ULCC 10-K & 10-Q changes, risk factors and insider trading

Our business is labor intensive. We require large numbers of pilots, flight attendants, maintenance technicians and other personnel. We compete against other airlines for pilots, mechanics and other skilled labor and certain U.S. airlines offer wage and benefit packages exceeding ours. The airline industry is currently experiencing certain shortages of qualified personnel. As is common with most of our competitors, we have faced considerable turnover of our employees. These factors, as well as our network seasonality, have caused us recently to maintain a larger workforce than is immediately necessary for our planned operations in order to maintain network reliability and support planned growth in light of the challenges of hiring and retaining employees under current economic conditions, including the current worker shortage impacting certain sectors of the U.S. labor market. As a result of the foregoing, there can be no assurance that we will be able to attract or retain qualified personnel and we may be required to increase wages and/or benefits in order to do so. Furthermore, we cannot predict what policies we may elect to or be required to implement in the future, or the effect thereof on our business, which could cause us to lose or experience difficulties hiring qualified personnel. If we are unable to hire, train and retain qualified employees, our business could be harmed.

As of December 31, 20242025 and 2023,2024, we had no outstanding fuel cash flow hedges for future fuel consumption and, therefore, had no material impact within our consolidated statements of operations for the years ended December 31, 20242025 and 2023.2024. We cannot assure you that any potential future fuel hedging program will be effective or that we will maintain a fuel hedging program at all. Even if we are able to hedge portions of our future fuel requirements, we cannot guarantee that our hedge contracts will provide an adequate level of protection against increased fuel costs or that the counterparties to our hedge contracts will be able to perform. Future fuel hedge contracts could contain margin funding requirements that could require us to post collateral to counterparties in the event of a significant drop in fuel prices in the future. Additionally, our ability to realize the benefit of declining fuel prices may be delayed by the impact of any fuel hedges in place, and we may record significant losses on fuel hedges during periods of declining fuel prices. A failure of our fuel hedging strategy, significant margin funding requirements, overpaying for fuel through the use of hedging arrangements or our failure to maintain a fuel hedging program could prevent us from adequately mitigating the risk of fuel price increases and could have a material adverse effect on our business, results of operations and financial condition.

AsOn aSeptember result9, of2021, the U.S. Sustainable Aviation Fuel Grand Challenge launched(“ inSAF 2021Grand andChallenge”) was launched, built upon by the FAA’s Aviation Climate Action Plan published by the FAA on November 9,in 2021, which outlines plans to scale up the production of Sustainable Aviation Fuel (SAF”). On January 13, 2025, the SAF Grand Challenge 2021-2024 Progress report was released, which highlighted goals of reducing gas emission by 50%, producing 3 billion gallons of SAF by 2030, and aimsmeeting to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditionaldomestic aviation fuel with SAFdemand by 2050, industry demand for SAF had grown.2050. Currently, industrial production of SAF is small in scale and inadequate to meetmeeting growing industry demand,demand and while additional production capacity is expected to come online in coming years, we anticipate that competition for SAF among industry participants will remain intense. As a result, we may need to pay a significant premium for SAF above the price we would pay for conventional jet fuel. Certain existing or potential future agreements pertain to SAF production from facilities that are planned but not yet operational, and which may utilize technology that has not been proven at commercial scale. There is no assurance that these facilities will be built or that they will meet contracted production timelines and volumes. In the event that the SAF is not delivered on schedule or in sufficient volumes, there can be no assurance that we will be able to source a supply of SAF sufficient to meet our stated goals, or that we will be able to do so on favorable economic terms.

We are subject to extensive regulation by the FAA, the DOT, the TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which could cause us to incur increased costs and adversely affect our business, results of operations and financial condition.

In October 2022, the DOT issued a Notice of Proposed Rulemaking (“NPRM”) which would require airlines and travel agents to increase disclosure of bag fees, change and cancellation fees and family seating fees during the ticket purchase process in an effort to improve the transparency of airline pricing. The final rule was published in April 2024.2024, Thehowever the rule is being challenged by airline associations and certain individual airlines and, in JulyOctober 2024, the U.S. Court of Appeals for2025, the Fifth Circuit granted athe motionairlines’ request for stayrehearing. ofAs such, the final rule pendingis review.under further review and any potential impacts are still being evaluated.

Also, in August 2024, the DOT issued a NPRM regarding family seating in air transportation which would require airlines to seat children aged 13 and under next to at least one accompanying adult at no additional cost beyond the fare, subject to limited exceptions. WeThe areDOT is still evaluating the impacts of this proposed rule.

We may also be impacted by regulations affecting certain of our major commercial partners, including our co-branded credit card partner or our loyalty program. For example, there has been bipartisan legislation proposed in the U.S. Congress, referred to as the Credit Card Competition Act, designed to increase credit card transaction routing options for merchants which, if enacted, could result in a reduction of the fees levied on credit card transactions. If this legislation or any similar legislation or regulation wereis enacted, it could fundamentally alter the profitability of our agreement with our co-branded credit card partner and the benefits we provide to our consumers through our co-branded credit card. Additionally, in May 2024, the DOT and the Consumer Financial Protection Bureau (the “CFPB”) held a joint hearing on airline and credit card rewards. In September 2024, the DOT launched an inquiry into certain airline loyalty programs to investigate potential competition or consumer protection issues in airlines’ administration of these programs and the CFPB recently issued a circular to other law enforcement agencies warning that credit card issuers and their parties could violate federal law by devaluing rewards points and airline miles. Draft legislation introduced in the U.S. Congress, referred to as the Protect Your Points Act, similarly aims to regulate the management of frequent flyer programsprogram co-branded credit cards. If regulatory or legislative efforts to impose restrictions on airline loyalty programs wereare successful, they could materially reduce the revenues we derive from our FRONTIER Miles loyalty program and adversely impact our results of operations.

The FAA has issued final regulations governing pilot rest periods and work hours for all passenger airlines certificatedcertified under Part 121 of the Federal Aviation Regulations (“FAR”). The rule known as FAR Part 117, which became effective January 4, 2014, impacts the required amount and timing of rest periods for pilots between work assignments and modifies duty and rest requirements based on the time of day, number of scheduled segments, time zones and other factors. In addition, the U.S. Congress enacted a law and the FAA issued regulations requiring U.S. airline pilots to have a minimum number of hours as a pilot in order to qualify for an Air Transport Pilot certificate, which all pilots on U.S. airlines must obtain. In October 2022, the FAA issued a final rule mandating rest periods of at least 10 consecutive hours for flight attendants who are scheduled for a duty period of 14 hours or less and prohibiting the reduction of the rest period under any circumstances, which have impacted and will continue to impact our scheduling flexibility. Compliance with these rules may increase our costs, while failure to remain in full compliance with these rules may subject us to fines or other enforcement action. FAR Part 117 and the minimum pilot hour requirements may also reduce our ability to meet flight crew staffing requirements. We cannot assure you that compliance with these and other laws, regulations, orders, rulings and guidance will not have a material adverse effect on our business, results of operations and financial condition.

Our ability to operate as an airline is dependent on our obtaining and maintaining authorizations issued to us by the DOT and the FAA. The FAA from time to time issues directives and other mandatory orders relating to, among other things, operating aircraft, the grounding of aircraft, maintenance and inspection of aircraft, installation of new safety-related items, and removal and replacement of aircraft parts that have failed or may fail in the future. These requirements can be issued with little or no notice, can impact our ability to efficiently or fully utilize our aircraft, and could result in the temporary grounding of aircraft types altogether. A decision by the FAA to ground, or require time-consuming inspections of or maintenance on, our aircraft, for any reason, could negatively affect our business, results of operations and financial condition. Federal law requires that air carriers operating scheduled service be continuously “fit, willing and able” to provide the services for which they are licensed. Our “fitness” is monitored by the DOT, which considers managerial competence, operations, finances and compliance record. In addition, under federal law, we must be a U.S. citizen (as determined under applicable law). Please see “Business—Foreign Ownership”. While the DOT has seldom revoked a carrier’s certification for lack of fitness, such an occurrence would render it impossible for us to continue operating as an airline. The DOT may also institute investigations or administrative proceedings against airlines for violations of regulations.

International routes are regulated by air transport agreements and related agreements between the United States and foreign governments. Our ability to operate international routes is subject to change, as the applicable agreements between the United States and foreign governments may be amended from time to time. Our access to new international markets may be limited by the applicable air transport agreements between the United States and foreign governments and our ability to obtain the necessary authority from the United States and foreign governments to fly the international routes. In addition, our operations in foreign countries are subject to regulation by foreign governments and our business may be affected by changes in law and future actions taken by such governments, including granting or withdrawal of government approvals, airport slots and restrictions on competitive practices. We are subject to numerous foreign regulations in the countries outside the United States where we currently provide service. If we are not able to comply with this complex regulatory regime, our business could be significantly harmed. Please see “Business—Government RegulationRegulation.”.

For the years ended December 31, 20242025 and 2023,2024, we generated non-fare passenger revenues of $2,248$2,117 million and $2,232$2,248 million, respectively. Our non-fare passenger revenue consists primarily of revenue generated from air travel-related services such as service fees, baggage fees, seat selection fees and other passenger-related revenue and is a component of passenger revenue within our consolidated statements of operations. The DOT has rules governing many facets of the airline-consumer relationship including, for instance, unfair or deceptive practices and unfair methods of competition including undisclosed display bias, lengthy tarmac delays, chronically delayed flights, airline advertising and marketing practices, codeshare disclosure, denied boarding compensation, ticket refunds, baggage liability, contracts of carriage, customer service commitments, consumer notices and disclosures, customer complaints and transportation of passengers with disabilities.competition. The DOT periodically audits airlines to determine whether such airlines have violated any of the DOT rules. The DOT has conducted audits of our business and routine post-audit investigations of our business are ongoing. For example, in 2023, the DOT sent us a request for information to assist in its investigation into whether we cared for our customers as required by law during Winter Storm Elliott, including providing adequate customer service assistance, prompt flight status notifications, and proper and timely refunds. The DOT concluded the investigation related to Winter Storm Elliott during 2025 with no material financial impact to our business. We arewill continue to fully cooperating with any requests from the DOT request.DOT. If the DOT determines that we are not, or have not been, in compliance with these rules or if we are unable to remain compliant, the DOT may subject us to fines or other enforcement action.

The DOT may also impose additional consumer protection requirements, including adding requirements to modify our websites and computer reservations system, which could have a material adverse effect on our business, results of operations and financial condition. The U.S. Congress and the DOT have also examined the increasingly common airline industry practice of unbundling the pricing of certain products and ancillary services, a practice that is a core component of our business strategy.services. For example, in December 2024, a U.S. Senate subcommittee held a bipartisan hearing on ancillary fees and unbundled pricing practices, and numerous airline executives, including our Senior Vice President, Chief Commercial Officer, were called to testify. IfHowever, if new laws or regulations are adopted that make unbundling of airline products and services impermissible, or more cumbersome or expensive, or if new taxes are imposed on non-fare passenger revenues, our business, results of operations and financial condition could be harmed. Congressional, federal agency and other government scrutiny may also change industry practice or the public’s willingness to pay for non-fare ancillary services. For a discussion of DOT regulations and rulemaking efforts, please see “—We are subject to extensive regulations by the FAA, the DOT, the TSA, the CBP and other U.S. and foreign governmental agencies, compliance with which would cause us to incur increased costs and adversely affect our business, results of operations and financial condition.”

We are also subject to the examination of our tax returns and other tax matters by the U.S. Internal Revenue Service (“IRS”) and other tax authorities. Most recently, followingFollowing a federal excise tax audit by the IRS in December 2024 covering the first quarter of 2021 to the second quarter of 2023, in June 2025, we received a preliminaryrevised assessment in the amount of $149$133 million related to the applicability of federal excise tax to certain optional ancillary products and services. We established reserves for certain fees subject to the assessment where we believe a loss for this matter is probable and estimable. We intendare toactively contestcontesting the assessment.assessment Thisand initialour assessmentappeal is ongoing,pending notwith currentlythe deemed final and subject to further determinations.IRS. There can be no assurance as to the outcome of these examinations, and we could face additional tax liability, including interest and penalties, which could adversely affect our business, results of operations and financial condition.

Efforts to transition to a low-carbon future have increased the focus by global, national and regional regulators on climate change and GHG emissions, including CO2 emissions. In particular, ICAO has adopted rules, including those pertaining to CORSIA, which will require us to address the growth in CO2 emissions of a significant majority of our international flights. For more information on CORSIA, see “Business—Government Regulation—Environmental RegulationRegulation.”.

In the event that CORSIA does not come into force as expected or is terminated for whatever reason, we and other airlines could become subject to an unpredictable and inconsistent array of national or regional emissions restrictions, creating a patchwork of complex regulatory requirements that could affect global competitors differently without offering meaningful aviation environmental improvements. Concerns over climate change are likely to result in continued attempts by municipal, state, regional and federal agencies, as well as international bodies, to adopt requirements or change business environments related to aviation that, if successful, may result in increased costs to the airline industry and us. In addition, several countries and U.S. states have adopted, or are considering adopting, programs, including new taxes, to regulate domestic GHG emissions. For example, in October 2023, California became the first state to sign two climate disclosure lawslaws, whichif willthey survive ongoing legal challenge, require certain companies doing business in CaliforniaCalifornia, and above a certain threshold to disclose their GHG emissions and climate-related financial risks. Other states and jurisdictions in which we operate may adopt similar, divergent, or more stringent laws. Certain airports have adopted, and others could in the future adopt, GHG emission or climate-related goals that could impact our operations or require us to make changes or investments in our infrastructure.

In addition, in January 2021, the EPA adopted GHG emission standards for new aircraft engines, which are aligned with the 2017 ICAO aircraft engine GHG emission standards. Like the ICAO standards, the final EPA standards for new aircraft engines would not apply retroactively to engines on in-service aircraft. Pursuant to the Clean Air Act, the FAA issued a final rule in February 2024 to implement these standards, introducing new fuel efficiency certification regulations. These regulationsregulations, which took effect in April 2024, apply to airplanes manufactured after January 1, 2028, as well as to uncertified large business and commercial jet aircrafts. The new requirements took effect in April 2024.

U.S. commitments announced during the April 2021 Leaders’ Summit on Climate include working with other countries on a vision toward reducing the aviation sector’s emissions in a manner consistent with the 2050 net-zero emissions goal, continued participation in CORSIA and development of SAF. On September 9, 2021, the Sustainable Aviation Fuel Grand Challenge was launched, built upon by the FAA’s Aviation Climate Action Plan published in 2021 and updated in 2024, which outlines plans to scale up the production of SAF, aiming to reduce GHG emissions from aviation by 20% by 2030 and to replace all traditional aviation fuel with SAF by 2050. Whether these U.S. or international goals will be achieved and the potential effects on our business cannot be predicted at this time. If demand for SAF increases beyond the current capacity of SAF production efforts, we may need to pay a significant premium for SAF above the cost of traditional fuel.

Growing recognition among consumers of the dangers of climate change may mean some customers choose to fly less frequently or fly on an airline they perceive as operating in a manner that is more sustainable to the climate or generally.climate. Business customers may choose to use alternatives to travel, such as virtual meetings and workspaces. Greater development of high-speed rail in markets now served by short-haul flights could provide passengers with lower-carbon alternatives to flying with us. Our collateral to secure loans, in the form of aircraft, spare parts, airport slots and loyalty and brand assets, could lose value as customer demand shifts and economies move to low-carbon alternatives, which may increase our financing costs. Additionally, climate change-related litigation and investigations have increased in recent years and any claims or investigations against us could be costly to defend and our business could be adversely affected by the outcome.

We are subject to increasingly stringent federal, state, local and foreign laws, regulations and ordinances relating to the protection of the environment and noise reduction, including those relating to air emissions, discharges (including storm water discharges) to surface and subsurface waters, safe drinking water and the use, management, disposal and release of, and exposure to, hazardous waste, materials and chemicals. We are or may be subject to new or proposed laws and regulations that may have a direct effect (or indirect effect through our third-party specialists or airport facilities at which we operate) on our operations. Any such existing, future, new or potential laws and regulations, including in light of the results of the November 2024 elections and the initial actions taken by the Trump Administration,regulations could have an adverse impact on our business, results of operations and financial condition.

We provide service to many areas of the United States that are at risk of, and from time to time experience, severe weather events. Adverse weather conditions and natural disasters, such as hurricanes, thunderstorms, blizzards, snowstorms or earthquakes, can cause flight cancellations or significant delays. Cancellations or delays due to adverse weather conditions or natural disasters, air traffic control problems or inefficiencies, breaches in security or other factors may affect us to a greater degree than other larger airlines that may be able to recover more quickly from these events, and therefore could have a material adverse effect on our business, results of operations and financial condition to a greater degree than other air carriers. Because of our high utilization, operational disruptions can have a disproportionate impact on our ability to recover from such disruptions. In addition, many airlines re-accommodate their disrupted passengers on other airlines at prearranged rates under flight interruption manifest agreements. We have been unsuccessful in procuring such agreements with other airlines, which makes our recovery from travel disruption more challenging than for larger airlines that have these agreements in place. New identification requirements, such as the implementation of rules under the REAL ID Act of 2005, and increased travel taxes, such as those provided in the Travel Promotion Act, enacted in March 2010, which currently charges visitors from certain countries a $17 fee every two years to travel into the United States to subsidize certain travel promotion efforts, could also result in decreases in passenger traffic. Any general reduction in airline passenger traffic could have a material adverse effect on our business, results of operations and financial condition.

TheFuture outbreakpublic health threats or outbreaks of disease, including pandemics similar to the COVID-19 pandemic, have in the past and globalmay spreadin ofthe COVID-19future resultedresult in a severe decline in demand for air travel, and measures to reduce the spread of COVID-19 adversely impacted our business, results of operations, financial condition and liquidity. Future public health threats or outbreaks of disease, including pandemics similar to the COVID-19 pandemic, as well as measures to reduce the spread of such disease, could adversely affect general economic conditions and demand for air travel which, in turn,diseases could have a material adverse impact on our business, results of operations, and financial condition. The duration and severity of a future public health threat or outbreak of disease, or any additional governmental or regulatory requirements that could be imposed on our business in response to such public health threat or disease, cannot be predicted and could result in additional adverse effects on our business, results of operations and financial condition.

Some of our target growth markets include countries with less developed economies, legal systems or financial markets, and business and political environments that are vulnerable to economic and political disruptions, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets, trafficking and the imposition of taxes or other charges by governments. For example, the FAA recently suspended all U.S. flights to Haiti for 30 days as a result of multiple planes being struck by gunfire. The occurrence of any of these events in markets served by us now or in the future and the resulting instability may have a material adverse effect on our business, results of operations and financial condition.

If any of our aircraft were to be involved in a significant accident or if our property or operations were to be affected by a significant natural catastrophe or other event, we could be exposed to material liability or loss. If we are unable to obtain sufficient insurance (includingincluding, but not limited to: aviation hull and liability insurance, property and business interruption coverage and cybersecurity incident coverage) to cover such liabilities or losses, whether due to insurance market conditions or otherwise, our business, results of operations and financial condition could be materially adversely affected.

We currently obtain third-party war risk (terrorism) insurance as part of our commercial aviation hull and liability policy and additional third-party war risk (terrorism) insurance through a separate policy with a different private insurance company. Our current third-party war risk (terrorism) insurance from commercial underwriters excludes nuclear, radiological and certain other events. If we are unable to obtain adequate war risk (terrorism) insurance, or if an event not covered by the insurance we maintain were to take place, our business, results of operations and financial condition could be materially adversely affected.

Our growth strategy includes significantly expanding our fleet and expanding the number of markets we serve. We selectmay targetbe marketsunable and routes where we believe we canto achieve profitability withinin anew reasonablemarkets timeframe, and we only continue operating on routes where we believe we can achieve andor maintain ourprofitability desiredin levelexisting of profitability.markets. When developing our route network, we focus on gaining market share on routes that have been underserved or that are served primarily by higher cost airlines, where we believe we have a competitive cost advantage. Effectively implementing our growth strategy is critical for our business to achieve economies of scale and to sustain or increase our profitability. We face numerous challenges in implementing our growth strategy, including our ability to:

In addition, in order to successfully implement our growth strategy, which includes effectively planning and managing the planned growth of our fleet size and a firm commitment to purchase 187 A320neo family aircraft by the end of 2031,size, we will require access to a large number of gates and other services at airports we currently serve or may seek to serve. We believe there are currently significant restraints on gates and related ground facilities at many of the most heavily utilized airports in the United States, in addition to the fact that three major domestic airports (JFK and LGA in New York and DCA in Washington, D.C.) require government-controlled take-off or landing “slots” to operate at those airports. As a result, if we are unable to obtain access to a sufficient number of slots, gates or related ground facilities at desirable airports to accommodate our growing fleet, we may be unable to compete in those markets, our aircraft utilization rate could decrease and we could suffer a material adverse effect on our business, results of operations and financial condition.

A key component of our Low Fares Done Right strategy is attracting customers with low fares and garnering repeat business by delivering a high-quality, family-friendly customer experience with a more upscale look and feel than traditionally experienced on other ULCCs in the United States. We intend to continue to differentiate our brand and product in order to expand our loyal customer base and grow or maintain our unit revenues and maintain our non-fare revenues. The rising cost of aircraft and engine maintenance may impair our ability to offer low-cost fares, which may result in reduced revenues. Differentiating our brand and product has required, and will continue to require, significant investment, and we cannot assure you that the initiatives we have implemented will continue to be successful or that the initiatives we intend to implement will be successful. If we are unable to maintain or further differentiate our brand and product from the other U.S. ULCCs, our market share could decline, which could have a material adverse effect on our business, results of operations and financial condition. We may also not be successful in leveraging our brand and product to stimulate new demand with low-cost fares or gain market share from the legacy airlines, particularly if we experience significant excess capacity.

Since 2022, we have begun to introduce aircraft into our fleet that use the Pratt & Whitney PW1100 Geared Turbo Fan (“GTF”) engine, and we have selected this engine for certain of our planned future deliveries. During 2023, Pratt & Whitney announced an expansion of an inspection program related to these PW1100 GTF engines. This inspection program began in 2023 and may continue beyond 2026; however this has not materially impacted our operations through December 31, 2024.2025. During 2024, the FAA superseded two Airworthiness Directives related to PW1100 GTF engines. The new Airworthiness Directive imposed additional inspection and maintenance requirements on PW1100 GTF engines, including accelerated replacement of certain engine components. Although the specific impact to our operations is unknown at this time, additional inspection or maintenance obligations, whether required by Pratt & Whitney oralso rolled out a new “GTF Advantage” program during 2025, which includes a significant redesign of the FAA,engine’s could result in lengthy turnaround times to perform these inspections and any resulting repairs or other modifications that may be identified. This inspection program could have an adverse impact on our operations, particularly when we are required to temporarily take aircraft out of service.core. The inspection program could potentially affect the timing of future deliveries of aircraft for which Pratt & Whitney engines have been selected.

Separately, if any of Airbus, CFM International or Pratt & Whitney becomebecomes unable to perform its contractual obligations, including a failure to deliver aircraft or engines on schedule, and we must lease or purchase aircraft or engines from another supplier, we would incur substantial transition costs, including expenses related to acquiring new aircraft, engines, spare parts, maintenance facilities and training activities. Additionally, we would lose the cost benefits realized by our current single-fleet composition, any of which could have a material adverse effect on our business, results of operations and financial condition. We have recently experienced delays in the deliveries of Airbus aircraft, which have not exceeded several months, and our business could be additionally impacted if delays persist in future periods. These risks may be exacerbated by the long-term nature of our fleet and order book. See also “—We may be subject to competitive risks due to the long-term nature of our fleet and order book which commits us to Airbus aircraft and the engines available for such aircraft for a substantial period of time into the future.”

As of December 31, 2024,2025, we had substantial existing aircraft purchase commitments through 2031, all of which are for Airbus A320neo family aircraft. Of the 187 A320neo family aircraft weWe have committed to purchase 168 A320neo family aircraft by the end of 2031, 96all of which will be equipped withhave Pratt & Whitney GTF engines. We are still evaluating engine options for the remaining 91 aircraft on our order book. We have a firm obligation to purchase 1121 additional spare engines to be delivered by the end of 2028,2031, all of which are Pratt & Whitney GTF engines. In addition, theroughly majorityhalf of our current fleet is equipped with the LEAP engine manufactured by CFM International. The A320neo family represents the latest step in the modernization of the A320 family aircraft, and includes next-generation engine technology as well as aerodynamic refinements, large curved sharklets, weight savings, a new aircraft cabin with larger hand luggage spaces and an improved air purification system. We were one of the first airlines to utilize the A320neo family and the LEAP engine, and it could take several years to determine whether the reliability and maintenance costs associated with a new aircraft and engineengines wouldwill have a significant impact on our operations. If we are unable to realize the potential competitive advantages we expect to achieve through the implementation of the A320neo family aircraft and LEAP or GTF engines into our fleet or if we experience unexpected costs or delays in our operations as a result of such implementation, including due to increased inspection or maintenance obligations imposed on the Pratt & Whitney GTF engines, our business, results of operations and financial condition could be materially adversely affected.

Our business is labor intensive, with labor costs representing approximately 26% and 24% of our total operating costs for each of the years ended December 31, 20242025 and 2023, respectively.2024. As of December 31, 2024,2025, approximately 87%86% of our workforce was represented by labor unions, including a number of employees covered by collective bargaining agreements that are amendable. We are currently in negotiations with our pilots, flight attendants,attendants and aircraft technicians, aircraft appearance agents, material specialists and maintenance controllerstechnicians regarding their next labor contracts. See “Business—Human Capital ResourcesResources.”. We cannot assure you that our labor costs going forward will remain competitive or that any new agreements into which we enter will not have terms with higher labor costs or that the negotiations of such labor agreements will not result in any work stoppages.

We are highly dependent on markets served from airports that are significant to our business, including Denver, Orlando, Las Vegas, Philadelphia and Atlanta. Our results of operations may be affected by actions taken by governmental or other agencies or authorities having jurisdiction over our operations at these and other airports, including, but not limited to:

•international travel regulationsregulations, such as customs and immigration;

Our largest operating base is Denver International Airport, where we primarily operate out of Concourse A, including the ground-levelground boardingload facility and accompanying gates. Additionally, we operate at Orlando International Airport and Hartsfield-Jackson Atlanta International Airport under an operating leaseleases which expiresexpire in 2026. In general, any changes in airport operations could have a material adverse effect on our business, results of operations and financial condition.

Maintaining a good reputation globally is critical to our business. Our reputation or brand image could be adversely impacted by, among other things, any failure to adopt or maintain high ethical, social and environmental sustainability practices for our operations and activities; our impact on the environment; any inability to maintain our position as “America’s Greenest Airline” as measured by fuel efficiency (ASMs per fuel gallon consumed during the year ended December 31, 20242025; compared to all other major U.S. carriers) including, for example, if another major U.S. airline experiences more average fuel savings than us based on ASMs per fuel gallon consumed or if consumers perceive us to be less “green” than other airlines based on different factors or metrics or by attributing the sustainability practices of our vendors, suppliers and other third parties to us; public pressure from investors or policy groups to change our policies; customer perceptions of our advertising campaigns, sponsorship arrangements or marketing programs; customer perceptions of our use of social media; or customer perceptions of statements made by us, our employees and executives, agents or other third parties. Increasingly, our reputation may also be impacted by our customers’ and other stakeholders’ evolving, and diverging, perception of the risks and opportunities we face related to human capital management and climate change engagement, our role in the communities in which we operate and our relationship with our crew members. In addition, we operate in a highly visible industry that has significant exposure to social media. Negative publicity, including as a result of misconduct by our customers, vendors or employees, can spread rapidly through social media. ShouldIf we do not respond in a timely and appropriate manner to address negative publicity, our brand and reputation may be significantly harmed. Damage to our reputation or brand image or loss of customer confidence in our services could adversely affect our business and financial condition, as well as require additional resources to rebuild our reputation. In addition, our reputation or brand image could be adversely impacted by any inability to deliver strong operational performance, which we believe helps strengthen our customer loyalty and attract new customers. Any sustained inability to maintain or improve our operational performance could result in decreased customer loyalty and, in turn, could significantly harm our brand and reputation and adversely affect our business and financial condition.

Moreover, an outbreak and spread of an infectious disease could adversely impact consumer perceptions of the health and safety of travel, and in particular airline travel, such as occurred during the COVID-19 pandemic. Actual or perceived risk of infection on our flights could have a material adverse effect on the public’s perception of us and may harm our reputation and business. We have in the past been, and may in the future be, required to take extensive measures to reassure our team members and the traveling public of the safety of air travel, and we could incur significant costs implementing safety, hygiene-related or other actions to limit the actual or perceived threat of infection among our employees and passengers. However, we cannot assure that any actions we might take in response to an infectious disease outbreak will be sufficient to restore the confidence of consumers in the safety of air travel. While the rate of these incidents has declined following the lifting of mask mandates and other COVID-19 measures, if our employees feel unsafe or believe that we are not doing enough to prevent and prosecute such incidents, we could experience higher rates of employee absence or attrition and we may suffer reputational harm which could make it more difficult to attract and retain employees, and which could in turn adversely affect our business, results of operations and financial condition.

Companies are facing increasing scrutiny from customers, regulators, investors and other stakeholders related to their ESG practices and disclosures, including practices and disclosures related to GHGs and climate change in the airline industry in particular, and human capital management, health and safety and human rights initiatives and governance standards among companies more generally. As a result, we may face increasing and/or conflicting pressure regarding our ESG practices and disclosures. Failure, or a perception of failure, to adapt to or comply with regulatory requirements or investor or stakeholder expectations and standards (including in the timeline and manner in which we adapt or comply) could negatively impact our reputation and the trading price of our common stock. Moreover, we may be subject to diverging or inconsistent ESG regulations in different jurisdictions. New, and rapidly evolving, government regulations could also result in new or more stringent forms of ESG oversight and expanded mandatory and voluntary reporting, diligence and disclosure. For example, theThe growing emphasis on ESG matters has resulted, and may result, in the adoption of new laws and regulations, including new reporting requirements, including with respect to climate change. For example, in 2023, the State of California enacted SB 253 and theSB SEC261 finalizedwhich, rulesbeginning thatin would2026, and if they survive ongoing legal challenge, will require extensive disclosure of climate-related data,financial risks,risks and opportunities,Scope including1, financial impacts, physical2 and transition risks, related governance and strategy, and3 GHG emissions, for certain public companies. The final SEC rules, if enforced by the SEC and if they survive litigation pending in the U.S. Court of Appeals for the Eighth Circuit, may result in increased legal, accounting and financial compliance costs and may make certain activities more difficult, time-consuming and costly. Additionally, our suppliers, customers or other business partners may require us to provide additional climate-related information if they are also subject to these or additional climate-related disclosure laws or regulations in other jurisdictions. If we fail to comply with new laws, regulations or reporting requirements, or we fail to provide complete and accurate information to our suppliers, customers or other business partners, our reputation and business could be adversely impacted. Simultaneously, there are efforts by some stakeholders to reduce companies’ efforts on certain ESG, including human capital management-related matters, and anti-ESG or anti-diversity, equity and inclusion (“DEI”) sentiment is gaining momentum across the United States, with several states having enacted or proposed anti-ESG or anti-DEI policies or legislation and several state and federal governmental authorities filing suit alleging that ESG or DEI measures or initiatives violate law. If we were sued under any of these claims, our financial condition, reputation or business could be adversely impacted. Increasingly, different stakeholder groups have divergent views on ESG matters, which increases the risk that any action or lack thereof with respect to ESG matters will be perceived negatively by at least some stakeholders and adversely impact our reputation and business. We could be sued for our ESG or diversity policies and/or programs. Both advocates and opponents to certain ESG matters are increasingly resorting to a range of activism forms, including media campaigns and litigation, to advance their perspectives. To the extent we are subject to such activism, it may require us to incur costs or otherwise adversely impact our business. This and other stakeholder expectations will likely lead to increased costs as well as scrutiny that could heighten all of the risks identified in this risk factor. Additionally, many of our customers, business partners, and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may not be known to us.

In addition, we have a number of ESG initiatives, which will require ongoing investment, and there is no assurance that our initiatives will achieve their intended outcome. Consumers’ perceptions of our efforts to achieve these initiatives often differ widelywidely, may vary over time and present risks to our reputation and brand. Further, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters. Such ratings are used by some investors to inform their investment or voting decisions. If we are unable to meet the ESG standards or investment criteria set by these investors, we may lose investors, investors may allocate a portion of their capital away from us and our reputation may also be negatively affected. In addition, even if our initiatives are effective, we may experience increased costs as a result of executing upon our sustainability goals that may not be offset by any benefit to our reputation, which could have an adverse impact on our business and financial condition.

Our business strategy includes the differentiation of our brand and product from the other U.S. airlines, including other ULCCs, in order to increase customer loyalty and drive future ticket sales. We intend to accomplish this by continuing to offer passengers dependable customer service. However, in the past, we have received customer complaints related to, among other things, our customer service and reservations and ticketing systems. We and other airlines have also received complaints regarding the treatment and handling of passengers’ noncompliance with airline policies. Passenger complaints, together with reports of lost baggage, delayed and cancelled flights and other service issues, are reported to the public by the DOT. The DOT may choose to investigate such customer complaints, and we have in the past received information requests from the DOT related to our compliance with certain consumer protection requirements. DOT investigations may result in fines or other penalties; for example, we have previously been required to provide flight credits to certain customers and pay a net cash penalty pursuant to a settlement agreement with the DOT. While such penalties have not previously had a material impact, future fines or other penalties imposed by the DOT could have a material adverse effect on our business, results of operations, and financial condition. In addition, our loyalty programs are constantly improving and evolving, which could impact customer understanding of our current offerings. If an offering is removed or added without a customer being aware, there could be an increased number of complaints due to lack of visibility and clarity of our offerings.

InWe November 2022, we completed our migration tooffer a self-service customer service model.model Following this transition,where our customers are able to receive support via online, mobile and text channels, including the option to chat with a live agent, but will no longer be able to speak with an agent over the telephone except for customers traveling within 24 hours, customers who have traveled within 24 hours and customers with FRONTIER Miles Elite Status.agent. Some of our customers may prefer to only speak with a live agent and could develop a negative perception of our self-service model.model if that option is limited to them. If we do not meet our customers’ expectations with respect to reliability and service, our brand and product could be negatively impacted, which could result in customers deciding not to fly with us and adversely affect our business and reputation.

We rely on maintaining a high daily aircraft utilization rate during peak days to implement our low-cost structure, which makes us especially vulnerable to flight delays, flight cancellations, aircraft unavailability or unplanned reductions in demand.

Our average daily aircraft utilization was 10.39.2 hours and 11.310.3 hours for the years ended December 31, 20242025 and 2023,2024, respectively. Aircraft utilization is the average amount of time per day that our aircraft spend carrying passengers. Part of our business strategy is to maximize revenue per aircraft through high daily aircraft utilization, which is achieved, in part, by quick turnaround times at airports so we can fly more hours on average in a day. During 2024,2025, we responded to customersoftened demand trendsdue to oversaturated domestic supply amid an uncertain environment by reducingcontinuing to cut capacity and reduce departures on non-peak travel days; however, our business strategy remains to maximize aircraft utilization overall, especially on peak days. Aircraft utilization is reduced by delays and cancellations caused by various factors, many of which are beyond our control, including air traffic congestion at airports or other air traffic control problems or outages, labor availability, adverse weather conditions, increased security measures or breaches in security, international or domestic conflicts, terrorist activity or other changes in business conditions. A significant portion of our operations are concentrated in markets such as Denver, the Southeast, the Northeast and Northern Midwest regions of the United States, which are particularly vulnerable to weather, airport traffic constraints and other delays, particularly in the winter months and during hurricane season. In addition, pulling aircraft out of service for unscheduled and scheduled maintenance, such as required with respect to PW1100 GTF engines,maintenance may materially reduce our average fleet utilization and require that we re-accommodate passengers or seek short-term substitute capacity at increased costs. Further, an unplanned reduction in demand reduces the utilization of our fleet and results in a related increase in unit costs, which may be material. Due to the relatively small size of our fleet and high daily aircraft utilization rate, the unexpected unavailability of one or more aircraft and resulting reduced capacity or even a modest decrease in demand could have a material adverse effect on our business, results of operations and financial condition.

As of December 31, 2024,2025, we had $935$874 million of total available liquidity, consisting of $730$654 million in unrestricted cash and cash equivalents and $205$220 million infrom totalthe undrawn capacityRevolving underLoan our revolving loan facility.Facility. We will continue to be dependent on our operating cash flows (if any) and cash balances to fund our operations, provide capital reserves and make scheduled payments on our aircraft-related fixed obligations, including substantial PDPs related to the aircraft we have on order. In addition, we have sought, and may continue to seek, financing from other available sources to fund our operations, which includes PDP payments.

Under the terms of the PDP Financing Facility and the Second PDP Financing Facility, we are subject to a fixed charge coverage ratio requirement (the “FCCR Test”). If the FCCR Test is not maintained, we are required to test the loan to collateral ratio for the underlying aircraft in the PDP Financing Facility and the Second PDP Financing Facility that are subject to financing (the “LTV Test”) and make any pre-payments or post additional collateral required in order to reduce the loan to value on each aircraft in the PDP Financing Facility and the Second PDP Financing Facility that are subject to financing below a ratio threshold. The LTV Test is largely dependent on the appraised fair value of the underlying aircraft subject to financing. LTV Tests performedmay recentlyrequire haveprepayments notor resultedcollateral postings in any required pre-payment of either the PDPfuture Financingdepending Facilityon oraircraft theappraisals Secondand PDPother Financing Facility or the posting of additional collateral.factors.

As of December 31, 2024, we were not subject to any credit card holdbacks, although ifIf we fail to maintain certain liquidity and other financial covenants, our credit card processorsprocessors, of which one vendor represents a significant majority of transactions, have the right to hold back credit card remittances to cover our obligations to them, which would result in a reduction of unrestricted cash that could be material. In addition, while we currently have aircraft lease financing that does not require that we maintain a maintenance reserve account, we could be required in the future to fund reserves in cash in advance for scheduled maintenance to act as collateral for the benefit of lessors as a result of future aircraft lease financing arrangements. Further, if our revolving loan facility is drawn upon, we may be required to hold certain amounts of cash in restricted accounts until the drawn amount is repaid. Our restricted cash is partially collateralized by our standby letters of credit and surety bonds to be issued to various airport authorities and vendors, and could result in material future use of restricted cash. If we fail to generate sufficient funds from operations to meet our operating cash requirements or do not obtain another line of credit, other borrowing facility or equity financing, we could default on our operating leases and fixed obligations. Our inability to meet our obligations as they become due could have a material adverse effect on our business, results of operations and financial condition.

We have significant obligations to purchase aircraft and spare engines that we have on order from Airbus and Pratt & Whitney, respectively. AsPlease of December 31, 2024, we had a firm obligationrefer to purchase“Notes 187to A320neoConsolidated familyFinancial aircraftStatements — 11. Commitments and 11Contingencies” for additional spare engines to be delivered by the end of 2031. Of our aircraft commitments, all scheduled 2025 deliveries, as well as eight scheduled 2026 deliveries, had committed operating leases.information. We are evaluating financing options for the remainingaircraft aircraft.operating leases that are committed as of December 31, 2025. Historically, we have financed our aircraft and spare engine deliveries through sale-leaseback financing. During the years ended December 31, 2025, 2024 and 2023, we generated $441 million, $264 million and $163 million of financing cash flows, respectively, and corresponding operating gains of $302 million, $294 million and $147 million, respectively, from sale-leaseback financing related to our aircraft and spare engine deliveries. There are a number of factors that may affect our ability to raise financing or access the capital markets in the future, includingwhich includes future sale-leaseback financing, such as our liquidity and credit status, our operating cash flows, market conditions in the airline industry, U.S. and global economic conditions, the general state of the capital markets and the financial position of the major providers of commercial aircraft financing. We cannot assure you that we will be able to source external financing for our planned aircraft acquisitions or for other significant capital needs, and if we are unable to source financing on acceptable terms, or unable to source financing at all, our business could be materially adversely affected. The extent of future sale-leaseback gains/losses recognized and cash generated, which is also dependent on the number of committed future deliveries of aircraft and spare engines, could be impacted if we are not able to secure sale-leaseback arrangements in the future for our deliveries. To the extent we finance our activities with additional debt, we may become subject to financial and other covenants that may restrict our ability to pursue our business strategy or otherwise constrain our growth and operations.

As of December 31, 2024,2025, the operating leases for 2,0, 9,7, 14, 1413 and 1312 aircraft in our fleet were scheduled to terminate during 2026, 2027, 2028, 2029 and 2030, respectively. Additionally, as of December 31, 2025, the operating leases for 1, 0, 2, 3 and 2 engines in our fleet were scheduled to terminate during 2026, 2027, 20282028, 2029 and 2029,2030, respectively. In certain circumstances, such operating leases may be extended. Prior to such aircraft and engines being returned, we will incur costs to restore thesethe aircraft and engines to the condition required by the terms of the underlying operating leases.leases or as negotiated with lessors due to lease terminations. The amount and timing of these so-called “return conditions” costs can prove unpredictable due to uncertainty regarding the maintenance status of each particular aircraft and engine at the time it is to be returned, and it is not unusual for disagreements to ensue between the airline and the leasing company as to the required maintenance on a given aircraft or engine.

In addition, as of December 31, 2024,2025, we had a firm obligation to purchase 187168 A320neo family aircraft and 21 engines by the end of 2031. We expect that these new aircraft and engines will require less maintenance when they are first placed in service (sometimes called a “maintenance holiday”) because the aircraft and engines will benefit from manufacturer warranties and also will be able to operate for a significant period of time, generally measured in years, before the most expensive scheduled maintenance obligations, known as heavy maintenance, are first required. Following these initial maintenance holiday periods, the new aircraft and engines we have an obligation to acquire will require more maintenance as they age and our maintenance and repair expenses for each newly purchased aircraft will be incurred at approximately the same intervals. Moreover, because a large portion of our future fleet will be acquired over a relatively short period, significant maintenance to be scheduled on each of these planes may occur concurrently with other aircraft acquired around the same time, meaning we may incur our heavy maintenance obligations across large portions of our fleet around the same time. These more significant maintenance activities result in out-of-service periods during which our aircraft are dedicated to maintenance activities and unavailable to fly revenue service.

Total operating revenues for the year ended December 31, 20242025 totaled $3,775$3,724 million, ana increasedecrease of 5%1% compared to the year ended December 31, 2023. This was primarily due to the 5% increase in capacity, as measured by ASMs.2024. Revenue per available seat mile (“RASM”) remaineddecreased consistentby for1% thedriven yearby endeda December1% 31,decrease 2024in total revenue per passenger, as compared to the year ended December 31, 2023, as the 5% decline in revenue per passenger and 4.6 point decrease in load factor was offset by an 11% decrease in average stage length as compared to thecorresponding prior year period. The lower average stage length is primarily the result of a higher proportion of out-and-back flying in the current year to simplify our network and improve operational efficiency and recoverability.

Total operating expenses during the year ended December 31, 20242025 increased to $3,717$3,873 million, resulting in a cost per available seat mile (“CASM”) of 9.329.74¢, aan decreaseincrease of 2%5% compared to the year ended December 31, 2023.2024. Fuel expense was $89$112 million lower, as compared to the corresponding prior year period. This 8%11% decrease in fuel expense for the year ended December 31, 20242025 was primarily driven by thea 12%10% decrease in fuel cost per gallon, partiallyas offsetwell byas the 5%2% increasedecrease in fuel gallons consumed, as a result of our 5% capacity increase.consumed.

Our non-fuel expenses increased by 9%10% during the year ended December 31, 2024,2025, as compared to the corresponding prior year period, driven primarily by higherincreased capacityaircraft andrent due to a larger fleetfleet, sizeincreased station costs due to station mix and rate inflation, increased employee costs, and the resultingbenefit increasefrom a legal settlement in operations during the sameprior period, partially offset by anlower increaselease inreturn sale-leasebackcosts gains,during the costsame benefit from our network simplification, and a legal settlement.period. CASM (excluding fuel), a non-GAAP measure, increased 3%10% to 6.717.41¢, onwhile acapacity 5%remained increase in capacity,consistent, for the year ended December 31, 2024,2025, as compared to the corresponding prior year period, due to the aforementioned drivers of increased non-fuel expenses.

We generated a net incomeloss of $85$137 million during the year ended December 31, 2024,2025, compared to a net lossincome of $11$85 million for the year ended December 31, 2023.2024. AfterThere givingwere effectno tonon-GAAP adjustments for the year ended December 31, 2025. Considering the aforementioned non-GAAP operating adjustments and related tax impacts, as well as the $5 million valuation allowance and the write-off of $1 million in unamortized deferred financing costs for the year ended December 31, 2024, and the $37 million valuation allowance in the year ended December 31, 2023, our adjusted net income, a non-GAAP measure, was $53 million and $28 million, respectively, for the yearsyear ended December 31, 2024 and 2023.2024.

For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Results of Operations—Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interest” and “Results of Operations — Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss), and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAREBITDAR.”.

As of December 31, 2024,2025, our total available liquidity was $935$874 million, madeconsisting upof $654 million of unrestricted cash and cash equivalents,equivalents includingand $205 millionavailability of funds$220 available to be drawnmillion under our revolving loanline facility.of credit (the “Revolving Loan Facility”).

Competition. The airline industry is highly competitive. The principal competitive factors in the airline industry are the fare and total price, flight schedules, number of routes served from a city, frequent flyer programs, product and passenger amenities, customer service, fleet type and reputation. The airline industry is particularly susceptible to price discounting as once a flight is scheduled, airlines incur only nominal incremental costs to provide service to passengers occupying otherwise unsold seats. Price competition occurs on a route-by-route basis through price discounts, changes in pricing structures, fare matching, target promotions and frequent flyer initiatives. Airlines typically use discount fares and other promotions to stimulate traffic during normally slower travel periods to generate cash flow and to maximize RASM. The prevalence of discount fares can be particularly acute when a competitor has excess capacity that it is under financial pressure to sell. A key element of our competitive strategy is to maintain very low unit costs in order to permit us to compete successfully in price-sensitive markets. In addition, some of the legacy network carriers match LCC and ULCC pricing on portions of their network, including through the selective deployment of so-called “basic economy” fares. We believe that fare discounts, along with more customer optionality over product offerings,offerings and enhancements to our frequent flyer program, have and will continue to stimulate demand for Frontier due to our Low Fares Done Right strategy.Frontier.

Our Low Fares Done Right strategy is underpinned by our low-cost structure, and has significantly reduced our cost base by optimizing aircraft utilization with disciplined capacity deployment across peak and off peak periods to align capacity with expected travel demand patterns, transitioning to larger and more fuel-efficient aircraft, maximizing seat density, renegotiating the majority of our distribution agreements, realigning and simplifying our network, enhancing our website and mobile app, boosting employee productivity and contracting with leading specialists to provide us with select operating and other services.

Our cost structure has generally allowed us to achieve strong results from operations relative to the rest of the industry during periods of competitive pricing and price discounts. We believe that we are well positioned to maintain our low unit operating costs relative to our competitors through on-going strategic initiatives, including continuing our cost optimization effortsefforts, planned increases in aircraft utilization and further realizing economies of scale. To the extent that we are unable to maintain our low-cost structure, our ability to compete effectively may be impaired. In addition, if our competitors engage in fare wars or similar behavior, our financial performance could be adversely impacted.

Seasonality. Our results of operations for any interim period are not necessarily indicative of those for the entire year because the air transportation business and our route network are subject to seasonal fluctuations. We generally expect demand to be greater in the secondsummer months and thirdless quarters compared toin the restwinter ofmonths, apart from the year.holiday Whileseason. As we have,increase overour recentroutes years,in other markets, we have reduced our concentration in Denver to decrease the impact of seasonality in our business,business. 23% of our flights duringDuring the year ended December 31, 20242025, 21% of our flights had Denver International Airport as either their origin or destination, as compared to 24%23% of our flights during the year ended December 31, 2023.2024.

We have seven union-represented employee groups comprising approximately 87%86% of our employees as of December 31, 2024.2025. Our pilots are represented by the Air Line Pilots Association (“ALPA”); our flight attendants are represented by the Association of Flight Attendants (“AFA-CWA”); our aircraft technicians, aircraft appearance agents, material specialists and maintenance controllers are all represented by the International Brotherhood of Teamsters (“IBT”); and our dispatchers are represented by the Transport Workers Union (“TWU”). We are currently in negotiations with the ALPA, the AFA-CWAAFA-CWA, and theaircraft technicians represented by IBT regarding the next labor contract. Please refer to “Notes to Consolidated Financial Statements — 12.11. Commitments and Contingencies” for additional information.

Pratt & Whitney. Since 2022, we have introduced aircraft into our fleet that use the Pratt & Whitney PW1100 Geared Turbo Fan (“GTF”) engine, and we have selected this engine for most of our planned future deliveries. During 2023, Pratt & Whitney announced the requirement, mandated by the FAA,U.S. Federal Aviation Administration, that certain engines be removed for inspection due to a possible condition in the powdered metal used to manufacture certain engine parts. This will require accelerated inspection of the PW1100 GTF engine, which we use for certain of our A320neo family aircraft, and could result in lengthy turnaround times to perform these inspectionsinspections, including any resulting repairs or other modifications that may be identified. Although our operations have not been impacted as of December 31, 2024,2025, this inspection program may have an adverse impact on our operations, particularly when we are required to temporarily take aircraft out of service. We continuedo tonot assessanticipate thethis impact onimpacting our future capacity plans and we are in communication with Pratt & Whitney regarding compensation related to this matter.capacity.

(b)These metrics are not calculated in accordance with GAAP. For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Reconciliation of CASM to CASM (excluding fuel), Adjusted CASM (excluding fuel), Adjusted CASM, Adjusted CASM including net interest and CASM including net interestinterest.”.

Aircraft Fuel. Aircraft fuel expense decreased by $89$112 million, or 8%,11%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decrease was primarily due to a 12%10% decrease in fuel cost per gallon, partiallyas offsetwell byas thea 5%2% increasedecrease in gallons consumed, driven by higher capacity.consumed.

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $96$62 million, or 11%,6%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The increase was primarily due to higher crew costs driven primarily by the growth in the business, as well as othercrew, employee benefit costsbenefits and increasedincentives, salariedand support staffsalary costs, partially offset by efficiencies from our network simplification as compared to the corresponding prior year period.

Aircraft Rent. Aircraft rent expense increased by $121$73 million, or 22%,11%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to a larger fleetfleet, andpartially increasedoffset by lower aircraft lease return costs.

Station Operations. Station operations expense increased by $121$80 million, or 23%,13%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to increased airport operations as a result of the 15% increase in departuresstation mix and 10%rate increase in passengers,inflation, partially offset by increased5% benefitsfewer from airport revenue and cost sharing arrangements.departures.

Maintenance, Materials and Repairs. Maintenance, materials and repair expense increasedremained by $30 million, or 17%,consistent during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. This increase was primarily due to athe 16%11% increase in average aircraft in service, which resulted in higher aircraft repair and maintenancematerials costs, partially offset by lower contractengine labor.repair costs from recognition of vendor credits.

Sales and Marketing. Sales and marketing expense increaseddecreased by $14$19 million, or 9%,11%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to increasesdecreases in customerthird-party reservationdistribution systemchannel fees, call center operation fees and credit card fees, as a result of increased bookings year over year.fees. The following table presents our distribution channel mix:

Depreciation and Amortization. Depreciation and amortization expense increased by $22$19 million, or 44%,26%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, primarily due to an increase in capitalized maintenance depreciation duedriven toby our growing fleet.

Other Income (Expense). Other income decreased by $7$13 million, or 20%,46%, during the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023.2024. The decrease was primarily due to lowerincreased interest expense, driven by higher principal balances on our debt and decreased interest income from lower balances in interest-bearing cash accountsaccounts, andpartially theoffset increaseby in interest expense, net ofgreater capitalized interest.

Income Taxes. Our effective tax rate for the year ended December 31, 20242025 was an expense of 1.2%,2.2%, compared to an expense of 134.4%1.2% for the year ended December 31, 2023,2024, on pre-tax incomeloss forand bothincome, periods.respectively. The primary difference between the effective tax rate and the federal statutory rate for the year ended December 31, 20242025 was related to aan decreaseincrease in our valuation allowance relating to federal and state net operating losses (“NOLs”).

(fd)Adjusted CASM is included as supplemental disclosure because we believe it is a useful metric to properly compare our cost management and performance to other peers, as derivations of Adjusted CASM are well-recognized performance measurements in the airline industry that are frequently used by our management, as well as by investors, securities analysts and other interested parties in comparing the operating performance of companies in the airline industry. Additionally, we believe this metric is useful because it removes certain items that may not be indicative of base operating performance or future results. Adjusted CASM is not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

(ge)In September 2024, we reduced the capacity of the PDPpre-delivery deposit payments (“PDPs”) Financing Facility from $365 million to $135 million. The downsize of the facility resulted in a one-time write-off of $1 million in unamortized deferred financing costs. This amount is a component of interest expense within our consolidated statements of operations.

(hf)Adjusted CASM including net interest and CASM including net interest are included as supplemental disclosures because we believe they are useful metrics to properly compare our cost management and performance to other peers that may have different capital structures and financing strategies, particularly as it relates to financing primary operating assets such as aircraft and engines. Additionally, we believe these metrics are useful because they remove certain items that may not be indicative of base operating performance or future results. Adjusted CASM including net interest and CASM including net interest are not determined in accordance with GAAP, may not be comparable across all carriers and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.

Adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA have limitations as analytical tools. Some of the limitations applicable to these measures include: adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; EBITDA, and adjusted EBITDA do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness or possible cash requirements related to our warrants; although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements; and other companies in our industry may calculate adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA differently than we do, limiting their usefulness as comparative measures. Because of these limitations, adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA should not be considered in isolation from or as a substitute for performance measures calculated in accordance with GAAP. In addition, because derivations of adjusted pre-tax income (loss), adjusted net income (loss), EBITDA and adjusted EBITDA are not determined in accordance with GAAP, such measures are susceptible to varying calculations and not all companies calculate the measures in the same manner. As a result, derivations of pre-tax income (loss), net income (loss) and EBITDA, including adjusted pre-tax income (loss), adjusted net income (loss) and adjusted EBITDA, as presented may not be directly comparable to similarly titled measures presented by other companies.

(b)During the yearsyear ended December 31, 2024 and 2023,2024, we recorded a $5 million and $37 million non-cash valuation allowances, respectively,allowance against our U.S. federal and state NOL deferred tax assets, which largely do not expire, mainly as a result of being in a three-year cumulative pre-tax loss position, which has no impact on cash taxes and is not reflective of our effective tax rate for deductible NOLs generated or actual cash tax obligations created. Please refer to “Notes to Consolidated Financial Statements — 15.13. Income Taxes” for additional information.

(c)Stage LengthStage-Length Adjusted (“SLA”) to 1,000 miles: AdjustedApplicable CASMOperating (excluding fuel)Statistic * Square root (stage length / 1,000).

As of December 31, 2024,2025, we had $935$874 million of total available liquidity, consisting of $730$654 million in unrestricted cash and cash equivalents and $205$220 million infrom totalthe undrawn capacity on our Revolving Loan Facility. We had $502$614 million of total debt, net, of which $261$301 million was short-term and consisted primarily of amounts outstanding under our Pre-delivery Credit Facilities. Our total debt, net was comprised of $329$348 million outstanding under our PDP Financing Facility, $100$105 million of 2025-1 EETCs, $101 million outstanding under our pre-purchased miles facility with Barclays Bank Delaware (“Barclays”), and $66 million in 10-year, low-interest10-year loans (collectively, the “PSP Promissory Notes”) from the U.S. Department of the Treasury (the “Treasury”) and $12 million in secured indebtedness for our headquarters building,, partially offset by $5$6 million in deferred debt acquisition costs.

We expect to meet our cash requirements for the next twelve months through use of our available cash and cash equivalents, our Pre-delivery Credit Facilities, and cash flows from operating activities. We expect to meet our long-term cash requirements with cash flows from operating and financing activities, including, but not limited to, potential future borrowings under the Pre-delivery Credit Facilities, our undrawn Revolving Loan Facility and/or potential issuances of debt or equity. The Revolving Loan Facility also permits us to enter into additional indebtedness secured by our loyalty program and brand-related assets, to the extent such indebtedness is pari passu to that ofwith the Revolving Loan Facility. Our primary uses of cash are for working capital, aircraft PDPs, debt repayments and capital expenditures.

(a)Includes principal commitments only associated with our Pre-delivery Credit Facilities with borrowings as of December 31, 2024,2025, our affinity card unsecured debt due through 2029, our building notes through September 2031 and the2029,the PSP Promissory Notes through 2031.2031, and our class A-1 enhanced equipment certificate through 2032. See “Notes to Consolidated Financial Statements — 8.7. DebtDebt.”.

(c)Represents gross cash payments related to our operating fixed lease obligations that are not subject to discount as compared to the obligations measured on our consolidated balance sheets. See “Notes to Consolidated Financial Statements — 9.8. Operating LeasesLeases.”.

(d)Represents purchase commitments for aircraft and engines. See “Notes to Consolidated Financial Statements — 12.11. Commitments and ContingenciesContingencies.”.

During the year ended December 31, 2024,2025, net cash used in operating activities totaled $82$525 million, which was driven by non-cash adjustments of $204 million, partially offset by $85$202 million of net income and $37 million of inflowsoutflows from changes in operating assets and liabilities.liabilities, non-cash adjustments of $186 million and $137 million of net loss.

Macroeconomic Conditions. Recent geopolitical tensions and military conflict in the Middle East, including developments involving Iran, have contributed to volatility in global energy markets. Higher crude oil prices can increase our jet fuel costs, which we experienced during the three and six months ended MarchJune 31,30, 2026. In addition, related instability may create supply chain challenges affecting aircraft parts and other operational inputs. Continued uncertainty or further escalation could pressure our operating costs and negatively affect our financial performance. We continue to monitor the situation and the related impacts to our business.

We previously received an immaterial audit assessment from the U.S. Transportation Security Administration (the “TSA”) that covered the third quarter of 2016 through the fourth quarter of 2018 and related to the remittance of TSA fees where flight credits expired unused (the “2016-2018 Audit”). We appealed this assessment to the United States Tenth Circuit Court of Appeals. In addition, we are under audit by the TSA for the period from the fourth quarter of 2019 through the fourth quarter of 2022 (the “2019-2022 Audit”). In April 2026, we lost our appeal regarding the 2016-2018 Audit and received a preliminary assessment for the 2019-2022 Audit in the amount of $42 million, which mainly covered remittance of TSA fees where flight credits expired unused as well as for other passengers that purchased tickets and did not travel. AsDuring ofthe Marchsix 31,months ended June 30, 2026, we recorded ana additionalone-time estimatedcharge liabilityrelated to prior periods of $77$73 million (the “TSA Reserve”), for the 2016-2018 Audit and 2019-2022 Audit periods, which is largely related to remittance of TSA fees for passengers that purchased tickets and did not travel and is included in other current liabilities and other long-term liabilities on our condensed consolidated balance sheets and in passenger revenues within our condensed consolidated statements of operations. We could be subject to further TSA audit examinations and resulting assessments.

Fleet. In March 2026, we entered into an agreement (the “Early Return Agreement”) to terminate the leases associated with 24 A320neo aircraft,aircraft. expectedAs toof beJune completed30, by2026, all 24 aircraft have been returned and removed from the second quarter of 2026.fleet. For the three and six months ended MarchJune 31,30, 2026, we recognized $139$70 million and $209 million, respectively, of operating expenses related to the Early Return Agreement, which includes one-time charges for lease return costs and costs related to the write-off of non-recoverable capitalized prepaid maintenance and accelerated depreciation of capitalized maintenance. Please refer to “Notes to Condensed Consolidated Financial Statements — 6. Operating Leases” for additional information.

The following table provides select financial and operational information for the three and six months ended MarchJune 31,30, 2026 and 2025 (in millionsmillions, except per share data):

Total operating revenues for the three months ended MarchJune 31,30, 2026 totaled $992$1,279 million, an increase of 9%38% compared to the three months ended MarchJune 31,30, 2025. Revenue per available seat mile (“RASM”), increased by 10%28% driven by a 2%20% increase in total revenue per passenger as compared to the corresponding prior year period, alongside a 3.5-point1.0-point increase in load factor. Capacity, as measured by ASMs, for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, decreasedincreased by 1%.8%.

Adjusted RASM, a non-GAAP measure, increased from $9.179.08¢ during the threesix months ended MarchJune 31,30, 2025 to $10.8611.21¢ during the threesix months ended MarchJune 31,30, 2026. For the threesix months ended MarchJune 31,30, 2026, this excludes the impact of $73 million related to the TSA Reserve associated with prior periods. There were no adjustments for the three months ended MarchJune 31,30, 2026 and the three and six months ended June 30, 2025.

Total operating expenses during the three months ended MarchJune 31,30, 2026 increased to $1,275$1,376 million, resulting in a cost per available seat mile (“CASM”) of 13.0012.39¢, an increase of 35%,27%, as compared to the three months ended MarchJune 31,30, 2025. Fuel expense for the three months ended MarchJune 31,30, 2026 was $30$206 million higher than the corresponding prior year period. The 13%90% increase in fuel expense for the three months ended MarchJune 31,30, 2026 was primarily driven by thea 13%77% increase in fuel cost per gallon.gallon and an 8% increase in fuel gallons consumed.

Our non-fuel expenses increased by 40%21% during the three months ended MarchJune 31,30, 2026, as compared to the corresponding prior year period, driven primarily by expenses related to the Early Return Agreement,Agreement to terminate the leases associated with 24 A320neo aircraft. The 21% increase was also driven by higher rent and maintenance expenses due to a larger fleet, and increased station operations expense due to increased leaseairport returnoperations, costspartially andoffset largerby fleet,an andincrease higherin employeesale-leaseback costs.transactions. CASM (excluding fuel), a non-GAAP measure, increased 42%13% to 10.278.46¢, on aan 1%8% decreaseincrease in capacity, for the three months ended MarchJune 31,30, 2026, as compared to the corresponding prior year period, due to the aforementioned drivers of increased non-fuel expenses.

Adjusted CASM (excluding fuel), a non-GAAP measure, increased from 7.247.50¢ for the three months ended MarchJune 31,30, 2025 to 8.857.84¢ for the three months ended MarchJune 31,30, 2026. For the three months ended MarchJune 31,30, 2026, this excludes the impact of $139$70 million in expenses relating to the Early Return Agreement. There were no adjustments for the three months ended MarchJune 31,30, 2025.

We generated a net loss of $272$90 million during the three months ended MarchJune 31,30, 2026, compared to a net loss of $43$70 million for the three months ended MarchJune 31,30, 2025. Considering the aforementioned non-GAAP adjustments and related $8$2 million of tax impacts, our adjusted net loss, a non-GAAP measure, was $68$22 million for the three months ended MarchJune 31,30, 2026. There were no non-GAAP adjustments for the three months ended MarchJune 31,30, 2025.

For the reconciliation to the corresponding GAAP measures of the aforementioned non-GAAP adjusted measures, see “Results of Operations — “Reconciliation of GAAP to Non-GAAP Financial Data.”, “Reconciliation of Passenger Revenue to Adjusted Passenger Revenue”, and “Results of Operations — Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss), Pre-Tax Income (Loss) to Adjusted Pre-Tax Income (Loss), and Net Income (Loss) to EBITDA, EBITDAR, Adjusted EBITDA, and Adjusted EBITDAR.”

As of MarchJune 31,30, 2026, our total available liquidity was $974$1,156 million, consisting of $754$936 million of unrestricted cash and cash equivalents and availability under our revolving line of credit (the “Revolving Loan Facility”).

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended MarchJune 31,30, 2025

Total operating revenue increased $80$350 million, or 9%,38%, during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. Revenue was favorably impacted by the 10%28% increase into RASM, driven by a 2%20% increase in total revenue per passengerpassenger, led by fare revenue per passenger, a 5% decrease in average stage length, supported by a 12% increase in departures and a 1.0-point increase in load factor, as compared to the corresponding prior year period,period. alongsideThe a 3.5-point8% increase in load factor. Revenue was unfavorably impacted by $77 million related to the TSA Reserve during the three months ended March 31, 2026. In addition, capacity, as measured by ASMs, forwas theprimarily three months ended March 31, 2026, as compared to the three months ended March 31, 2025, decreaseddriven by 1% primarily due to a 12% decrease in average daily aircraft utilization partially offset by the 14%6% increase in average aircraft in service.service as compared to the corresponding prior year period.

Aircraft Fuel. Aircraft fuel expense increased by $30$206 million, or 13%,90%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to athe 13%77% increase in fuel cost per gallon.gallon as well as an 8% increase in fuel gallons consumed, driven by higher capacity.

Salaries, Wages and Benefits. Salaries, wages and benefits expense increased by $22$12 million, or 9%,5%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The increase was primarily due to higher crew costs, as compared to the corresponding prior year period.

Aircraft Rent. Aircraft rent expense increased by $104$72 million, or 65%,37%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily due to additionalhigher aircraft lease return expense, indriven part related toby the Early Return Agreement, and a larger fleet.

Station Operations. Station operations expense increased by $12$19 million, or 7%,11%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily due to anincreased airport operations driven by a 14% increase in airport cost sharing arrangementspassengers and a 6%12% increase in passengers.departures.

Maintenance, Materials and Repairs. Maintenance, materials and repair expense increased by $91$17 million, or 178%,36%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This increase was primarily due to thehigher write-offengine onrepair non-recoverablecosts prepaidand maintenancetiming balancesof aircraft inspections and related tomaterials thecosts, Earlydriven Returnby Agreementa and the 14%6% increase in average aircraft in service, which resulted in higher aircraft repair and materials costs.service.

Sales and Marketing. Sales and marketing expense increased by $2$9 million, or 5%,23%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily due to anthe increase in credit card fees,fees as a result of the 38% increase in total operating revenue, partially offset by a decrease in third-party distribution channel fees. The following table presents our distribution channel mix:

Depreciation and Amortization. Depreciation and amortization expense increased by $42$35 million, or 210%,167%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, primarily due to the accelerated depreciation on capitalized maintenance costs related to the Early Return Agreement and the increase in capitalizedcapital maintenance depreciation duedriven toby oura growinglarger fleet.

Other Operating Expense. Other operating expenses increased by $14$2 million, or 78%,5%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. This increase was primarily driven by an increase in supplies, outside service costs, and taxes and insurance expenses, partially offset by the decreaseincrease in sale-leaseback gains, as a result of 7six aircraft inductions compared to 4three aircraft inductions and 2 engine inductions in the corresponding prior year period subject to sale-leaseback transactions, and an increase in travel costs.period.

Other Income (Expense). Other income decreased by $4$2 million, or 67%,40%, during the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025. The decrease was primarily due to increaseddecreased interestcapitalized expense,interest, driven by higher principal balances on our debt from the addition of the class A-1 enhanced equipment trust certificates (the “2025-1 EETCs”) and decreased interest income from lower interestPDP rates on interest-bearing cash accounts.balances.

Income Taxes. Our effective tax rate for the three months ended MarchJune 31,30, 2026 was a benefit of 3.2%,4.3% on pre-tax loss, compared to an0% expenseon ofa 7.5%pre-tax loss for the three months ended MarchJune 31,30, 2025, on pre-tax loss for each of the respective periods.2025. The primary difference between the effective tax rate and the federal statutory rate for the three months ended March 31, 2026 was related to the increase in our valuation allowance relating to U.S. federal and state net operating loss. Please refer to “Notes to Condensed Consolidated Financial Statements — 10. Income Taxes” for additional information.

(b)We received a court ruling relating to the remittance of TSA fees for unused travel covering the 2016-2018 Audit that resulted in a $73 million charge, the TSA Reserve, that covers probable losses in prior years subject to audit that were recorded during the threesix months ended MarchJune 31,30, 2026. See “Notes to the Condensed Consolidated Financial Statements — 8. Commitments and Contingencies” and “Reconciliation of Passenger Revenue to Adjusted Passenger Revenue” for additional information.