0001670076-21-000012 | 10-Q | XBRL Viewer | Frontier Group Holdings INC

Tabular disclosure of information about multiemployer plan.

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Revenue from Contract with Customer [Abstract]

Debt - Schedule of Maturity (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Debt Disclosure [Abstract]
Remainder of 2021	$ 79,000
2022	52,000
2023	20,000
2024	0
2025	150,000
Thereafter	60,000
Total debt principal payments	$ 361,000

Revenue Recognition

3 Months Ended

Mar. 31, 2021

Revenue Recognition

As of December 31, 2020, the Company’s air traffic liability balance was $135 million. During the three months ended March 31, 2021, 41% of the air traffic liability as of December 31, 2020 has been recognized as passenger revenue. As of March 31, 2021, the Company’s current air traffic liability is $230 million, of which $44 million is related to customer rights to book future travel, which generally expire 12 months after issuance if not redeemed by the passenger. The amounts expected not to be redeemed are recognized over the historical pattern of rights exercised by customers.

During the three months ended March 31, 2021 and 2020, the Company recognized $10 million and $9 million of revenue, respectively, within passenger revenue within the condensed consolidated statements of operations, primarily related to expected and actual expiration of customer rights to book future travel.

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/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 condensed 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 condensed consolidated statements of operations at the time of travel for mileage credits redeemed. Mileage credits the Company estimates are not likely to be redeemed are subject to breakage and are recognized as a portion of passenger revenue 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.

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)


	Three Months Ended March 31,
		2021		2020
Passenger revenues:
Fare		$	100	$	219
Non-fare passenger revenues:
Baggage		67		109
Service fees		62		141
Seat selection		24		43
Other		9		16
Total non-fare passenger revenue		162		309
Total passenger revenues		262		528
Other revenues		9		16
Total operating revenues		$	271	$	544

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):


	Three Months Ended March 31,
		2021		2020
Domestic		$	259	$	500
Latin America		12		44
Total operating revenues		$	271	$	544

During the three months ended March 31, 2021 and 2020, no revenue from any one foreign country represented greater than 5% of the Company’s total passenger 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.

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

The carrying amounts and estimated fair values of the Company’s debt are as follows (in millions):


	March 31, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Secured debt:
Pre-delivery credit facility	$	133	$	131	$	141	$	139
Floating rate building note	18		18		18		18
Treasury Loan	150		153		150		148
Unsecured debt:

Affinity card advance purchase of mileage credits	15		14		15		11
PSP Promissory Note	45		35		33		25
Total debt	$	361	$	351	$	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 financial statements (in millions):



	Fair Value Measurements as of March 31, 2021
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	429	$	429	$	—	$	—
Warrants	$	39	$	—	$	—	$	39


	Fair Value Measurements as of December 31, 2020
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	378	$	378	$	—	$	—
Warrants	$	18	$	—	$	—	$	18

Impact of COVID-19 - Impact of the COVID-19 Pandemic (Details)	3 Months Ended
	Mar. 31, 2021
Unusual or Infrequent Items, or Both [Abstract]
Increase in passenger volume from fourth quarter of 2020	14.00%

Debt (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Schedule of Debt Obligations

The Company’s debt obligations are as follows (in millions):


	March 31, 2021		December 31, 2020
Secured debt:
Pre-delivery credit facility(1)	$	133	$	141
Floating rate building note(2)	18		18
Treasury Loan(3)	150		150
Unsecured debt:

Affinity card advance purchase of mileage credits(4)	15		15
PSP Promissory Notes(5)	45		33
Total debt	361		357
Less current maturities of long-term debt, net	(110)		(101)
Less long-term debt acquisition costs and other discounts	(9)		(9)
Long-term debt, net	$	242	$	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 through 2023 (see Note 10). On December 22, 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.

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 expected to be in the fourth quarter of 2023.

(2)Represents a note with National Bank of Arizona related to the Company’s headquarters building. Under the terms of the agreement, the Company will repay 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.

(3)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%. Additional funding can be drawn on the loan through May 28, 2021 and includes a maximum of three total draws on the facility, and it 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. As part of any funding under the loan program, the Company is required to comply with the relevant provisions of the CARES Act, which will apply until one year after the loan is repaid in full. 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 upon notice from the Treasury. Such warrants are included in other current liabilities on the Company’s condensed consolidated balance sheets. As of March 31, 2021, the Company had issued 2,358,090 warrants to the Treasury in conjunction with the Treasury Loan.

(4)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. 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.

(5)On April 30, 2020, the Company executed the PSP Promissory Note with the Treasury as part of the original payroll support program in which the Company received a $33 million unsecured 10-year, low interest loan. Subsequently, as part of the PSP2 Agreement, in March 2021 the Company received an additional $12 million 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 up to 625,784 shares of common stock of FGHI, which have a five-year term and are settled in cash or shares. Such warrants are included in other current liabilities on the Company’s condensed consolidated balance sheets.

Schedule of Maturities of Long-term Debt

As of March 31, 2021, future maturities of debt are payable as follows (in millions):


	March 31, 2021
Remainder of 2021	$	79
2022	52
2023	20
2024	—
2025	150
Thereafter	60
Total debt principal payments	$	361

Related Parties (Details) $ in Thousands	1 Months Ended	3 Months Ended
Related Parties (Details) $ in Thousands	Aug. 31, 2018	Mar. 31, 2021 USD ($) director	Mar. 31, 2020 USD ($)
Indigo Partners \| Controladora Vuela Compañía de Aviación, S.A.B. de C.V.
Related Party Transaction [Line Items]
Outstanding shares of common stock held		18.00%
Affiliated Entity \| Indigo Partners
Related Party Transaction [Line Items]
Management fees, expense reimbursements, and director compensation \| $		$ 1,000	$ 1,000
Affiliated Entity \| Controladora Vuela Compañía de Aviación, S.A.B. de C.V.
Related Party Transaction [Line Items]
Number of company directors \| director		2
Affiliated Entity \| Controladora Vuela Compañía de Aviación, S.A.B. de C.V. \| Codeshare Arrangement
Related Party Transaction [Line Items]
Effective period of codeshare agreements	3 years

Impact of COVID-19	3 Months Ended
Impact of COVID-19	Mar. 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 period ended March 31, 2021 and the comparable prior year period. Additionally, the Company is unable to predict the future spread of COVID-19 or any new strains of the virus along with resulting measures that may be introduced by governments or other parties and what impact they may have on the demand for air travel. In response to the impacts of the COVID-19 pandemic, beginning in March 2020 and continuing through March 2021, the Company has taken measures to address the significant cash outflows experienced to date, which most notably included aligning capacity to demand, and continues to evaluate options to align costs with expected demand. Beginning in December 2020, the Food and Drug Administration issued emergency use authorizations for various vaccines for COVID-19. As the vaccines continue to be distributed, administered and made available to a broader range of the population, the Company expects confidence in travel to increase, particularly in the domestic leisure market on which the Company’s business is focused. While the Company has experienced a 14% increase in passenger volumes during the quarter ended March 31, 2021 as compared to the fourth quarter of 2020 as well as a meaningful increase in bookings during the first quarter of 2021 compared to the fourth quarter of 2020, 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, as any noncompliance could have a material impact on the Company’s financial position, cash flows and results of operations. As of March 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 2021 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 (“PSP Grant”) for payroll support for the period from April 2020 through September 30, 2020, and a $33 million unsecured 10-year, low interest loan (“PSP Promissory Note”). During 2020, the Company received the full $178 million under the PSP Grant, which was recognized net of $1 million in deferred financing costs over the periods it was intended to support payroll, within CARES Act credits in the Company’s condensed consolidated statements of operations. In conjunction with the PSP Promissory Note, the Company issued to the Treasury warrants to acquire 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 of 2021, which extended the PSP provisions of the CARES Act, the Company entered into an agreement with the Treasury for a minimum of $140 million of installment funding under a second Payroll Support Program (“PSP2”), comprised of a $128 million grant (“PSP2 Grant”) for the continuation of payroll support through March 31, 2021, and a $12 million unsecured 10-year low interest loan (“PSP2 Promissory Note”), all of which was received during the three months ended March 31, 2021. In conjunction with the PSP2 Promissory Note, the Company issued to the Treasury warrants to acquire up to 103,208 shares of common stock of FGHI at an exercise price of $11.65 per share. As of March 31, 2021, the $12 million PSP2 Promissory Note is presented net of unamortized discounts related to warrants and deferred financing costs totaling $1 million within long-term debt, net on the Company’s condensed consolidated balance sheet. Of the $128 million received under the PSP2 Grant, $125 million was recognized within CARES Act credits in the Company’s condensed consolidated statements of operations, and the remaining $3 million was deferred within other current liabilities on the Company's condensed consolidated balance sheet. Subsequent to March 31, 2021, the Treasury provided the Company with an additional disbursement under the PSP2 Agreement of $21 million on April 29, 2021, comprised of an additional $15 million toward the PSP2 Grant and $6 million toward the PSP2 Promissory Note. In conjunction with this additional funding, the Company issued to the Treasury warrants to purchase up to 54,105 additional 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 ("PSP3"). On April 29, 2021, the Company entered into an agreement with the Treasury for approximately $150 million of installment funding under PSP3 (the “PSP3 Agreement”), comprised of a $135 million grant (“PSP3 Grant”) for the continuation of payroll support through September 30, 2021, and a $15 million unsecured 10-year low interest loan (“PSP3 Promissory Note”). In conjunction with funding from PSP3, the Company agreed to issue to the Treasury warrants to purchase up to 79,961 additional shares of common stock of FGHI at an exercise price of $18.85 per share. The impacts of PSP3 are not reflected within the Company’s March 31, 2021 condensed consolidated financial statements. 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 (“Treasury Loan”). As of March 31, 2021, the Company has borrowed $150 million under the Treasury Loan, which is presented net of unamortized discounts related to warrants and deferred financing costs, within long-term debt, net on the Company’s condensed consolidated balance sheets. Additional funding can be drawn on the loan through May 28, 2021 and includes a maximum of three total draws on the facility. 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. As of March 31, 2021, the Company had issued 2,358,090 warrants with an exercise price of $6.36 per share in conjunction with the first draw on the loan. 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 the later of September 30, 2022 or one year after the Treasury Loan facility is repaid; •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 our employees (other than our 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 the later of April 1, 2023 or one year after the Treasury Loan facility is repaid; •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 and the Treasury Loan, and pursuant to the stipulations set forth within the CARES Act, the Company issued to the Treasury warrants to acquire shares of common stock of FGHI, which have a five-year term and are settled in cash or shares. The warrants do not have any voting rights and are freely transferable, with registration rights. The warrants issued in conjunction with the CARES Act financing have been classified as liability based awards within other current liabilities on the condensed consolidated balance sheets and, as of March 31, 2021 and December 31, 2020, the warrant liability was $39 million and $18 million, respectively. Given the liability based classification, at the end of each period the warrant liability is adjusted to its fair market value, calculated utilizing the Black Scholes option pricing model, with the corresponding fair market value adjustment classified as interest expense within the Company’s condensed consolidated statements of operations, which was $20 million for the three months ended March 31, 2021. 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 condensed consolidated statements of operations over the term of the loan. The CARES Act also provided for an employee retention credit (“CARES Employee Retention Credit”), which is a refundable tax credit against certain employment taxes that the Company qualified for beginning on April 1, 2020. In December 2020, the CARES Employee Retention Credit program was extended and enhanced through June 30, 2021. Further, in March 2021, the ARP further extended the availability of the CARES Employee Retention Credit through December 31, 2021. The ARP increased the credit from 50% to 70% of qualified wages, increased the maximum wages per employee from $10,000 for the entire period to $10,000 per quarter, and expanded the gross receipts test for eligible employers from a 50% to an 80% decline in gross receipts as compared to the same calendar quarter in 2019. During the three months ended March 31, 2021, the Company recognized $11 million related to the CARES Employee Retention Credit within CARES Act credits in the Company’s condensed consolidated statements of operations and other current assets on the Company’s condensed consolidated balance sheets. Income Taxes The Company's effective tax rate for the three months ended March 31, 2021 was 19.5%, compared to 37.9% for the three months ended March 31, 2020. The effective tax rate for the three months ended March 31, 2021 deviates from the statutory rate primarily due to 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, and the Treasury Loan, partially offset by excess tax benefits associated with the Company’s stock-based compensation arrangements. The decrease in tax rate as compared to the prior year period is largely driven by the CARES Act benefit that allowed the 2020 net operating loss to be carried back to tax years in which a federal 35% tax rate applied, resulting in a permanent benefit of the 14% rate differential.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2021
Accounting Policies [Abstract]
Basis of Presentation	Basis of PresentationThe condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States (“GAAP”)
Consolidation, Policy	Basis of PresentationThe condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted 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. Prior to December 3, 2013, FAH was a wholly-owned subsidiary of Republic Airways Holdings, Inc. (“Republic”). On December 3, 2013, FGHI, formerly known as Falcon Acquisition Group, Inc., purchased from Republic all of FAH’s common stock for $52 million in cash and assumed all of its obligations. As a result of the acquisition, all of FAH’s assets and liabilities were remeasured to fair value as of the acquisition date.
Use of Estimates	Use of EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the financial statements and accompanying notes. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements 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 Instrument 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, are expected to be treated as equity classified awards post IPO.
Frequent Flyer Program	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/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 condensed 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 condensed consolidated statements of operations at the time of travel for mileage credits redeemed. Mileage credits the Company estimates are not likely to be redeemed are subject to breakage and are recognized as a portion of passenger revenue 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.
Operating Leases	The Company leases property and equipment under operating leases. For leases with initial terms greater than 12 months, the related asset and obligation is recorded at the present value of lease payments over the term. 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.
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 as of March 31, 2021 and December 31, 2020 were 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. Within restricted cash, the Company also maintains certificates of deposit that secure certain letters of credit issued for workers’ compensation claim reserves and certain airport authorities. 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 determined to be Level 3 measurement. The primary inputs to the warrant valuation are driven by FGHI’s share price as well as assumptions about the expected share price volatility and estimated term the warrants will remain outstanding. These inputs are largely impacted by internal forecasts, discount rates and other internal assumptions as well as assumptions used by the participating underwriters to establish the initial offering price related to the Company’s IPO, which were unobservable as of March 31, 2021. For the three months ended March 31, 2021, the Company’s warrant liability increased by $21 million, which was driven by mark to market adjustments of $20 million and $1 million of additional warrants issued in conjunction with PSP2 funding obtained during the three months ended March 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.

Disclosure of accounting policy for revenue from contract with customer.

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Commitments and Contingencies - Aircraft and Engine Orders (Details)	1 Months Ended	3 Months Ended
	Dec. 31, 2017 aircraft	Mar. 31, 2021 aircraft aircraftEngine
Air Transportation Equipment
Long-term Purchase Commitment [Line Items]
Remainder of 2021		10
2022		14
2023		19
2024		19
2025		25
Thereafter		66
Total		153
Aircraft Engine
Long-term Purchase Commitment [Line Items]
Remainder of 2021 \| aircraftEngine		2
2022 \| aircraftEngine		4
2023 \| aircraftEngine		2
2024 \| aircraftEngine		2
2025 \| aircraftEngine		3
Thereafter \| aircraftEngine		9
Total \| aircraftEngine		22
A-320-Neo \| Air Transportation Equipment
Long-term Purchase Commitment [Line Items]
Remainder of 2021		10
2022		9
2023		0
2024		0
2025		17
Thereafter		50
Total	100	86
A321neo \| Air Transportation Equipment
Long-term Purchase Commitment [Line Items]
Remainder of 2021		0
2022		5
2023		19
2024		19
2025		8
Thereafter		16
Total	34	67

Revenue Recognition - Operating Revenues by Principal Geographic Region (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Total operating revenues	$ 271,000	$ 544,000
Domestic
Disaggregation of Revenue [Line Items]
Total operating revenues	259,000	500,000
Latin America
Disaggregation of Revenue [Line Items]
Total operating revenues	$ 12,000	$ 44,000

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current Assets
Cash and cash equivalents	$ 429,000	$ 378,000
Accounts receivable, net	48,000	28,000
Supplies, net	20,000	18,000
Other current assets	223,000	226,000
Total current assets	720,000	650,000
Property and equipment, net	177,000	176,000
Operating lease right-of-use assets	2,292,000	2,250,000
Pre-delivery deposits for flight equipment	212,000	224,000
Aircraft maintenance deposits	86,000	82,000
Intangible assets, net	29,000	29,000
Other assets	164,000	143,000
Total assets	3,680,000	3,554,000
Current liabilities
Accounts payable	79,000	71,000
Air traffic liability	230,000	135,000
Frequent flyer liability	12,000	13,000
Current maturities of long-term debt, net	110,000	101,000
Current maturities of operating leases	423,000	416,000
Other current liabilities	369,000	267,000
Total current liabilities	1,223,000	1,003,000
Long-term debt, net	242,000	247,000
Long-term operating leases	1,881,000	1,848,000
Long-term frequent flyer liability	50,000	50,000
Other long-term liabilities	65,000	96,000
Total liabilities	3,461,000	3,244,000
Commitments and contingencies
Stockholders' equity
Common stock, no par value, stated value of $0.001 per share, with 200,416,799 and 199,438,098 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively	0	0
Additional paid-in capital	60,000	60,000
Retained earnings	170,000	261,000
Accumulated other comprehensive income (loss)	(11,000)	(11,000)
Total stockholders’ equity	219,000	310,000
Total liabilities and stockholders’ equity	$ 3,680,000	$ 3,554,000

Other Current Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid expenses	$ 17,000	$ 24,000
Income tax receivable	161,000	161,000
Passenger and other taxes receivable	20,000	26,000
Other	25,000	15,000
Total other current assets	$ 223,000	$ 226,000

Summary of Significant Accounting Policies - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Millions	Apr. 06, 2021	Mar. 31, 2021	Dec. 31, 2020
Class of Stock [Line Items]
Common shares outstanding after initial public offering (in shares)		200,416,799	199,438,098
Deferred offering costs		$ 6
Subsequent Event
Class of Stock [Line Items]
Common shares outstanding after initial public offering (in shares)	215,416,799
IPO \| Subsequent Event
Class of Stock [Line Items]
Common stock issued and sold (in shares)	15,000,000
Common stock issued (in dollars per share)	$ 19.00
Proceeds from initial public offering, net of underwriting discounts and offering expenses	$ 271
Public Stock Offering - Shares From Existing Shareholders \| Subsequent Event
Class of Stock [Line Items]
Common stock issued and sold (in shares)	15,000,000
Over-Allotment Option \| Subsequent Event
Class of Stock [Line Items]
Common stock issued and sold (in shares)	4,500,000

Operating Leases - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Operating lease cost	$ 107,000	$ 98,000
Variable lease cost	65,000	45,000
Total lease costs	$ 172,000	$ 143,000

Stock-Based Compensation - Stock Options and Restricted Awards (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Apr. 01, 2021	Mar. 31, 2021	Mar. 31, 2020	Apr. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted (in shares)		0	0
Stock option exercise (in shares)		640,121
Weighted average stock price (in dollars per share)		$ 0.64
Weighted average exercise price of outstanding options (in dollars per share)		$ 2.02
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 \| Subsequent Event
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
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units issued (in shares)		695,742
Weighted average grant date fair value (in dollars per share)		$ 13.84
Aggregate fair value		$ 10,000
Shares withheld to cover employee taxes on vested restricted stock units (in shares)		146,490
Weighted average grant date fair value (in dollars per share)		$ 10.98

Fair Value Measurements

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

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 as of March 31, 2021 and December 31, 2020 were 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. Within restricted cash, the Company also maintains certificates of deposit

that secure certain letters of credit issued for workers’ compensation claim reserves and certain airport authorities. 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 determined to be Level 3 measurement. The primary inputs to the warrant valuation are driven by FGHI’s share price as well as assumptions about the expected share price volatility and estimated term the warrants will remain outstanding. These inputs are largely impacted by internal forecasts, discount rates and other internal assumptions as well as assumptions used by the participating underwriters to establish the initial offering price related to the Company’s IPO, which were unobservable as of March 31, 2021. For the three months ended March 31, 2021, the Company’s warrant liability increased by $21 million, which was driven by mark to market adjustments of $20 million and $1 million of additional warrants issued in conjunction with PSP2 funding obtained during the three months ended March 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):


	March 31, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Secured debt:
Pre-delivery credit facility	$	133	$	131	$	141	$	139
Floating rate building note	18		18		18		18
Treasury Loan	150		153		150		148
Unsecured debt:

Affinity card advance purchase of mileage credits	15		14		15		11
PSP Promissory Note	45		35		33		25
Total debt	$	361	$	351	$	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 financial statements (in millions):



	Fair Value Measurements as of March 31, 2021
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	429	$	429	$	—	$	—
Warrants	$	39	$	—	$	—	$	39


	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 any of the above levels during the three months ended March 31, 2021 and the year ended December 31, 2020.

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ (91,000)	$ (64,000)
Other comprehensive loss
Unrealized loss from cash flows hedges net of adjustment for dedesignation of fuel hedges, net of tax	0	(26,000)
Other comprehensive income (loss)	0	(26,000)
Comprehensive income (loss)	$ (91,000)	$ (90,000)

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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