Updated from 12:08 p.m. EDTFrontier Airlines ( FRNT) reported a quarterly profit, reversing a year-ago loss, as revenue grew while costs declined. The Denver-based low-cost carrier said net income was $4 million, or 10 cents a share, in the quarter ended June 30, compared with a loss of $2.7 million, or 8 cents a share, in the same period a year earlier. The 2005 quarter included charges of $4.3 million. Revenue was $302 million, up from $236 million. Analysts surveyed by Thomson Financial had expected a profit of 4 cents a share. On a conference call, CEO Jeff Porter said the airline is improving its performance at its Denver hub, despite its own growth and intense competition from two expanding competitors, UAL ( UAUA) unit United Airlines and Southwest Airlines ( LUV). While industry capacity is down 4% for the year, capacity in the Mile-High City is up 6.8%. "Denver is a competitive environment unlike any in the industry today," Potter said. "Yet we were able to improve financial performance over last year,
For the quarter ended June 30, RASM rose 8.5% to 9.57 cents, a result of higher ticket prices and a load factor increase of 3.5 points to 81.9%. Capacity, as measured by available seat miles, increased 18.9%. Fuel costs grew 29.7%. Excluding fuel, cost per available seat mile fell 6.1% to 6.15 cents, primarily because maintenance expenses fell as three leased Boeing aircraft were returned. The airline continues to benefit from operating an all- Airbus fleet, Tate said. JPMorgan analyst Jamie Baker said the airline exceeded expectations, but "with Frontier RASM lagging the industry, profitability behind even that of JetBlue ( JBLU) and the expected decline in consensus forecasts, Frontier shares have not yet reached a level that we believe adequately reflects the challenges facing the carrier." Baker, in a research report Friday, maintained an underweight rating on the stock. Frontier shares rose 8 cents to $6.49.