equipment | ||||
Long-term Purchase Commitment [Line Items] | ||||
2022 | 14 | |||
2023 | 21 | |||
2024 | 24 | |||
2025 | 30 | |||
2026 | 41 | |||
Thereafter | 104 | |||
Total | 234 | |||
Aircraft Engine | ||||
Long-term Purchase Commitment [Line Items] | ||||
2022 | aircraftEngine | 5 | |||
2023 | aircraftEngine | 2 | |||
2024 | aircraftEngine | 2 | |||
2025 | aircraftEngine | 3 | |||
2026 | aircraftEngine | 3 | |||
Thereafter | aircraftEngine | 6 | |||
Total | aircraftEngine | 21 | |||
A320neo | Air Transportation Equipment | ||||
Long-term Purchase Commitment [Line Items] | ||||
2022 | 9 | |||
2023 | 0 | |||
2024 | 0 | |||
2025 | 17 | |||
2026 | 19 | |||
Thereafter | 31 | |||
Total | 67 | 76 | ||
A321neo | Air Transportation Equipment | ||||
Long-term Purchase Commitment [Line Items] | ||||
2022 | 5 | |||
2023 | 21 | |||
2024 | 24 | |||
2025 | 13 | |||
2026 | 22 | |||
Thereafter | 73 | |||
Total | 91 | 10 | 67 | 158 |
Commitments and Contingencies_2
Commitments and Contingencies - Additional Information (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2021aircraft | Jul. 31, 2021aircraft | Dec. 31, 2017aircraft | Dec. 31, 2021USD ($)aircraftemployee_group | Dec. 31, 2020USD ($) | |
Long-term Purchase Commitment [Line Items] | |||||
Purchase commitments for aircraft and engines, 2022 | $ | $ 784 | ||||
Purchase commitments for aircraft and engines, 2023 | $ | 1,215 | ||||
Purchase commitments for aircraft and engines, 2024 | $ | 1,450 | ||||
Purchase commitments for aircraft and engines, 2025 | $ | 1,754 | ||||
Purchase commitments for aircraft and engines, 2026 | $ | 2,345 | ||||
Purchase commitments for aircraft and engines, thereafter | $ | $ 6,218 | ||||
Number of union-represented employee groups | employee_group | 7 | ||||
Amount of employees represented by unions | 88.00% | ||||
Accrued liabilities for health care claims | $ | $ 5 | $ 4 | |||
Air Transportation Equipment | |||||
Long-term Purchase Commitment [Line Items] | |||||
Number of aircraft agreed to purchase | aircraft | 234 | ||||
Air Transportation Equipment | A320neo | |||||
Long-term Purchase Commitment [Line Items] | |||||
Number of aircraft agreed to purchase | aircraft | 67 | 76 | |||
Number of aircraft eligible for conversion | aircraft | 18 | ||||
Air Transportation Equipment | A321neo | |||||
Long-term Purchase Commitment [Line Items] | |||||
Number of aircraft agreed to purchase | aircraft | 91 | 10 | 67 | 158 | |
Number of leasing partners with signed letter of intent | aircraft | 2 | ||||
Number of aircraft signed in to direct lease agreements | aircraft | 7 | ||||
Number of aircraft covered under non-binding letter of intent | aircraft | 3 |
Commitments and Contingencies_3
Commitments and Contingencies - Collective Bargaining Agreements (Details) | 12 Months Ended |
Dec. 31, 2021 | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 88.00% |
Pilots | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 31.00% |
Flight Attendants | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 52.00% |
Aircraft Technicians | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 2.00% |
Aircraft Appearance | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 1.00% |
Dispatchers | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 1.00% |
Material Specialists | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 1.00% |
Maintenance Control | |
Multiemployer Plan [Line Items] | |
Amount of employees represented by unions | 1.00% |
Stockholders_ Equity (Details)
Stockholders’ Equity (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021USD ($)votePerShare$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock authorized for issuance (in shares) | shares | 750,000,000 | 456,000,000 | |
Preferred stock authorized for issuance (in shares) | shares | 10,000,000 | 1,000,000 | |
Common stock, stated par (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | ||
Common stock outstanding (in shares) | shares | 217,065,096 | 199,438,098 | |
Number of votes per share of common stock | votePerShare | 1 | ||
Dividends declared (in dollars per share) | $ / shares | $ 0 | $ 0 | $ 0.76 |
Dividends paid, vested share-based awards | $ 1,000 | $ 1,000 | $ 7,000 |
Dividends | 166,000 | ||
Dividends paid | 0 | 0 | 159,000 |
Dividends paid, common stock | 159,000 | ||
Dividends payable | $ 1,000 | $ 1,000 | $ 27,000 |
Nonvoting Common Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock authorized for issuance (in shares) | shares | 150,000,000 | 76,000,000 | |
Common stock, stated par (in dollars per share) | $ / shares | $ 0.001 |
Net Earnings (Loss) per Share_2
Net Earnings (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Basic: | |||
Net income (loss) | $ (102,000) | $ (225,000) | $ 251,000 |
Less: net income attributable to participating rights | 0 | 0 | (14,000) |
Net income (loss) attributable to common stockholders | $ (102,000) | $ (225,000) | $ 237,000 |
Weighted average common shares outstanding, basic (in shares) | 211,436,542 | 199,260,410 | 199,141,090 |
Net earnings (loss) per share, basic (in dollars per share) | $ (0.48) | $ (1.13) | $ 1.19 |
Diluted: | |||
Less: net income attributable to participating rights | $ 0 | $ 0 | $ (14,000) |
Net income (loss) attributable to common stockholders | $ (102,000) | $ (225,000) | $ 237,000 |
Effect of dilutive potential common shares (in shares) | 0 | 0 | 452,010 |
Weighted average common shares outstanding, diluted (in shares) | 211,436,542 | 199,260,410 | 199,593,100 |
Net earnings (loss) per share, diluted (in dollars per share) | $ (0.48) | $ (1.13) | $ 1.19 |
Shares excluded from the computation of diluted shares (in shares) | 233,700 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense from Continuing Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Current: | |||
Federal | $ (10) | $ (134) | $ 19 |
State and local | 0 | 1 | 3 |
Current income tax expense (benefit) | (10) | (133) | 22 |
Deferred: | |||
Federal | (32) | (5) | 49 |
State and local | (1) | (9) | 4 |
Foreign | 1 | 0 | (1) |
Deferred income taxes | (32) | (14) | 52 |
Total income tax expense (benefit) | $ (42) | $ (147) | $ 74 |
Income Taxes - Components of Ef
Income Taxes - Components of Effective Income Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% |
Reserves for uncertain tax positions, net | 6.20% | (0.20%) | 0.10% |
Stock-based compensation | 5.20% | 0.00% | (0.20%) |
State taxes, net of federal benefit | 1.60% | 2.10% | 1.80% |
Nondeductible warrants | (3.50%) | (0.50%) | 0.00% |
Impact of CARES Act | 0.00% | 16.90% | 0.00% |
Other | (1.30%) | 0.20% | 0.10% |
Effective income tax rate | 29.20% | 39.50% | 22.80% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Income Tax Contingency [Line Items] | |||
Cash payments for income taxes, net of refunds | $ (158,000) | $ 9,000 | $ 56,000 |
Net deferred tax assets (liabilities) | 9,000 | ||
Deferred tax assets related to state net operating losses | 10,000 | ||
Deferred tax assets related to federal net operating losses | 30,000 | ||
Deferred tax assets related to foreign net operating losses | 7,000 | ||
Valuation allowance | 8,000 | $ 0 | $ 0 |
Amount of unrecognized benefit that if recognized, would reduce income tax expense | 1,000 | ||
Amount related to interest and penalties | 1,000 | ||
Foreign Tax Authority | |||
Income Tax Contingency [Line Items] | |||
Valuation allowance | 7,000 | ||
State and Local Jurisdiction | |||
Income Tax Contingency [Line Items] | |||
Valuation allowance | 1,000 | ||
Settlement with Taxing Authority | |||
Income Tax Contingency [Line Items] | |||
Possible reduction to income tax expense | 1,000 | ||
Settlement with Taxing Authority, Lapse In Statute Of Limiations | |||
Income Tax Contingency [Line Items] | |||
Possible reduction to income tax expense | $ 1,000 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | |||
Operating lease liability | $ 551 | $ 514 | |
Net operating losses | 47 | 9 | |
Nondeductible accruals | 32 | 25 | |
Deferred revenue | 12 | 12 | |
Income tax credits | 2 | 0 | |
Valuation allowance | (8) | 0 | $ 0 |
Other | 10 | 11 | |
Deferred tax assets | 646 | 571 | |
Deferred tax liabilities: | |||
Right of use asset | (545) | (507) | |
Property and equipment | (36) | (34) | |
Maintenance deposits | (22) | (19) | |
Intangibles | (6) | (7) | |
Leasehold interests | 0 | (6) | |
Other | (12) | (7) | |
Deferred tax liabilities | (621) | (580) | |
Net deferred tax assets (liabilities) | $ (9) | ||
Deferred tax assets | $ 25 |
Income Taxes - Unrecognized Tax
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Beginning balance | $ 10 | $ 9 | $ 9 |
Increase for tax positions taken during prior period | 0 | 0 | 0 |
Decrease for tax positions taken during prior period | (9) | 0 | 0 |
Increase for tax positions taken during current period | 0 | 1 | 0 |
Ending balance | $ 1 | $ 10 | $ 9 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amounts and Estimated Fair Values of the Company’s Debt (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Carrying Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | $ 423 | $ 357 |
Estimated Fair Value | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 422 | 341 |
Pre-delivery credit facility | Carrying Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 174 | 141 |
Pre-delivery credit facility | Estimated Fair Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 175 | 139 |
Treasury Loan | Carrying Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 150 | 150 |
Treasury Loan | Estimated Fair Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 156 | 148 |
Floating rate building note | Carrying Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 18 | 18 |
Floating rate building note | Estimated Fair Value | Secured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 19 | 18 |
PSP Promissory Note | Carrying Value | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 66 | 33 |
PSP Promissory Note | Estimated Fair Value | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 58 | 25 |
Affinity card advance purchase of mileage credits | Carrying Value | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | 15 | 15 |
Affinity card advance purchase of mileage credits | Estimated Fair Value | Unsecured Debt | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt, fair value | $ 14 | $ 11 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value of Assets and Liabilities Measured at Fair Value (Details) - Fair Value, Recurring - USD ($) $ in Millions | Dec. 31, 2021 | Dec. 31, 2020 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 918 | $ 378 |
Warrants | 18 | |
Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 918 | 378 |
Warrants | 0 | |
Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
Warrants | 0 | |
Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | $ 0 | 0 |
Warrants | $ 18 |
Related Parties (Details)
Related Parties (Details) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2018 | Dec. 31, 2021USD ($)director | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. | Indigo Partners | ||||
Related Party Transaction [Line Items] | ||||
Outstanding shares of common stock held | 18.00% | |||
Indigo Partners | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Management fees, expense reimbursements, and director compensation | $ | $ 2 | $ 2 | $ 2 | |
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Number of company directors | director | 2 | |||
Controladora Vuela Compañía de Aviación, S.A.B. de C.V. | Affiliated Entity | Codeshare Arrangement | ||||
Related Party Transaction [Line Items] | ||||
Effective period of codeshare agreements | 3 years |
Subsequent Events (Details)
Subsequent Events (Details) | Feb. 05, 2022USD ($)$ / shares | Feb. 02, 2022USD ($) | Dec. 31, 2021USD ($)$ / shares | Dec. 31, 2020USD ($)$ / shares | Dec. 31, 2019USD ($) |
Subsequent Event [Line Items] | |||||
Principal repayments on debt | $ 97,000,000 | $ 126,000,000 | $ 139,000,000 | ||
Interest paid | $ 9,000,000 | $ 7,000,000 | $ 10,000,000 | ||
Common stock, stated par (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||
Spirit Airlines, Inc Merger | |||||
Subsequent Event [Line Items] | |||||
Transaction or integration planning costs | $ 0 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Common stock, stated par (in dollars per share) | $ / shares | $ 0.001 | ||||
Subsequent Event | CARES Credit Agreement | Line of Credit | |||||
Subsequent Event [Line Items] | |||||
Principal repayments on debt | $ 150,000,000 | ||||
Interest paid | $ 1,000,000 | ||||
Length of limitations on stock repurchases and payment of dividends | 1 year | ||||
Subsequent Event | Spirit Airlines, Inc. | |||||
Subsequent Event [Line Items] | |||||
Common stock, stated par (in dollars per share) | $ / shares | $ 0.0001 | ||||
Subsequent Event | Spirit Airlines, Inc Merger | |||||
Subsequent Event [Line Items] | |||||
Business combination exchange ratio | 1.9126 | ||||
Stock price per share (in dollars per share) | $ / shares | $ 2.13 | ||||
Termination fee | $ 94,200,000 |
Uncategorized Items - fron-2021
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-02 [Member] |