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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
Or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 001-40304
Frontier Group Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware46-3681866
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
4545 Airport Way
Denver, CO 80239
(720) 374-4200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
    
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of exchange on which registered
Common Stock, $0.001 par valueULCCThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes ☒    No ☐
Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        Yes ☒     No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.    ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes     No ☒
The registrant had outstanding 216,012,632 shares of common stock, par value of $0.001, as of November 5, 2021.



TABLE OF CONTENTS
Page
1


PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(unaudited, in millions, except for share and per share data)

September 30, 2021December 31, 2020
Assets
Cash and cash equivalents$802 $378 
Accounts receivable, net49 28 
Supplies, net29 18 
Other current assets212 226 
Total current assets1,092 650 
Property and equipment, net187 176 
Operating lease right-of-use assets2,491 2,250 
Pre-delivery deposits for flight equipment196 224 
Aircraft maintenance deposits92 82 
Intangible assets, net29 29 
Other assets165 143 
Total assets$4,252 $3,554 
Liabilities and stockholders’ equity
Accounts payable$90 $71 
Air traffic liability252 135 
Frequent flyer liability12 13 
Current maturities of long-term debt, net85 101 
Current maturities of operating leases450 416 
Other current liabilities349 267 
Total current liabilities1,238 1,003 
Long-term debt, net280 247 
Long-term operating leases2,053 1,848 
Long-term frequent flyer liability43 50 
Other long-term liabilities62 96 
Total liabilities3,676 3,244 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock, $0.001 par value per share, with 215,474,482 and 199,438,098 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively
  
Additional paid-in capital374 60 
Retained earnings212 261 
Accumulated other comprehensive income (loss)(10)(11)
Total stockholders’ equity576 310 
Total liabilities and stockholders’ equity$4,252 $3,554 

See Notes to Condensed Consolidated Financial Statements

2


FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(unaudited, in millions, except for per share data)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Operating revenues:
Passenger$610 $237 $1,408 $950 
Other20 8 43 33 
Total operating revenues630 245 1,451 983 
Operating expenses:
Aircraft fuel166 62 389 281 
Salaries, wages and benefits161 128 454 406 
Aircraft rent128 115 399 266 
Station operations108 63 285 182 
Sales and marketing33 17 80 62 
Maintenance materials and repairs29 17 82 59 
Depreciation and amortization10 8 28 23 
CARES Act credits(72)(97)(295)(188)
Other operating24 13 60 73 
Total operating expenses587 326 1,482 1,164 
Operating income (loss)43 (81)(31)(181)
Other income (expense):
Interest expense(4)(2)(31)(7)
Capitalized interest1 1 3 5 
Interest income and other1  1 4 
Total other income (expense)(2)(1)(27)2 
Income (loss) before income taxes41 (82)(58)(179)
Income tax expense (benefit)18 (31)(9)(81)
Net income (loss)$23 $(51)$(49)$(98)
Earnings (loss) per share:
Basic$0.10 $(0.26)$(0.23)$(0.49)
Diluted$0.10 $(0.26)$(0.23)$(0.49)


See Notes to Condensed Consolidated Financial Statements
3


FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(unaudited, in millions)
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income (loss)$23 $(51)$(49)$(98)
Unrealized gains (losses) and amortization from cash flow hedges net of adjustment for de-designation of fuel hedges, net of deferred tax benefit/(expense) of less than $(1) million, $(4) million, less than $(1) million, and $5 million, respectively (Note 5)
 7 1 (17)
Other comprehensive income (loss) 7 1 (17)
Comprehensive income (loss)$23 $(44)$(48)$(115)

















See Notes to Condensed Consolidated Financial Statements
4


FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in millions)
Nine Months Ended September 30,
20212020
Cash flows from operating activities:
Net loss$(49)$(98)
Deferred income taxes(9)(9)
Depreciation and amortization28 23 
Gains recognized on sale-leaseback transactions(55)(37)
Warrant liability unrealized loss22 1 
Stock-based compensation8 6 
Amortization of swaption cash flow hedges, net of tax1  
Cash flows for derivative instruments, net (6)
Cash flows from operating leases 17 
Changes in operating assets and liabilities:
Accounts receivable(15)47 
Supplies and other current assets13 (104)
Aircraft maintenance deposits(14)(12)
Other long-term assets(24)(34)
Accounts payable16 36 
Air traffic liability117 (86)
Other liabilities57 (110)
Cash provided by (used in) operating activities96 (366)
Cash flows from investing activities:
Capital expenditures(20)(6)
Pre-delivery deposits for flight equipment, net of refunds28 22 
Other(4)(1)
Cash provided by investing activities4 15 
Cash flows from financing activities:
Proceeds from issuance of debt115 226 
Principal repayments on debt(97)(111)
Proceeds from sale-leaseback transactions43 34 
Proceeds from initial public offering, net of offering costs and underwriting discounts266  
Minimum tax withholdings on share-based awards(3)(1)
Cash provided by financing activities324 148 
Net increase (decrease) in cash, cash equivalents and restricted cash424 (203)
Cash, cash equivalents and restricted cash, beginning of period378 768 
Cash, cash equivalents and restricted cash, end of period$802 $565 




See Notes to Condensed Consolidated Financial Statements
5

FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited, in millions, except for share data)
Nine Months Ended September 30, 2020
Common StockAdditional
paid-in
capital
Retained
earnings
Accumulated other comprehensive income (loss)Total
SharesAmount
Balance at December 31, 2019199,242,854 $ $52 $486 $4 $542 
Net loss— — — (64)— (64)
Unrealized loss from cash flow hedges net of adjustment for de-designation of fuel hedges, net of tax (Note 5)— — — — (26)(26)
Stock-based compensation— — 2 — — 2 
Balance at March 31, 2020199,242,854 $ $54 $422 $(22)$454 
Net income— — — 17 — 17 
Shares issued in connection with vesting of restricted stock units46,892 — — — — — 
Shares withheld to cover employee taxes on vested restricted stock units(13,604)— — — — — 
Unrealized gain from cash flow hedges, net of tax— — — — 2 2 
Stock-based compensation— — 2 — — 2 
Balance at June 30, 2020199,276,142 $ $56 $439 $(20)$475 
Net loss— — — (51)— (51)
Restricted stock issued99,408 — — — — — 
Shares issued in connection with vesting of restricted stock units73,986 — — — — — 
Shares withheld to cover employee taxes on vested restricted stock units(21,394)— — — — — 
Unrealized gain from cash flow hedges, net of tax— — — — 7 7 
Stock-based compensation— — 2 — — 2 
Balance at September 30, 2020199,428,142 $ $58 $388 $(13)$433 













See Notes to Condensed Consolidated Financial Statements
6

FRONTIER GROUP HOLDINGS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Continued)
(unaudited, in millions, except for share data)

Nine Months Ended September 30, 2021
Common StockAdditional
paid-in
capital
Retained
earnings
Accumulated other comprehensive income (loss)Total
SharesAmount
Balance at December 31, 2020199,438,098 $ $60 $261 $(11)$310 
Net loss— — — (91)— (91)
Shares issued in connection with vesting of restricted stock units 505,438 — — — — — 
Shares withheld to cover employee taxes on vested restricted stock units (146,490)— (3)— — (3)
Restricted stock unit repurchases(20,368)— — — — — 
Stock option exercises640,121 — — — — — 
Stock-based compensation— — 3 — — 3 
Balance at March 31, 2021200,416,799 $ $60 $170 $(11)$219 
Net income— — — 19 — 19 
Shares issued in connection with vesting of restricted stock units18,259 — — — — — 
Shares withheld to cover employee taxes on vested restricted stock units(8,015)— — — — — 
Amortization of swaption cash flow hedges, net of tax— — — — 1 1 
Stock-based compensation— — 2 — — 2 
Issuance of common stock upon initial public offering, net of offering costs, underwriting discounts and commissions15,000,000 — 266 — — 266 
Payroll Support Program warrants (Note 2)— — 43 — — 43 
Balance at June 30, 2021215,427,043 $ $371 $189 $(10)$550 
Net income— — — 23 — 23 
Shares issued in connection with vesting of restricted stock units74,140 — — — — — 
Shares withheld to cover employee taxes on vested restricted stock units(32,546)— — — — — 
Stock option exercises5,845 — — — — — 
Stock-based compensation— — 3 — — 3 
Balance at September 30, 2021215,474,482 $ $374 $212 $(10)$576 
See Notes to Condensed Consolidated Financial Statements
7



FRONTIER GROUP HOLDINGS, INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)


1. Summary of Significant Accounting Policies
Basis of Presentation
The 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.
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.
The accompanying condensed consolidated financial statements include the accounts of the Company and reflect all normal recurring adjustments which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company for the respective periods presented. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for Form 10-Q. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements of the Company and notes thereto included in the Company's final prospectus, dated March 31, 2021, and filed with the SEC pursuant to Rule 424(b) on April 2, 2021.
The interim results reflected in the unaudited condensed consolidated financial statements are not necessarily indicative of the results that may be expected for other interim periods or for the full year. The air transportation business is subject to significant seasonal fluctuations and is volatile and highly affected by economic cycles and trends. In addition, the Company experienced significant impacts from the novel strain of coronavirus (“COVID-19”) pandemic during the three and nine months ended September 30, 2021, as well as during the comparable periods in 2020.
Use of Estimates
The 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.
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
8



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

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.
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 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.

2. 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 three and nine months ended September 30, 2021 and the comparable prior year periods. Although the Company has seen significant recovery of demand through the quarter ended September 30, 2021 as compared to the corresponding prior year period, the Company is unable to predict the future spread of COVID-19, including future variants of the virus such as the recent Delta variant, as well as efficacy and adherence rates of vaccines and related boosters 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 quarter ending September 30, 2021, due to the rise in cases from the Delta variant. 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 of September 30, 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
9



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

through the fourth 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 (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 periods it was intended to support payroll, including $92 million net of $1 million in deferred financing costs for the three months ended September 30, 2020; and the full $178 million net of $1 million in deferred financing costs for the nine months ended September 30, 2020, 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 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 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 September 30, 2021. The Company recognized the full $143 million PSP2 Grant, which had been fully recognized prior to the three months ended September 30, 2021, during the nine months ended September 30, 2021, net of deferred financing costs within CARES Act credits in the Company’s condensed 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 September 30, 2021. Of the $135 million received under the PSP3 Grant, $72 million and the full $135 million was recognized during the three and nine months ended September 30, 2021, respectively, within CARES Act credits in the Company’s condensed 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 September 30, 2021 and December 31, 2020, the Company had borrowed $150 million under the Treasury Loan, for which the right to draw any further funds lapsed in May 2021.
10



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

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 one year after the Treasury Loan 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 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 the later of April 1, 2023 or one year after the Treasury Loan 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, the PSP3 Promissory Note (collectively, the “PSP Promissory Notes”) and the Treasury Loan, and pursuant to the stipulations set forth within the CARES Act, the Company issued to the Treasury warrants to purchase shares of common stock of FGHI, which have a five-year term and are 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 condensed 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 condensed consolidated balance sheets, with periodic mark to market remeasurements being included in interest expense 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 condensed 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 condensed consolidated balance sheet. The Company recorded $22 million in mark to market adjustments during the nine months ended September 30, 2021, and $1 million during each of the three and nine months ended September 30, 2020, to interest expense within the Company’s condensed consolidated statements of operations.
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. If the gross receipts test is met in any quarter, wages earned in the following quarter automatically qualify for the credit and as a result of the increase in revenues during the second and third quarters of 2021, the Company did not qualify for any additional CARES Employee Retention Credits. During the nine months ended September 30, 2021 and the three and nine months ended September 30, 2020, the Company recognized $17 million, $6 million and $11 million, respectively, related to the CARES Employee Retention Credit within CARES Act credits in the Company’s condensed consolidated statements of operations and within other current assets on the Company’s condensed consolidated balance sheets.
11



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

Income Taxes
The Company's effective tax rate for the nine months ended September 30, 2021 was a benefit of 15.5%, compared to a benefit of 45.3% for the nine months ended September 30, 2020. The effective tax rate for the nine months ended September 30, 2021 is lower than 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, PSP3, and the Treasury Loan, partially offset by excess tax benefits associated with the Company’s stock-based compensation arrangements. The effective tax rate for the nine months ended September 30, 2020 was favorably impacted 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 14% permanent rate benefit. In addition, the prior year rate was also favorably impacted by the inclusion of the tax deduction for the payments made to FAPAInvest, LLC, as described further in Note 9. The resulting effective tax rates for the three months ended September 30, 2021 and 2020 reflect the updates made to the annual estimated effective tax rates for 2021 and 2020, respectively, and the impact from the discrete items.

3. Revenue Recognition
As of December 31, 2020, the Company’s air traffic liability balance was $135 million. During the nine months ended September 30, 2021, 84% of the air traffic liability as of December 31, 2020 has been recognized as passenger revenue. As of September 30, 2021, the Company’s current air traffic liability is $252 million, of which $72 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 and nine months ended September 30, 2021 and 2020, the Company recognized $14 million, $31 million, $22 million and $113 million of revenue, respectively, in 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,
12



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

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 September 30,Nine Months Ended September 30,
2021202020212020
Passenger revenues:
Fare$254 $103 $568 $446 
Non-fare passenger revenues:
Baggage131 48 321 174 
Service fees164 61 368 232 
Seat selection47 16 118 65 
Other14 9 33 33 
Total non-fare passenger revenue356 134 840 504 
Total passenger revenues610 237 1,408 950 
Other revenues20 8 43 33 
Total operating revenues$630 $245 $1,451 $983 
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 September 30,Nine Months Ended September 30,
2021202020212020
Domestic$595 $243 $1,376 $937 
Latin America35 2 75 46 
Total operating revenues$630 $245 $1,451 $983 
During the three and nine months ended September 30, 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
13



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

Company’s tangible assets consist primarily of flight equipment, which are mobile across geographic markets. Accordingly, assets are not allocated to specific geographic regions.

4. Other Current Assets
Other current assets consist of the following (in millions):
September 30, 2021December 31, 2020
Prepaid expenses$14 $24 
Income tax receivable161 161 
Passenger and other taxes receivable10 26 
Other27 15 
Total other current assets$212 $226 

5. Financial Derivative Instruments and Risk Management
The Company is exposed to variability in jet fuel prices. Aircraft fuel generally represents the Company’s largest operating expense. 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 enters into derivative contracts in order to limit exposure to the fluctuations in jet fuel prices. 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. Although 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 is exposed to interest rate risk through aircraft lease contracts for the time period between agreement of terms and commencement of the lease, where portions of the rental payments are adjusted and become fixed based on the seven- or nine-year swap rate. As part of its risk management program, the Company enters into contracts in order to limit the exposure to fluctuations in interest rates. During the three and nine months ended September 30, 2021, the Company did not enter into any swaps and during the three and nine months ended September 30, 2020, the Company paid no upfront premiums and $4 million, respectively, for the option to enter into and exercise cash settled swaps with a forward starting effective date.
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 accumulated other comprehensive income/loss (“AOCI/L”), a component of stockholders’ equity on the condensed 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 in the period that the jet fuel subject to hedging is consumed for its fuel derivative instruments. 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 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
14



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

consumption declines. The impacts of the de-designation in the Company’s results of operations are reflected in the tables below.
As of September 30, 2021, the Company had no fuel derivative contracts or interest rate hedges outstanding.
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 condensed consolidated balance sheets and there were none as of September 30, 2021 and these assets and liabilities were less than $1 million as of December 31, 2020.
The following table summarizes the effect of fuel and interest rate derivative instruments reflected in aircraft fuel and rent expense, respectively, within the condensed consolidated statements of operations (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Derivatives designated as cash flow hedges
Losses on fuel derivative contracts$ $(11)$ $(24)
Amortization of swaption cash flow hedges, net of tax$ $ $(1)$ 
Derivatives not designated as cash flow hedges
Losses on fuel derivative contracts$ $(1)$ $(56)
15



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

The following table presents the net of tax impact of the overall effectiveness of derivative instruments designated as cash flow hedging instruments within the condensed consolidated statements of comprehensive income (loss) (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Derivatives designated as cash flow hedges
Fuel derivative contract gains (losses) – net of tax impact$ $7 $ $(18)
Fuel derivative losses reclassified to earnings due to de-designation – net of tax impact   11 
Interest rate derivative contract losses – net of tax impact   (10)
Amortization of swaption cash flow hedges, net of tax  1  
Total$ $7 $1 $(17)

As of September 30, 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 condensed consolidated statements of operations over the aircraft lease term of the hedging instrument.

6. Other Current Liabilities
Other current liabilities consist of the following (in millions):
September 30, 2021December 31, 2020
Salaries, wages and benefits$84 $97 
Current portion of phantom equity units (Note 9)26  
Station obligations57 33 
Leased aircraft return costs24 20 
Aircraft maintenance28 22 
Passenger and other taxes and fees payable68 41 
Fuel liabilities27 6 
Warrant liability 18 
Other current liabilities35 30 
Total other current liabilities$349 $267 

16



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

7. Debt
The Company’s debt obligations are as follows (in millions):
September 30, 2021December 31, 2020
Secured debt:
Pre-delivery credit facility(1)
$126 $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)
66 33 
Total debt375 357 
Less current maturities of long-term debt, net(85)(101)
Less long-term debt acquisition costs and other discounts(10)(9)
Long-term debt, net$280 $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 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.
(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%. The Company could not draw any further funds from its Treasury Loan facility during the three months ended September 30, 2021, as the right to draw any further funds lapsed as of May 2021, and the Company did not draw any further funds from its Treasury Loan facility during the nine months ended September 30, 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. 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, 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 condensed consolidated statements of operations over the term of the 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.
17



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

(5)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 condensed consolidated statements of operations over the term of the loan.

Cash payments for interest related to debt was $7 million and $6 million for the nine months ended September 30, 2021 and 2020, respectively.
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 September 30, 2021 and December 31, 2020, the Company did not have any outstanding letters of credit that were drawn upon.
As of September 30, 2021, future maturities of debt are payable as follows (in millions):
September 30, 2021
Remainder of 2021$5 
2022106 
202333 
2024 
2025150 
Thereafter81 
Total debt principal payments$375 

8. 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.
Aircraft
As of September 30, 2021, the Company leased 112 aircraft, all of which are under operating leases with remaining terms ranging from three months to 12 years. In addition, as of September 30, 2021, the Company leased 17 spare engines, which are all under operating leases with the remaining terms for engines included within right-of-use asset and lease liability ranging from four months to 11 years.
During the three and nine months ended September 30, 2021 and 2020, the Company executed sale-leaseback transactions with third-party lessors for five, thirteen, four and seven new Airbus A320 family aircraft, respectively. Additionally, the Company did not complete a sale-leaseback transaction for any engines during the three months ended September 30, 2021, and completed a sale-leaseback transaction for one engine during each of the nine months ended September 30, 2021 and the three and nine months ended September 30, 2020. 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 $19 million, $55 million, $18 million and $37 million during the
18



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

three and nine months ended September 30, 2021 and 2020, respectively, which are included as a component of other operating expenses within the condensed consolidated statements of operations. During the nine months ended September 30, 2021 and 2020, the Company acquired, through new operating leases, aircraft and engines totaling $480 million and $218 million, respectively, which are included in operating lease right-of-use assets on the condensed consolidated balance sheets.
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 to five years. The other included the return of $17 million in previously unrecoverable maintenance reserves for two aircraft. The remaining unamortized amount is included within the Company’s right-of-use assets as a lessor incentive as of September 30, 2021, as it was negotiated as a combined contract.
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, while the two A320 aircraft are to be returned at their originally agreed upon return dates in December 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 $1 million and $10 million charge included as a component of rent expense within the condensed consolidated statements of operations for the three and nine months ended September 30, 2021, respectively, related to the accelerated rent and lease return obligations of the A319 aircraft returned early.
Aircraft Rent Expense and Maintenance Obligations
During the three and nine months ended September 30, 2021 and 2020, aircraft rent expense was $128 million, $399 million, $115 million and $266 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 for maintenance-related reserves that were deemed non-recoverable was less than $1 million for each of the three and nine months ended September 30, 2021, and less than $1 million and $1 million for the three and nine months ended September 30, 2020, respectively. The portion of supplemental rent expense related to probable lease return condition obligations was $16 million, $41 million, $7 million and $17 million for three and nine months ended September 30, 2021 and 2020, respectively.
Additionally, certain of the Company’s aircraft and spare engine 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 September 30, 2021 and December 31, 2020, the Company had aircraft maintenance deposits that are expected to be recoverable of $103 million and $82 million, respectively, on its condensed consolidated balance sheets of which $11 million and less than $1 million, respectively, are included in accounts receivable, net as the eligible maintenance has been performed. The remaining $92 million and $82 million are included within aircraft maintenance deposits on the condensed consolidated balance sheets as of September 30, 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 September 30, 2021, fixed maintenance reserve payments for aircraft and spare engines, including estimated amounts for contractual price escalations, were expected to be approximately $1 million for the remainder of 2021 and $3 million per year for the years 2022 through 2025 and $12 million thereafter before consideration of reimbursements.
19



FRONTIER GROUP HOLDINGS, INC.
Notes to Consolidated Financial Statements (Continued)
(unaudited)

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 September 30, 2021, the remaining lease terms vary from one month to twelve 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 condensed 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 condensed consolidated balance sheets as a right-of-use asset and liability. The remaining lease terms range from one month to seven years as of September 30, 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 condensed consolidated statements of operations. These deferrals changed operating cash flows and unfavorably impacted the Company’s results of operations by $2 million and $22 million, net, for the three and nine months ended September 30, 2021, respectively, which included a $2 million and $31 million unfavorable impact to aircraft rent within the condensed consolidated statements of operations for the same periods, respectively. There was no impact to station operations for the three months ended September 30, 2021, and a $9 million favorable impact to station operations within the condensed consolidated statements of operations resulting from additional deferrals granted for the nine months ended September 30, 2021, which will be recognized throughout the rest of 2021 and future years as such amounts are paid. The impact of the deferrals on the comparable prior year periods was an unfavorable $8 million and a favorable $64 million to operating cash flows for the three and nine months ended September 30, 2020, respectively, which included a $7 million unfavorable and $50 million favorable impact to aircraft rent and a $1 million unfavorable and $