For the past five years, Frontier Airlines ( FRNT) has been in the black, but falling ticket prices, overcapacity and slumping demand for travel has snapped the Colorado-based carrier's streak.

The company posted a fiscal fourth-quarter net loss of $13 million, or 44 cents a share, compared with a year-earlier profit of 2 cents a share. Excluding charges, Frontier said it would have lost 36 cents a share, in line with expectations.

The small-cap airline announced a fiscal 2003 loss of $22.8 million, or 77 cents a share. Excluding one-time items, Frontier's loss was $24.9 million, or 84 cents a share. Last year, the company had income of $16.5 million, or 56 cents a share.

"Reporting our first annual loss in five years is a disappointment and reflects many of the challenges faced by our industry during the past year, including a weakened economy and, in this latest quarter, the recent unrest in the Middle East that culminated in the Iraq war. In addition, our fiscal year 2003 loss was exacerbated by the severe winter blizzard in March 2003 that shut down the Denver metro area for two days," said CEO Jeff Potter.

Potter said the company would continue to try and hack at costs, simplify its fare pricing to appeal to travelers and launch a new marketing campaign designed to alter the company's image.

"During the past year we realized year over year unit cost reductions of 10.8%, posting what we believe are some of the greatest cost management improvements among our peers," said Potter. "With the recent simplified fare structure implemented during February 2003, and launch of our new branding campaign, 'A Whole Different Animal,' we believe customer response will be favorable."

In the fourth quarter, Frontier booked $118.5 million in revenue, up 4.7% from the year-ago $113.2 million, but the increase came from a boost to capacity and not demand. On a year-over-year basis, the company's capacity, measured in ASMs, or available seat miles, jumped 26.5% in the fourth quarter, while traffic, measure in RPMs, or revenue passenger miles, rose 26.8%.

The end result of the high capacity and relatively flat revenue picture is that Frontier's planes were only slightly more than half-full during much of the fourth quarter. The company's load factor was just 58.4%, nearly 13 basis points below the load factor Frontier said it needed to break even, which is 67.8%. Furthermore, in the fourth quarter, the average Frontier ticket price dropped $20 from year-ago levels, to $108.

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