Frontier Group Holdings, Inc. (ULCC) Q2 2022 Earnings Call Transcript

Frontier Group Holdings, Inc. (ULCC -2.08%)
Q2 2022 Earnings Call
Jul 28, 2022, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Ladies, and gentlemen, thank you for standing by. Welcome to the Frontier Group Holdings Inc. 2022 earnings call. At this time, all participants are in a listen-only mode.

After the speakers' presentation, there will be a question-and-answer session.[Operator Instruction] I would now like to turn the call over to your host, David Herman, you may begin.

David Herman -- Managing Director

Thank you, and good afternoon everyone. Welcome to our second quarter 2022 earnings call. Today's speakers will be Barry Biffle, president, and CEO; James Dempsey, EVP and CFO; And Daniel Shurz, senior vice president of commercial. Each will deliver brief prepared remarks, and then we'll get to your questions.

But first, let me quickly cover the customary safe harbor provisions. During this call, we will be making forward-looking statements which are subject to risks and uncertainties. Actual results may differ materially from those predicted in these forward-looking statements. Additional information concerning risk factors which could cause such differences are outlined in the announcement we published earlier, along with reports we file with the FCC.

We may also discuss non-GAAP financial measures which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement. And then lastly, we will be participating in several investor conferences in August and September. We certainly hope to see you at one of those events and so I'll give the floor to the area to begin his comments, Barry.

Barry Biffle -- Chief Executive Officer

Thanks, David, and good afternoon, everyone. Needless to say, it's been an interesting few months since our last earnings call. All public attention was largely centered on the merger. Behind the scenes, we realized the highest quarterly revenue in history at $909 million, 43% above the comparable 2019 quarter, and a record ancillary revenue of $75 per passenger.

The strong revenue performance in the second quarter enabled us to overcome elevated fuel prices and generate an adjusted pre-tax margin of 3%. We were able to lessen the impact of the weather and air traffic control limitations through proactive measures which led to an improvement in our completion factor as the quarter progressed, with a completion factor of 99% during June and over 99% during the busy 4th of July week. In addition, unlike many other carriers, we are not experiencing disruptions due to shortages related to pilot and flight attendant staffing levels. In fact, we have surplus staffing today, and a capacity to train 80 additional pilots a month.

Contrary to common paradigms and misconceptions about the ULCC segment, we're a highly attractive landing spot for the pilots, given our career growth and resulting pay opportunities as compared to the legacy carriers, along with a desirable footprint of bases, including the opening of the Phenix crew base later this year. To further strengthen our pilot recruitment capabilities, we're working with a major flight school to develop a cadet program which will provide an opportunity to train 250 zero-time flight applicants per year who might otherwise have chosen a different career path due to employment uncertainty. Upon completion of training, we will assist in placing them into flying assignments to continue to build experience and we'll be able to hire them once they reach requisite flying times. As we look forward to the third quarter, we expect the demand environment to remain strong with resume growth anticipated to be over 20% versus the comparable 2019 quarter, supported by continued strength in our ancillary revenue per passenger.

We will continue to focus on generating profitable growth in the business as we increase utilization and successfully overcome the challenges with the pandemic. Accordingly, we expect to turn a second consecutive quarterly profit in the third quarter with an adjusted pre-tax margin in the range of 1% to 5%. I'd like to thank team Frontier for their continued dedication, professionalism, and commitment to provide safe and reliable service to our customers. They are at the core of our low fares done right model.

With that, I'll now hand the call over to Daniel.

Daniel Shurz -- Senior Vice President, Commercial

Thanks, Barry, and good afternoon, everyone. Second quarter revenue performance was exceptional on many levels. Revenue growth of 43% over the comparable 2019 quarter was driven by a 29% increase in ransom from $9.27 to $11.97, along with a 10% increase in capacity over the 2019 quarter. Revenue per passenger grew an impressive 24% to $139, with ancillary revenue contributing nearly $75 off amount a record for the business above our expectations.

And some of those was driven by recent port expansion and enhancement, along with strong attachment rates. We will continue to expand enhanced voluntary offerings to allow our customers to personalize their travel experience, and to allow us to continue to offer ultra-low fares. Given our strong performance and future plans, we're now targeting ancillary capacity to reach $85 by the end of 2023. We achieved an 84% lower price during the second quarter, an improvement of 10% points over the prior quarter.

Utilization was an average of 10.9 hours per day, roughly in line with the prior quarter. And we expect a gradual trend toward the 12 plus hours we were last in 2019 consistent with our recovery plan. In response to higher fuel prices, we designed our second and third quarter average stage length to be between 960 and 980 miles, which is considerably below historical levels. We expect to return the airline to pre-pandemic average stages starting in the fourth quarter.

As we build back capacity, RASM growth relative to 2019 is expected to accelerate during the current quarter with 5% in July, 8% to 9% in August, and 14% to 16% in September. Resulting in a higher proportion of athletes being deployed in off-peak month and creating an approximate 3% drive on arrival in the quarter. Touching on promotional highlights, we recently announced expanded service to and from Las Vegas beginning August nine for launch service from Harry Reid International Airport to Baltimore, Buffalo, Hartford and Kansas City. With these new routes, Frontier will serve 57 destinations from our Las Vegas base, making us the fastest-growing airline, one of the top leisure destinations in North America.

In response to strong demand since we launched in Houston Hobby in May, we're adding a daily, nonstop route to Denver beginning in September. Just last month, we expand our International Caribbean Service from our Tampa base, launching nonstop flights to Montego Bay and San Juan, along with expanded service to Cancun. And lastly, on August 8 will formally break ground for our innovative new terminal at Denver International Airport, where we're planning construction of 14 ground loading gates, which will facilitate expediting planning, and planning through the front and rear aircraft doors leading to shorter-term times. This and other streamlining initiatives across our network are designed to improve operational performance and enhance the customer experience.

And with that, I'll hand it over to James Dempsey. 

James Dempsey -- Executive Vice President and Chief Financial Officer

Thank you, Daniel, and welcome, everybody. Second quarter results were in line with our guidance. Strong demand environments drove record-setting revenue growth compared to the same quarter in 2019, and along with the exceptional ancillary performance, enabled us to turn our first adjusted profit in over two years. We've employed rigorous financial discipline through this difficult period to ensure Frontier has a strong platform to deliver profitable growth.

Results in the second quarter were impacted by elevated fuel prices, resulting in $335 million of fuel expenses and an average fuel cost of $4.41 per gallon. Total operating expenses approximately $900 million, including $9 million of transaction and merger-related costs and $7 million related to an asset impairment while adjusted non-fuel operating expenses $550 million. This resulted in the account of next fuel of $7.24, which was impacted by lower utilization, lower average stage, higher station-related costs, and the short-term cost of service crew. Though our cosmic field is currently elevated, we're still targeting a return to service expense during 2023 as our utilization stage length normalized and seats for departure increase with the planned introduction of the 321 NEO to help mitigate inflationary pressures on the business.

We ended the second quarter in a strong financial position with $766 million in cash and cash equivalents. Frontiers in the ambulant position of having access to a substantial liquidity source by leveraging our co-brand, credit card program, and related brand assets should the need arise. As planned, we have enhanced our pre-delivery payment facility to align with the short term obligations under the Airbus Order book, whereby the facility was increased from $200 million to $280 million. We ended the second quarter with 114 aircraft in our fleet, after taking delivery of three A320neo aircraft during the quarter.

We expect to take delivery of another four aircraft in the fourth quarter, or in the third quarter, and eight in the fourth quarter, including the first 36 A321neos by the end of 2023. Looking forward to the third quarter, we expect a continuation of the favorable demand environment we saw in the second quarter. Capacity is anticipated to grow by 8% to 10% over the comparable 2019 quarter. RASM is expected to improve by over 20% in the third quarter versus the comparable 2019 quarter, bolstered by continued strength in ancillary revenue per passenger.

Fuel costs are anticipated to be between $3.75 and $3.80 per gallon based upon the blended jet fuel curve on July 22nd. Adjusted non-fuel operating expenses are expected to be between $565 million to $585 million in the third quarter. The increase from the prior quarter due largely to capacity growth. Adjusted pre-tax margin is expected to be in the range of 1% to 5%, constrained by the 3% rise on drag Daniel mentioned earlier.

With that, I'll turn the call back to Barry to deliver closing remarks before we go to Q&A.

Barry Biffle -- Chief Executive Officer

Thanks, Jimmy. Before closing, I'd like to offer my thoughts on the termination of our merger agreement with Spirit. Obviously, we're disappointed in this outcome, and it appears shareholders will miss an opportunity to meaningfully participate in the rebound of leisure travel, of which we're in the early stages. Our board took a disciplined approach throughout the course of our negotiations.

Rather than overpay for spirit. The Board prioritized the interests of Frontier, our employees, and our shareholders. As a stand-alone entity and potentially America's ultra low-cost carrier, Frontier has a fantastic platform for profitable growth, underpinned by a strong balance sheet, and unmatched 321neo order book, clear path to CASM-ex below $0.06, and exceptional ancillary performance, but plenty of room to run. Collectively, these elements are key contributors to the resiliency of our business model.

I could not be more confident in our future, especially given the growing demand for affordable air travel. Our proven and resilient ultralow cost model continues to provide the foundation for our strategy and long term value creation. Even with rising fuel prices, we continue to keep costs and fares low while generating record revenues and providing reliable service. We have one of the highest completion rates in the industry, and our recent performance further validates our business model and strengthens our confidence.

We appreciate everyone's time this afternoon. We will not be commenting any further on the termination of the merger agreement, nor a potential tie-up between Spirit and JetBlue. I am, however, happy to take questions about how we grow our business and add shareholder value as America's ultra low cost carrier.

Questions & Answers:

Operator

[Operator instruction] Our first question comes from Jamie Baker with J.P. Morgan. Your line is open.

Jamie Baker -- J.P. Morgan -- Analyst

Hey, good afternoon, everybody. So Airbus cut its production forecast today, also delayed the planned ramp in 320 production rates. Just wondering how you expect that to impact planned capacity over the next 24 months or so? And whether there is any flexibility within the Indigo portfolio to shift around deliveries so that you don't slip.

Barry Biffle -- Chief Executive Officer

Yeah. Look, Jamie, we don't. I mean, we've been a little focused on our own things right now. But, look, I mean, we have a large order book with Airbus.

And obviously, we buy a lot of planes and a lot of people have maybe move some orders around. I'm not sure what this has to do with us. Yes, we do have the ability has been disclosed before to move aircraft among the Indigo portfolio carriers that participated in the in the Dubai order a few years ago. But, we're unaware of any any material difference.

This is our order book as we stand today.

Jamie Baker -- J.P. Morgan -- Analyst

OK. And second, there is no shortage of data at this point, proving that sort of lower end consumers are certainly trying to find ways to economize. Your third quarter guide looks fine to us. Just curious if you're seeing any change in trip duration.

Obviously, lobbing off a day of holidays is one way to save on the aggregate expense, or any changes in the booking curve. Or maybe your data just implies complete immunity to slowing economic trends. Any thoughts there?

Daniel Shurz -- Senior Vice President, Commercial

Well, I'll start on. I'll let Barry add on, Jamie, it's Daniel. No, we're not really seeing the difference. We've seen no change in trip duration.

We've not seen any slowdown in demand. And so we don't see this at the moment. So we're not being affected at the moment. And we're confident that we're offering the right value to customers to keep getting them to come and choose Frontier.

Barry Biffle -- Chief Executive Officer

Yeah, we have seen two things there interesting. One is kind of work from home phenomena. We have seen an extension of some people's itinerary. So I think in the composite, there may be some people, Jamie, that are actually or are cutting off a day.

I've read articles just like you have about it and some hotels, maybe they cut a day or two off their vacation, but they still go and save money. The same time you got people moving around that are working from home but really working from somewhere else. And so they are actually expanding. So the averages, I think may be clouding that.

The one piece of data we do have that is pretty empirical is that we have seen an increase in incomes of our travelers. And so a significant increase in $100,000 household income and a significant increase in the $200,000 plus household income, which suggests that you are seeing the down effect to Frontier.

Jamie Baker -- J.P. Morgan -- Analyst

OK. Very interesting. Thank you, gentlemen.

Operator

Our next question comes from Duane Pfennigwerth with Evercore ISI. Your line is open.

Duane Pfennigwerth -- Evercore ISI -- Analyst

Hey. Thank you. I wanted to ask you about new markets understand you've been busy and focused on other things. But as you sort of think through the implications of staffing shortages for the industry.

Staffing shortages for regional carriers, more whitespace in small markets. Are there any obvious targets or markets that you feel are really constrained or overly constrained from a capacity perspective? And I certainly appreciate your comments about not wanting to go there. But, you have spent a fair amount of time studying potential overlap. What would you might see as the opportunities that could develop if they do pursue a relationship?

Barry Biffle -- Chief Executive Officer

I'm gonna let Daniel talk about the more recent kind of phenomena with shortages of regional capacity. And he's probably got some examples because I know he's been exploiting it.

Daniel Shurz -- Senior Vice President, Commercial

Yeah, we've seen it with, we always try and watch what's going on in the industry. With what we've seen, actually, I think it's less of a regional lessening regional service in the traditional sense that they tend to serve quite small markets. Fundamentally, probably we do have markets or even the US are a little bit too small. But what we've also seen is as airlines have consolidated capacity again this year, as we've seen a pullback in certain markets, you can see notably, we've looked from our bank, from our Vegas base, one of the reasons we went into the markets we went into, as you can see, we were meaningfully reduced capacity in some of those markets.

As other airlines have sort of have consolidated the way they're flying. So, for example, Las Vegas, Buffalo, Las Las Vegas, Hartford, substantial markets, much less competitive service than you would assume what the same pre-pandemic. There are other examples in our key leisure spaces of where we're seeing a similar phenomenon. Those are the ones we're going to take advantage of.

Barry Biffle -- Chief Executive Officer

As far as your second question. Thanks, Duane. I said we were going to talk about our exciting future is America's ultra low cost carrier. So I'll answer your question in that in that vein.

So, in the event that they do emerge, you take a carrier that's probably one of the most similar to us. You slap on 40% more costs. And that creates a lot of runway ahead of us

Duane Pfennigwerth -- Evercore ISI -- Analyst

 And thanks for that. Maybe we'll get you to expand a little bit. There was a period of time and I don't recall the exact quarter or when, but, to manage your costs, to focus on your cost, you sort of de-emphasized some expenses. You know, Northeast airports, for example, you know, would it ever make sense to come back to, you know, LaGuardia or, you know, could you envision having a bigger footprint in south Florida if assets became available?

Barry Biffle -- Chief Executive Officer

Yeah. Look, absolutely. I mean, look, I mean, you're referencing what we did in New York and some other places. It's not that that they were expensive.

In addition to being expensive, we were unable to put together an efficient operation with the landing slots that we had. And so we would absolutely if we can get the right opportunity in LaGuardia, we would be really excited about it. I think consumers would be, too. 

Duane Pfennigwerth -- Evercore ISI -- Analyst

Appreciate the thoughts.

Michael Linenberg -- Deutsche Bank -- Analyst

Good afternoon, guys. Congrats to get back to profitability. My first question just on looking at the differentials the year-over-year, or year-over-two year in sort of your base fare versus your ancillary. And it is interesting, you were obviously successful in pushing both up, which is a good thing in a highly inflationary environment.

But that ancillary increase is roughly double. And I'm just curious about,  are there barriers, Daniel? Just they're different products, different price elasticities. Presumably, one is more stickier than the other, but it was a big increase. We're talking about $20, $25 or so, plus or minus a few dollars.

What were the big components? Or is there just an inflationary piece in there where, you know, just bag fees are now $3 to $5 higher, and seat fees, and insurance fees are all $3 to $5. Is that really what's flowing through here? Because it does look like a step function change. If you could add color.

Daniel Shurz -- Senior Vice President, Commercial

Right. So look, we took it on to the pandemic to continue developing new products. So it's a mix of everything. And it's the same inflationary effects.

It's new products we've introduced. It's the continued work we've done, and I think what we leave the industry and how we optimize our pricing while can tolerate products reflecting what sentiment customers want. And it's just a continued work to improve this. And that's why we now have confidence, given what we've seen, we now have confidence just to increase our target to $5 by the end of 2023.

Barry Biffle -- Chief Executive Officer

And I would just add, Michael, we learned in the pandemic, we used to think that 50-50 was a good split. And that's true. And you use it you said it just a moment ago. We use this word literally, you'll hear this around our office multiple times.

Just today we talk about the stickiness of non-ticket. And the truth is bears in fuel are largely out of our control, but non-ticket is not. And so what we like about non-ticket is that that we can get closer and closer. I mean, I can't guarantee profits, but we can get closer and closer to two to protect our profits going forward.

So that's why we've laid out today that we plan to get to $85 by the end of next year. And that is to not only get us back in profit, solid profitability in 2023, but mean to make sure that we can maintain it for decades to go.

Michael Linenberg -- Deutsche Bank -- Analyst

And then just my second, Barry, because you brought this up and it seems like, you know, you guys are sort of on the leading edge here with respect to zero hour pilots and helping them get through training and getting them to, I guess, at 250 hours. And the question that hasn't been well answered is, OK, they're at 250. You know, at what point do you get them to 1500? And I know there's part 135 opportunities, but there's only so many that are out there. It sounds like you study this.

What is it, a two year? Three year? What's the time frame from getting from 250 to 1500? It seems like, you know, everybody talks about it. It seems like you get them through the program and they're ready to fly. But it sounds like it's a few years. Can you just give us at least a little bit more sort of your thoughts on that?

Barry Biffle -- Chief Executive Officer

Yeah, I started off and we thought there might be some questions. So we were fortunate today to have Brad Lambert, our vice president, fly operations. But there's a couple of phases. You've got to get your private at roughly 40 hours.

You got to get to commercial 250 CFI. And then, yes, you can get an ATP at 1000. If you have 60 college hours of aviation, you can get it at 1250. If you have 30 college hours and you get it 1500.

If you don't have any college hours of aviation. And the cadet program that we're rolling out, we'll target, you know, using some of the college hours to limit that. But, Brad, we're really excited about it. And Brad can tell you more about the kind of opportunities that we're going to work with them to do here and abroad to build their hours from 250 up.

Brad Lambert -- Vice President, Fly Operations

Hey. So we definitely got opportunities, obviously, with 135 carriers. You're right. There's limited capacity there.

But the nice thing about our agreement with ATP is they are the biggest manufacturer of pilots out there in the country. And there's lots of opportunities there for them to construct and build time very quickly. So we look at the program 24 months or so, but again, we want to control our destiny and we think we've got enough opportunity for them to build the flight time up to the minimum.

Michael Linenberg -- Deutsche Bank -- Analyst

OK, great. That's the 24 month that's looking forward. That's actually very helpful. Thanks

Brad Lambert -- Vice President, Fly Operations

And we're also looking for international opportunities as well. You know, there's a lot of other countries out there that accept U.S. licenses and we can fly them at 250 hours build time up to that HP minimums.

Michael Linenberg -- Deutsche Bank -- Analyst

Oh, very good. Thank you.

Barry Biffle -- Chief Executive Officer

I would just say, Michael, is we're just going to no longer entertain these speculations that were going to run out pilots. We're going to source our pilots and have control of it. 

Operator

Our next question comes from Scott Group. Wolfe Research. Your line is open.

Scott Group -- Wolfe Research -- Analyst

Hey, thanks. Good afternoon. So as you think about the stand-alone growth potential, I guess what I'm trying to understand is what do you think your capacity growth looks like over the next several years in an environment where superior, stand-alone, and then where JetBlue acquires Spirit? I don't know if that's in violation of your you know, what do you want to talk about? But I guess I'm trying to understand, like how your growth story is different now and on a stand-alone basis and how do you navigate sort of that regular regulatory uncertainty potentially over the next year? Plus, do we have to wait for some of that accelerated growth?

Daniel Shurz -- Senior Vice President, Commercial

So we look at the standard we already have an aggressive growth plan next year. As we return to normal utilization levels, we anticipate 30% growth in 2023 over 2022 as we fully get the island back to normal utilization. And then going forward after that, we already have a fleet plan that provides for 15 to 20% of year growth. What happens in the environment? What happens in such combinations? We can always accelerate that.

Move it closer to 20, if necessary above 20. We will watch for opportunities by controlling our cost is discussed by driver and on ticket. We have we are controlling our destiny, and we can make the choices about where we fly.

Scott Group -- Wolfe Research -- Analyst

OK. Did I hear that the plan is to grow 30% next year versus 22.

Daniel Shurz -- Senior Vice President, Commercial

Yeah. It's got to simmer down here. Given that we have constrained capacity across this year, next year, as you move back to full utilization, you get to 30%, slightly above 30% growth.

Scott Group -- Wolfe Research -- Analyst

OK. Great. And then maybe just last thing, just as I focus on the report and the guidance. Can you just talk about the monthly travels and trends.

And I know you're talking about 20% plus, but, you know, if you feel like it should be closer to the upper twenties, you did in Q2 and any color there. Thank you.

Daniel Shurz -- Senior Vice President, Commercial

We are saying we are seeing right now typical seasonality. We're not going to go into more detail. Not what we're seeing for Q3 is just typical seasonality patterns. But because the issue, as we've discussed, is because we have the higher amount of capacity growth at the end of the quarter, because we're growing at 5% in July and 14% to 16% in September.

That is creating a drag on the overall rather than for the quarter of around three points, because we've pushed more capacity growth into an off peak month.

Got it. OK. Thank you, guys. Appreciate it.

Operator

Our next question comes from Savi Syth with Raymond James. Your line is open.

Savi Syth -- Raymond James -- Analyst

Hey, good afternoon. Just a follow-up on Jamie's question earlier. And it looks like maybe even this year you're your aircraft deliveries are getting a little bit delayed. So are you seeing that delay this year? And just as you kind of plan out your capacity, what's your confidence level and how much of that 30% is dependent on fleet deliveries versus just getting utilization back up?

Barry Biffle -- Chief Executive Officer

Roughly half of it is fleet deliveries, and the other half comes from increased utilization.

Savi Syth -- Raymond James -- Analyst

Okay.

James Dempsey -- Executive Vice President and Chief Financial Officer

And Savi, near term, we've seen some delays. I mean, it's been relatively modest. It's nothing like we're obviously on the Airbus program. It's nothing compared to the Boeing program.

You know, you're seeing 6 week delays, 4 to 6 weeks delays in aircraft deliveries for some of the aircraft. But all relatively near-term stuff.

Barry Biffle -- Chief Executive Officer

And we typically yell it's the delays have generally been in days and weeks. And so, you know, we typically put in a 45 day, up to 45 day kind of cushion between a delivery and when we have it scheduled to fly.

Savi Syth -- Raymond James -- Analyst

That's helpful. And finally, one thing you've shown last year and this year throughout is kind of a nimbleness to kind of react to the demand environment or whatever an environment brings with it or anything else. So it's kind of curious, you know, what kind of environment you're assuming in that 30%. And if we do see a slowing down or kind of a recession environment, what your kind of comfortable maybe moderating that to? Or how should we think about that?

Barry Biffle -- Chief Executive Officer

Well, look, I think we're always probably the fastest to react if things were to dramatically change. But that's you know, I think our confidence in the 30% is driven by a couple of things. One, we're headed to Sub6 CASM. So if anybody can be successful with airline business, it'll be with low prices if demand were to fall off.

And so we'll be one of the few that can afford to actually carry low prices. And it will be further subsidized, not just on the cost side, but by the fact that we have the $85 target by the end of next year in non tickets and we're already producing 75. So, we're pretty confident in the growth. Obviously, we'll reevaluate that if there were a deeper recession than what we're seeing.

But so far the demand looks very good and we've seen some seasonal changes but nothing major. And I think what seems to be missed in the airline space is even if there is a recession, the capacity cut are already built in. I think if you if you track back what we should have had with normal GDP growth over the last three years, we are significantly lower than where you would normally see capacity. And so if you get a 10% to 20% cut from a recession, well, the cuts are already in.

So that's why you're seeing a lot of the pricing power across the industry, even as other industries are having a tough time right now.

Savi Syth -- Raymond James -- Analyst

Good point. Thank you.

Operator

Our next question comes from Helane Becker Cowen. Your line is open.

Helane Becker -- Cowen and Company -- Analyst

Thanks very much, operator. Hi, everybody, and thank you very much for the time. I just have two questions to follow up, that comment Barry, that you just made about. A capacity reduction already factored in.

What do you think that the hiring will look like at the airline in an environment where things do slow? Would you pause the hiring or would you just continue to forge ahead?

Barry Biffle -- Chief Executive Officer

No. I think we would be the last airline to stop hiring because our slow, even slower hiring because when you're the lowest cost producer in the space, you're the first one that should be growing.

Helane Becker -- Cowen and Company -- Analyst

Got it. That's helpful. And then the other question I have. I'm not sure how you know the answer.

What responsibility do you think the pilots union itself, like Alpha National, has for training pilots? They seem to want a lot of, I don't know, assurances, but they don't seem to want to accept responsibility for building up the pilot ranks. Do they bear any responsibility? And as you know, in your negotiations with your pilots, can you get them to accept some of that?

Barry Biffle -- Chief Executive Officer

I guess I'm not understanding your question.

Helane Becker -- Cowen and Company -- Analyst

Well, think about it this way. If you want to become a pilot, the $250 thousand cost is 100% on you. And part of the reason for that is the rules around which you can become a pilot. It's not that easy a career path, right, if you don't go military or something like that.

So don't you think Alpha itself bears some responsibility for helping an 18 year old or a 22 year old get the necessary hours in order to build a career?

Barry Biffle -- Chief Executive Officer

I don't know if it's Alpha's responsibility. I think it's been. Maybe they have some. Maybe we everyone has a responsibility across the entire aviation community.

I mean, we just to clarify, it's not $250 thousand, it's less than $100 thousand to get your commercial. Yes. If you paid for all of your hours and you didn't get any type of job. Yes.

It would cost considerably more, maybe in the $250 $300 thousand range. But the challenge with that, you're not going to be as good a pilot as someone that we can hold through our cadet program place at a great place where they get good training and they get real life experiences flying from a commercial perspective. But look, I think, you know, we, as an industry, and overall need to take responsibility. But I can just tell you what we're doing.

We see the shortages coming down the line. And while we haven't had challenges, we're just taking control of our destiny. And we're going to have the sourcing that we need, no different than we source airplanes, and no different we source engines, parts, everything else. We're going to source training of pilots from 0 hours.

And to be quite honest, I mean, in the last few hours, it's been one of the most exciting times. It's at Frontier, I mean, I'm looking ahead of charge right across smile right now. I mean, he's been inundated today. We have a bunch of flight attendants that already are like, hey, I've always want to be a pilot.

And so this is really exciting to have a program that kind of handholds them, gets them through. It helps them get up, get set up with a really good training program, and then get them the right type of experience that they need to be safe pilots. And so not only are we going to control the sourcing of our pilots, but we're also going to control the quality and the training so that we can ensure that they'll be successful and safe pilots for us. And we hope that we can partner with Alpha when they come in.

But they are generally not involved until once they become an active line holder or actually a pilot at Frontier.

Got it. OK. That's really helpful. Thanks, Barry.

Have a nice day.

Operator

And I'm not showing any further questions at this time. I turn the call back over to Barry before any closing remarks.

Barry Biffle -- Chief Executive Officer

Thanks to everyone. We appreciate everyone and joining us today. And again, as I said, we're excited to be America's ultra low cost carrier. We're excited to talk to you soon.

Talk to you next quarter.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

David Herman -- Managing Director

Barry Biffle -- Chief Executive Officer

Daniel Shurz -- Senior Vice President, Commercial

James Dempsey -- Executive Vice President and Chief Financial Officer

Jamie Baker -- J.P. Morgan -- Analyst

Duane Pfennigwerth -- Evercore ISI -- Analyst

Michael Linenberg -- Deutsche Bank -- Analyst

Brad Lambert -- Vice President, Fly Operations

Scott Group -- Wolfe Research -- Analyst

Savi Syth -- Raymond James -- Analyst

Helane Becker -- Cowen and Company -- Analyst

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