UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

x                              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2007

o                                 TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:  000-51890

FRONTIER AIRLINES HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  x  No  o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer or large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated filer  o Accelerated filer x  Non-accelerated filer  o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  o  No  x

The number of shares of the Company’s Common Stock outstanding as of January 28, 2007 was 36,641,744.

TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited)

FRONTIER AIRLINES HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Unaudited) 
(In thousands, except share data) 

See accompanying notes to consolidated financial statements.

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FRONTIER AIRLINES HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations (Unaudited)

For the Three and Nine Months Ended December 31, 2007 and 2006

(In thousands, except per share amounts)

See accompanying notes to consolidated financial statements.

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FRONTIER AIRLINES HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Supplemental disclosure of investing activities:

In the nine months ended December 31, 2007 and 2006, the Company applied pre-delivery payments of $42,780,000 and $26,522,000, respectively, towards the purchase price of aircraft and LiveTV.

See accompanying notes to consolidated financial statements.

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FRONTIER AIRLINES HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (unaudited)

December 31, 2007

1.     Basis of Presentation

The accompanying unaudited consolidated financial statements of Frontier Airlines Holdings, Inc., a Delaware corporation (“Frontier Holdings” or the “Company”), have been prepared in accordance with generally accepted accounting principles for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended March 31, 2007.  The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

Certain prior period amounts have been reclassified to conform to the current year presentation. The marketing component of the sale of the Company’s EarlyReturns miles, previously reported as a reduction of promotion and sales expense in the amount of $4,811,000 and $10,170,000, have been reclassified as other revenue for the three and nine month periods ended December 31, 2006, respectively.

The consolidated financial statements include the accounts of Frontier Holdings, Frontier Airlines, Inc. (“Frontier”), and Lynx Aviation, Inc. (“Lynx Aviation”), which are wholly owned subsidiaries of Frontier Holdings.  Lynx Aviation received its operating certificate and began operations on December 7, 2007.  The financial results of Frontier Holdings include the operating results of Frontier and start-up costs and losses for Lynx Aviation.  In addition to mainline service, Frontier has entered into capacity purchase agreements to supplement its mainline operations with three partners (“Regional Partners”) and Lynx Aviation.  See Note 12 for operating segment information.

Financial results, as measured by net income, for the Company, and airlines in general, are seasonal in nature.  More recently, the financial results for Frontier’s first and second fiscal quarters generally have exceeded its third and fourth fiscal quarters.  Results of operations for the three and nine months ended December 31, 2007 are not necessarily indicative of the results that may be expected for the year ended March 31, 2008.

Lynx Aviation

Frontier Holdings entered into a purchase agreement with Bombardier, Inc. for ten Q400 turboprop aircraft, each with a seating capacity of 74, with the option to purchase ten additional aircraft.  The purchase agreement was assumed by Lynx Aviation and Lynx Aviation took title of the first eight aircraft deliveries which were purchased during the nine months ended December 31, 2007.  During the nine months ended December 31, 2007, Lynx Aviation completed five sale-leaseback transactions on these aircraft. Lynx Aviation took delivery of the last two aircraft in January 2008. See Note 14 for subsequent events. The aircraft are operated by Lynx Aviation under a separate operating certificate. Lynx Aviation may exercise its option to purchase the option aircraft no later than 12 months prior to the first day of the month of the scheduled delivery date.  The first option aircraft delivery date is March 2009 and the last option aircraft delivery date is July 2010.

Lynx Aviation has entered into a capacity purchase agreement with Frontier, effective December 7, 2007, whereby Frontier pays Lynx Aviation a contractual amount for the purchased capacity regardless of the revenue collected on those flights.  The amount paid to Lynx Aviation is based on operating expenses plus a margin.  The payments made under this agreement are eliminated in consolidation, and the passenger

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revenues generated by Lynx Aviation are included in passenger revenues in the consolidated statements of operations.  Payments made under the capacity purchase agreement during the three months ended December 31, 2007 were $2,295,000.   See Note 12 for operating segment information.

Regional Partners

In January 2007, the Company entered into an agreement with Republic Airlines, Inc. (“Republic”), under which Republic will operate up to 17 76-seat Embraer 170 aircraft.  The contract is for an 11-year period from the in-service date of the last aircraft, which is scheduled for December 2008.  The service began on March 4, 2007 and replaced all CRJ 700 aircraft operated by Horizon Air Industries, Inc. (“Horizon”).  The contract with Horizon expired on return of the last aircraft in November 2007.  Frontier establishes the scheduling, routes and pricing of the flights operated under the Republic agreement. The Company compensates Republic for its services based on Republic’s operating expenses plus a margin on certain of its expenses.  The agreement provides for financial incentives and penalties based on the performance of Republic which are accrued for in the period earned.

In September 2003, the Company signed an agreement with Horizon under which Horizon operated up to nine 70-seat CRJ 700 aircraft.  In September 2006, the Company amended the agreement with Horizon to provide that all nine CRJ-700 aircraft would be returned to Horizon during a one-year ramp down period which began in January 2007. The contract was terminated upon completion of the ramp down period in November 2007.

In September 2007, Frontier signed a limited-term contract with ExpressJet Airlines, Inc. (“ExpressJet”) to operate two to four 50-seat Embraer 145XR jets on behalf of Frontier.  These jets were used to service previously announced routes that were intended to be serviced by Lynx Aviation.  Lynx Aviation replaced ExpressJet on these routes as soon as its certification was completed.  The service by ExpressJet started November 15, 2007 and terminated on December 6, 2007.

In accordance with Emerging Issues Task Force No. 01-08, “Determining Whether an Arrangement Contains a Lease” (“EITF 01-08”), the Company has concluded that the agreements with Regional Partners each contains a lease as the agreement conveys the right to use a specific number and specific type of aircraft over a stated period of time, and as such, has reported revenues and expenses related to Regional Partners on a gross basis.  Revenues are pro-rated to the segment operated by the Regional Partners based on miles flown and are included in passenger revenues.  Expenses directly related to the flights flown by the Regional Partners are included in operating expenses – regional partners.  The Company allocates indirect expenses between mainline and Regional Partners operations by using Regional Partners departures, available seat miles, or passengers as a percentage of system combined departures, available seat miles or passengers.

2.     New Accounting Standards

New Accounting Standards Not Yet Adopted

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“FAS 157”). FAS 157 defines fair value, establishes a framework for measuring fair value under U.S. generally accepted accounting principles and expands disclosures about fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The Company has not yet determined the impact of adopting FAS 157.

In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“FAS 159”). This standard permits companies to choose to measure many financial instruments and certain other items at fair value, following the provisions of FAS 157. FAS 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined the impact of adopting FAS 159.

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New Accounting Standards Adopted During the Fiscal Year

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109, (“FIN 48”), on April 1, 2007.  The Company did not have any unrecognized tax benefits and there was no effect on the Company’s financial condition or results of operations as a result of implementing FIN 48.

The Company files income tax returns in the U.S., foreign and various state and local jurisdictions. The Company is not currently under examination by the IRS and tax years beginning after April 1, 2003 remain subject to examination.   State jurisdictions remain subject to examination for tax years 2002 - 2006. The Company believes there will not be any material changes in unrecognized tax positions over the next twelve months.

The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of the date of adoption of FIN 48, the Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor was any interest expense recognized with respect to taxes during the nine months ended December 31, 2007.

3.     Equity Based Compensation Plans

For the three and nine months ended December 31, 2007, the Company recognized stock-based compensation expense of $309,000 and $859,000, respectively, for stock options, stock appreciation rights (“SARs”) and restricted stock units (“RSUs”), net of estimated forfeitures. For the three and nine months ended December 31, 2006, the Company recognized stock-based compensation expense of $241,000 and $749,000, respectively. Unrecognized stock-based compensation expense related to unvested options and RSU awards outstanding as of December 31, 2007 was approximately $5,124,000, and will be recorded over the remaining vesting periods of one to five years.  At December 31, 2007, the remaining weighted average recognition period for options and RSUs was 3.7 years and 3.5 years, respectively.

During the nine months ended December 31, 2007, the Company granted 538,341 SARs at a weighted average base price of $5.83 per share with a grant-date fair value of $3.11.  During the nine months ended December 31, 2007, the Company also granted 250,541 RSUs at a weighted average grant date market value of $5.88.

The following table shows the Company’s assumptions used to compute the stock-based compensation expense for stock option and SAR grants issued during the nine months ended December 31, 2007 and 2006:

Exercise and base prices for options and SARs outstanding, respectively, as of December 31, 2007 ranged from $2.13 per share to $24.17 per share.  The weighted-average remaining contractual life of these equity awards is 4.8 years.  The aggregate intrinsic value of in-the-money vested options and SARs outstanding,

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which is calculated as the difference between the exercise price of the underlying options and the market price of the Company’s common stock, was $151,000 as of December 31, 2007.  As of December 31, 2007, the Company had 1,389,000 shares available for future grants.

4.     Property and Equipment, Net

As of December 31, 2007 and March 31, 2007, property and equipment consisted of the following:

Property and equipment includes capitalized interest of $3,951,000 and $1,970,000 at December 31, 2007 and March 31, 2007, respectively.

During the three and nine months ended December 31, 2007, the Company recorded additional depreciation expense of $354,000 and $3,228,000, respectively, related to a change in estimate of the useful life of its aircraft seats due to the implementation of a program to replace its Airbus seats with new leather seats estimated to be completed in May 2008.

5.     Deferred Revenue and Other Liabilities

At December 31, 2007 and March 31, 2007, deferred revenue and other liabilities consisted of the following:

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6.               Other Accrued Expenses

At December 31, 2007 and March 31, 2007, other accrued expenses consisted of the following:

7.     Long-Term Debt and Short-term Borrowings

(1) In March 2005, the Company entered into a two-year revolving credit facility (“Credit Facility”) to support of letters of credit and for general corporate purposes. The initial Credit Facility was renewed for another two-year period ending May 2009.  Under this facility, the Company may borrow the lesser of

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$20,000,000 (“maximum commitment amount”) or an agreed upon percentage of the current market value of pledged eligible spare parts.  The amount available for letters of credit is equal to the maximum commitment amount under the facility less current borrowings.  Interest under the Credit Facility is based on the Eurodollar rate plus a margin or prime plus a margin.  In addition, there is a quarterly commitment fee on the unused portion of the facility based on the maximum commitment amount.  The Credit Facility contains a covenant that will not permit the Company to maintain an unrestricted cash and cash equivalent position of less than $120,000,000, with a 30-day cure period. The amount available for borrowings under the Credit Facility based on a percentage of the current market value of the pledged eligible spare parts at December 31, 2007 was $18,187,000.  The Company has reduced the amount available for borrowings by letters of credit issued of $14,560,000 and short-term borrowings of $3,000,000.

(2)  During the nine months ended December 31, 2007, the Company borrowed $69,665,000 for the purchase of three Airbus A318 aircraft delivered in April 2007, May 2007 and June 2007.  These senior loans have terms of 12 years and are payable in monthly installments with a floating interest rate adjusted quarterly based on LIBOR. At the end of the term, there are balloon payments for each of these loans.  A security interest in the three purchased aircraft secures the loans.

During the nine months ended December 31, 2007, the Company borrowed $48,283,000 for the purchase of three Bombardier Q400 aircraft.  These aircraft loans have terms of 15 years and are payable in semi-annual installments with a floating interest rate adjusted semi-annually based on LIBOR. A security interest in the aircraft secures the loan.  Also, during the nine months ended December 31, 2007, the Company borrowed $80,188,000 for the purchase of five Bombardier Q400 aircraft which were subsequently sold in a sale-lease back transaction for a gain of $801,000.  The gain will be deferred and amortized over the life of the associated leases.

(3)  In November 2007, the Company entered into a pre-delivery deposit facility (“PDP Facility”) for the purpose of financing obligations to make pre-delivery payments on eight A320 aircraft.  The PDP Facility allows the Company to draw amounts up to $22,200,000 for aircraft deliveries through August 2010.  As of December 31, 2007, the Company had $12,333,000 outstanding under the PDP Facility for A320 aircraft deliveries scheduled for February 2008 and March 2008.  As such, the amount outstanding is classified as short-term borrowings on the consolidated balance sheet.

Other Revolving Facility and Letters of Credit

In July 2005, the Company entered into an agreement with a financial institution for a $5,000,000 revolving line of credit that allows the Company to issue letters of credit up to $3,500,000.  In June 2006, the revolving letter of credit was increased to $5,750,000 and it now permits the Company to issue letters of credit up to $5,000,000 and matures in June 2008. As of December 31, 2007, the Company has used $4,817,000 under this agreement for standby letters of credit to provide credit support for certain facility leases.  A cash compensating balance of $2,750,000 is required to be maintained to secure additional letters of credit, which has been classified as restricted investments on the consolidated balance sheets.

At December 31, 2007, the Company was in compliance with the covenants for all debt and lease agreements.

Sale-Lease Back Transactions and Loss on Early Extinguishment of Debt

During the three months ended December 31, 2007, the Company executed sale-lease back transactions on five Bombardier Q400 aircraft loans into lease transactions.  The gain on the sale-lease back transactions was $801,000, which were deferred over the new lease terms of 15 years.  Also, prior to the sale-leaseback transactions, the Company paid off interim loans on the Bombardier Q400 aircraft and wrote-off $283,000 of debt issuance fees as a loss on early extinguishment of debt in the consolidated statement of operations.

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8.     Equity

Treasury Stock and Unearned ESOP shares

In March 2007, the Company purchased 300,000 shares of its common stock for $1,838,000.  These shares were purchased to fund the Company’s 2007 contribution to the Employee Stock Ownership Plan (“ESOP”). These shares were subsequently contributed to the ESOP.  Compensation expense for the ESOP for the three and nine months ended December 31, 2007 was $459,000 and $1,378,000, respectively.  Compensation expense for the ESOP for the three and nine months ended December 31, 2006 was $698,000 and $2,094,000, respectively.

Comprehensive Loss

A summary of the comprehensive loss for the three and nine months ended December 31, 2007 and   2006 is as follows:

9.     Fuel Hedging Transactions

The Company’s operations are inherently dependent upon the price of and availability of aircraft fuel.  In November 2002, the Company initiated a fuel hedging program using a variety of financial derivative instruments.  These fuel hedges do not qualify for hedge accounting under SFAS 133, and, as such, realized and non-cash marks to market adjustments are included in aircraft fuel expense.

The results of operations for the three months ended December 31, 2007 and 2006 include non-cash mark to market derivative losses of $3,535,000 and derivative gains of $1,394,000, respectively. Cash settlements for fuel derivatives contracts for the three months ended December 31, 2007 and 2006 were receipts of $12,829,000 and payments of $3,791,000, respectively.  The results of operations for the nine months ended December 31, 2007 and 2006 include non-cash mark to market derivative losses of $5,712,000 and $2,306,000, respectively. Cash settlements for fuel derivatives contracts for the nine months ended December 31, 2007 and 2006 were receipts of $21,958,000 and payments of $2,517,000, respectively.

The following table summarizes the components of aircraft fuel expense for the three and nine months ended December 31, 2007 and 2006:

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Outstanding fuel hedge positions as of December 31, 2007 are as follows:

* Jet A is Gulf Coast Jet A fuel.  Crude oil is West Texas Intermediate crude oil.  Jet A Crack Spreads hedges in which we have hedged the difference between Gulf Coast Jet A fuel costs and the West Texas Intermediate crude oil costs.

**  One barrel is equal to 42 gallons.

As of December 31, 2007 and March 31, 2007, the fair value of the hedge agreements recorded on the balance sheet as an asset was $8,017,000 and $13,729,000 respectively.

10.   Post-retirement liability curtailment gain and other charges

Post-retirement liability curtailment gain

On December 14, 2007, the President signed the Fair Treatment for Experienced Pilots Act (the “Pilots Act”), which increased the retirement age for commercial pilots to 65 from 60.  Pilots that have not reached age 60 will now be allowed to work for five more years, provided they pass regular medical and piloting exams.

Pursuant to the Company’s collective bargaining agreement with its pilots, if pilots are forced to retire due to FAA requirements, the retired pilots and their dependents could retain medical benefits under the terms and conditions of the Health and Welfare Plan for Employees of Frontier Airlines, Inc. until age 65.  However, as a result of the Pilots Act, this retirement health benefit is no longer required.  It is only required for pilots who reached mandatory retirement age prior to the effective date of the Pilots Act.

The Company recorded a one-time post-retirement liability curtailment gain of $6,361,000 to reflect the impact of the Pilots Act, which was the reduction in post-retirement liability for pilots who had not yet attained the age of 60.  A liability of $319,000 remains for the pilots who had previously reached the mandatory retirement age prior to the Pilots Act.

Employee separation and other charges

In December 2007, the Company announced that it was reducing its indirect labor work force by 10

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percent. The jobs eliminated were corporate jobs not directly related to flight operations and resulted in a severance accrual of $442,000.  The Company will make the remaining cash payments during the quarters ending March 31, 2008 and June 30, 2008.

11.   Loss Per Share

The Company accounts for earnings per share in accordance with SFAS No. 128, Earnings per Share.  Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods presented.  Diluted net income per share reflects the potential dilution that could occur if outstanding stock option and warrants were exercised.  In addition, diluted convertible securities are included in the denominator while interest on convertible debt, net of tax, is added back to the numerator.

During the three and nine months ended December 31, 2007, interest on convertible notes, net of capitalized interest, of $335,000 and $1,493,000, respectively, and 8,900,000 shares were excluded from the calculation of diluted loss per share because they were anti-dilutive.  For the three and nine months ended December 31, 2007, the common stock equivalents of the weighted average options, SARS, RSUs and warrants outstanding of 413,000 and 239,000, respectively, were excluded from the calculation of diluted loss per share because they were anti-dilutive.  For the three and nine months ended December 31, 2007, the weighted average options, SARS and RSUs outstanding of 2,091,000 and 2,149,000, respectively, were excluded from the calculation of diluted loss per share because the exercise prices were greater than the average market price of the common shares.

During the three and nine months ended December 31, 2006, interest on convertible notes, net of tax, of $443,000 and $1,570,000, respectively, and 8,900,000 shares were excluded from the calculation of diluted loss per share because they were anti-dilutive.  For the three and nine months ended December 31, 2006, the common stock equivalents of the weighted average options, SARS, RSUs and warrants outstanding of 1,238,000 and 851,000, respectively, were excluded from the calculation of diluted loss per share because they were anti-dilutive. For the three and nine months ended December 31, 2006, the weighted average options, SARS and RSUs outstanding of 1,983,000 and 2,127,000, respectively, were excluded from the calculation of diluted loss per share because the exercise prices were greater than the average market price of the common shares.

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12.   Operating Segment Information

SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” requires disclosures related to components of a company for which separate financial information is available that is evaluated regularly by a company’s chief operating decision maker in deciding the allocation of resources and assessing performance. The Company has three primary operating and reporting segments, which consists of mainline operations, Regional Partner operations, and Lynx Aviation operations.  Mainline operations include service operated by Frontier using Airbus aircraft.  Regional Partner operations include regional jet service operated by Republic, Horizon and ExpressJet.  Lynx Aviations operations, a subsidiary of Frontier Holdings, includes service operated using Bombardier Q400 aircraft, which began revenue flight service on December 7, 2007.  The Company evaluates segment performance based on several factors, of which the primary financial measure is operating income (loss). However, the Company does not manage the business or allocate resources solely based on segment operating profit or loss, and scheduling decisions of the Company’s chief operating decision maker are based on their contribution to the overall network.

To evaluate the separate segments of the Company’s operations, management has segregated the revenues and costs of our operations as follows:  Passenger revenue for our mainline, Regional Partners and Lynx Aviation represents the revenue collected for flights operated by the Airbus fleet, the aircraft under lease through contracts with Regional Partners and the Bombardier Q400 fleet.  Operating expenses for Regional Partner flights include all direct costs associated with the flights plus payments of performance bonuses if earned under the contract.  Certain expenses such as aircraft lease, maintenance and crew costs are included in the operating agreements with our Regional Partners in which we reimburse these expenses plus a margin.  Operating expenses for Lynx Aviation include all direct costs associated with the flights and the aircraft including aircraft lease and depreciation, maintenance and crew costs.  Operating expenses for both Regional Partners and Lynx Aviation also include other direct costs incurred for which we do not pay a margin.  These expenses are primarily composed of fuel, airport facility expenses and passenger related expenses. The Company also allocates indirect expenses between mainline, Regional Partners and Lynx Aviation operations by using departures, available seat miles, or passengers as a percentage of system combined departures, available seat miles or passengers.

Financial information for the three and nine months ended December 31, 2007 and 2006 for the Company’s operating segments is as follows:

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(1)  Other revenues included in Mainline revenue consist primarily of cargo revenue, the marketing component of revenues earned under a co-branded credit card agreement and auxiliary services.

(2)  Mainline operating income (loss) includes realized and non-cash mark-to-market adjustments on fuel  hedges, a post-retirement liability curtailment gain in 2007 and employee separation costs and other charges.

(3)  Lynx Aviation operating costs consisted solely of start-up costs prior to December 7, 2007.

(4)  Includes the parent company, Frontier Holdings, Inc., including its investments in Frontier and Lynx Aviation, which are eliminated in consolidation.

13.  Commitments and Contingencies

In October 2007, the Company signed an amendment to its agreement with Airbus S.A.S. under which Airbus agreed to defer the delivery schedule of four Airbus A320 aircraft.  The final Airbus A320 aircraft will be delivered in November 2011, which was deferred from final delivery date of August 2010.

14.   Subsequent Events

In January 2008, the Company purchased two additional Bombardier Q400 aircraft which resulted in additional borrowings of $32,389,000.  The two additional aircraft brought the total number of Bombardier Q400 aircraft to a fleet of ten.  These senior loans have terms of 15 years and are payable in semi-annual installments including interest, payable in arrears, with a floating interest rate adjusted semi-annually based on LIBOR.  A security interest in the purchased aircraft secures these loans.

On January 24, 2008, the Company’s Board of Directors approved a plan to sell four of the 22 owned Airbus aircraft.

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Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Special Note About Forward-Looking Statements. This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) that describe the business and prospects of Frontier Airlines Holdings, Inc. and its subsidiaries and the expectations of our company and management. All statements included in this report that address activities, events or developments that we expect, believe, intend or anticipate will or may occur in the future, are forward-looking statements. When used in this document, the words “estimate,” “anticipate,” “intend,” “project,” “believe” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated.  These risks and uncertainties include, but are not limited to:  the timing of and expense associated with, expansion and modification of our operations in accordance with our business strategy or in response to competitive pressures or other factors; failure of our new markets to perform as anticipated; the inability to achieve a level of revenue through fares sufficient to obtain profitability due to competition from other air carriers and excess capacity in the markets we serve; the inability to obtain sufficient gates at Denver International Airport to accommodate the expansion of our operations; the inability to successfully lease or build a new maintenance hangar prior to a potential lease termination of our primary maintenance hangar located at DIA that is currently on a month-to-month sublease with Continental Airlines; general economic factors and behavior of the fare-paying public and its potential impact on our liquidity; terrorist attacks or other incidents that could cause the public to question the safety and/or efficiency of air travel; hurricanes and other natural forces and their impact on air transportation and oil production; operational disruptions, including weather; industry consolidation; the impact of labor disputes; enhanced security requirements; changes in the government’s policy regarding relief or assistance to the airline industry; the economic environment of the airline industry generally; increased federal scrutiny of low-fare carriers generally that may increase our operating costs or otherwise adversely affect us; actions of airlines competing in our primary markets, such as increasing capacity and pricing actions of United Airlines, Southwest Airlines, and other competitors;  the potential impact of new regulations related to congested airports including the potential for additional slot restrictions  and an increase in landing fees and other rates aimed toward reducing peak operations;  the availability of suitable aircraft, which may inhibit our ability to achieve operating economies and implement our business strategy; the unavailability of, or inability to secure upon acceptable terms, debt or operating lease financing necessary to acquire aircraft which we have ordered; uncertainties regarding aviation fuel price; inherent risks of entering into new business strategies, such as the start-up of a new subsidiary using a different type of aircraft and in different markets and the operating efficiency and dependability of the selected aircraft and a new regional jet partner, and various risk factors to our business discussed elsewhere in this report.  Forward-looking statements include the statements in “Outlook” below.   Because our business, like that of the airline industry generally, is characterized by high fixed costs relative to revenues, small fluctuations in our revenue per available seat mile (“RASM”) or cost per available seat mile (“CASM”) can significantly affect operating results. Additional information regarding these and other risk factors are contained in our SEC filings, including without limitation, our Form 10-K for the year ended March 31, 2007.   These risk factors are not exclusive, and we undertake no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this filing.

Our Business

Now in our 14th year of operations, we are a low cost, affordable fare airline operating primarily in a hub and spoke fashion connecting cities coast to coast through our hub at Denver International Airport (“DIA”).  In this report, references to “us,” “we,” or the “company” refer to the consolidated results of Frontier Airlines Holdings, Inc. (“Frontier Holdings”) unless the context requires otherwise.  We are the second largest jet service carrier at DIA based on departures.  In January 2007, we became a major carrier as designated by the DOT.  As of January 25, 2008, we, in conjunction with our Regional Partner Republic Airlines, Inc. (“Republic”) and our wholly owned subsidiary Lynx Aviation, Inc. (“Lynx Aviation”), operated routes linking our Denver hub to 53

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U.S. cities spanning the nation from coast to coast, six cities in Mexico, two cities in Canada and one in Costa Rica.  We also provide service to Mexico from nine non-hub cities.

We were organized in February 1994, and we began flight operations in July 1994 with two leased Boeing 737-200 jets.  We have since expanded our mainline fleet in service to 60 jets as of January 25, 2008 (38 of which we lease and 22 of which we own), consisting of 49 Airbus A319s and 11 Airbus A318s.  During the three and nine months ended December 31, 2007 and 2006, we increased year-over-year mainline capacity by 16.3% and 14.1%, respectively, and we increased year-over-year mainline passenger traffic by 25.3% and 20.0%, respectively.

On January 11, 2007, we signed an agreement with Republic under which Republic will operate up to 17 Embraer 170 aircraft with capacity of 76-seats.  The contract is for an 11-year period from the in-service date of the last aircraft, which is scheduled for December 2008.  The service began on March 4, 2007 and replaced the CRJ 700 aircraft operated by Horizon Air Industries.  The Horizon contract expired on return of the last aircraft in November 2007.  We control the routing, scheduling and ticketing of the Republic service.  We compensate Republic for its services based on its operating expenses plus a margin on certain of its expenses.  The agreement provides for financial incentives and penalties based on the performance of Republic.  We select the markets to which the Republic fleet flies in order to right-size each market properly.  Republic currently provides service to 14 cities, of which six cities are to supplement our mainline service.

In September 2006, we formed a new subsidiary, Lynx Aviation, Inc. We entered into a purchase agreement with Bombardier, Inc. for ten Q400 turboprop aircraft, each with a seating capacity of 74, with the option to purchase ten additional aircraft.  Lynx Aviation obtained its operating certificate to provide scheduled air transportation service from the Federal Aviation Administration (“FAA”) in December 2007.  The aircraft are operated by Lynx Aviation under its operating certificate.  Lynx Aviation began revenue service on December 7, 2007 upon receiving FAA certification.  As of January 29, 2008, Lynx Aviation has taken delivery of ten Q400 aircraft and plans to have all ten aircraft in service by March 2008.  Lynx Aviation expects to have its tenth aircraft delivered on January 29, 2008. Lynx Aviation currently serves the following destinations: Billings, Montana; Wichita, Kansas; Rapid City, South Dakota; Albuquerque, New Mexico; Sioux City, Iowa; Oklahoma City and Tulsa, Oklahoma; and El Paso, Texas.

    In September 2007, we signed a limited-term contract with ExpressJet Airlines, Inc. (“ExpressJet”) to operate two to four 50-seat Embraer 145XR jets on routes intended to be serviced by Lynx Aviation.  ExpressJet provided this service between November 15, 2007 and December 6, 2007.  These routes are now serviced by Lynx Aviation.

Following is a list of routes that we have started serving or have announced our intention to serve from April 1, 2007 through January 25, 2008:

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** We terminated these scheduled routes effective November 26, 2007, January 7, 2008 and January 6, 2008, respectively.

We began service between San Francisco, California and Los Angeles, California with five daily frequencies on June 29, 2006 and service between San Francisco, California and Las Vegas, Nevada on December 14, 2006 with one daily frequency.  We terminated these routes effective July 10, 2007. In July 2007, we announced that we would no longer provide service to Reno, Nevada effective September 5, 2007.

In November 2007, we announced our plan to reinforce capacity to our top destinations to support the start-up of Lynx Aviation by closing unprofitable routes and increasing frequencies and capacity in several markets served through our hub at DIA.  In January 2008, we discontinued service to Mexico from several of our non-hub markets, discontinued service to Guadalajara, Mexico from DIA, and discontinued service from Memphis, Tennessee to Ft. Lauderdale and Orlando, Florida and Memphis, Tennessee to Las Vegas, Nevada.  We also adjusted seasonal service in several markets that we serve.

We currently lease 21 gates on Concourse A at DIA on a preferential basis and one international gate on Concourse A on a subordinated preferential basis.  We use these 22 gates and share use of up to seven common use regional jet parking positions to operate approximately 270 daily mainline flight departures and arrivals, 47 Regional Partner daily system flight departures and arrivals and 51 Lynx Aviation daily system flight departures and arrivals.  To support future growth, we are working with DIA to identify additional gates and expansion projects to accommodate the mainline growth as well as the additional aircraft to be operated by Lynx Aviation and the growth in the aircraft fleet operated by our Regional Partners.

Our corporate headquarters are located at 7001 Tower Road, Denver, Colorado 80249.  Our administrative office telephone number is 720-374-4200 and our reservations telephone number is 800-432-1359.

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Overview

We intend to employ a modest growth strategy while keeping our operating costs low.  One of the key elements to keeping our mainline costs low is maintaining the same family of Airbus aircraft.  This strategy produces cost savings because crew training was standardized for aircraft of a common type, maintenance issues are simplified, spare parts inventory is reduced, and scheduling is more efficient. The addition of the Bombardier Q400 turboprop aircraft operated through our Lynx Aviation subsidiary and the expansion of our Regional Partner operation will allow us to add routes to under-served markets in Colorado and elsewhere in the Rocky Mountain region using the economically correct gauge of equipment and operating performance.  We also keep our operating costs low by operating a single class of service.  Operating a single class of service simplifies our operations, enhances productivity, increases our capacity and offers an operating cost advantage.

As of January 29, 2008, we had remaining firm purchase commitments for ten Airbus 320 aircraft from Airbus.  Our contract with Republic also calls for an additional seven Embraer 170 aircraft.  We intend to use these additional aircraft to provide service to new markets and to add frequencies to existing markets that we believe are underserved.

The airline industry continues to operate in an intensely competitive environment.  We expect competition will remain intense, as over-capacity in the industry continues to exist.  Business and leisure travelers continue to reevaluate their travel budgets and remain highly price sensitive.  Increased competition has prompted aggressive strategies from competitors through discounted fares and sales promotions.

Highlights from the Quarter

Outlook

Fuel costs have continued to rise sharply during our second and third fiscal quarters, as crude oil reached $100 a barrel in early January 2008.  Crude oil has decreased slightly in the past few weeks and on January 29, 2008 was $93 per barrel.   We had hedged 46%, 30%, and 40% of our fuel purchases during the quarters ended June 30, 2007, September 30, 2007, and December 31, 2007 respectively, with realized settlements resulting in hedging gains of $4,337,000, $4,792,000 and $12,829,000, respectively.  For the three months ended March 31, 2008, we currently have 22% of estimated fuel purchases hedged in crude oil and 24% hedged for Gulf Coast Jet A crack spreads.  For the quarters ending June 30, 2008, September 30, 2008, December 31, 2008 and March 31, 2009, we have, using crude oil derivatives, hedged an estimated 25% of our fuel purchases for each quarter in a barrel price range from $87 to $105 with pricing specific to a particular fiscal quarter.  We also have Gulf Coast Jet A crack spread derivatives for the June and September fiscal 2008 quarters at 42% and 45%, respectively, of estimated usage.

Our fuel hedging activities do not qualify as hedging instruments as defined under SFAS 133.  As such, changes in the fair value of our hedges are recognized in earnings in the current period.  This will cause fluctuations in earnings due to the change in the non-cash mark to market valuations of these hedges prior to settlement.   The hedging activities are discussed in “Hedging Transactions” below.

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In December 2006, our Board of Directors approved a plan to replace all of our Airbus aircraft seats with leather seats that have light weight composite material with the project scheduled for completion in May 2008. The lighter seats are expected to produce fuel savings and have a new design allowing for more legroom. We also began adding four seats per Airbus aircraft in November 2007 with the project scheduled for completion in July 2008.  We have installed the new leather seats on 29 of our Airbus aircraft to date and have added seats on nine aircraft.  We have accelerated the depreciation on our old seats on our owned aircraft, which increased depreciation by $3,228,000 for the nine months ended December 31, 2007.  We anticipate additional accelerated depreciation expense of approximately $342,000.  The costs to purchase these additional aircraft seats are included in the Contractual Obligations Table in the “Liquidity and Capital Resources” section.

Throughout the third fiscal quarter, we began making several network adjustments that will become effective throughout our fiscal fourth quarter to better align to our strengths.  We implemented more constrained day of week capacity deployment and reduced capacity or eliminated service in several non-Denver domestic markets, non-Denver point-to-point flying to Mexico, and red-eye flying.  On January 24, 2008, we announced our intent to sell four of our 22 owned Airbus aircraft.  This will allow us to slow capacity growth and increase our cash position.  These changes have resulted in a more modest projected year-over year mainline growth rate of 5% - 6% for the March 2008 quarter versus the originally scheduled 11% to 12% growth.  For the entire mainline and regional network, capacity growth has been reduced from a scheduled 20% to a projected 14% for the March 2008 quarter.  These changes are already having an impact on our March quarter traffic and revenue advanced bookings, as we are seeing good year-over-year improvements in booked load factor and unit revenue. Looking beyond the March quarter, we are finalizing more adjustments that will further rationalize our network and leverage our position in Colorado and our Denver hub.

We expect our fourth quarter of fiscal year 2008 mainline CASM to increase as compared to our first and second quarters of fiscal year 2008 due to higher fuel costs.   Based on current levels of fuel prices, we do not expect to be profitable in the fourth quarter of fiscal year 2008.

On January 24, 2008, we announced our intent to sell four of our 22 owned Airbus aircraft.  This will allow us to slow capacity growth and increase our cash position.

Results of Operations

Frontier Holdings includes the following operations: our mainline operations, which consists of 60 Airbus aircraft; our Regional Partner operations operated by Republic, Horizon and ExpressJet (“Regional Partners”); and Lynx Aviation, which was in its start-up phase of operations until December 7, 2007 when it began revenue operations.  Lynx Aviation and our Regional Partners services are separate and apart from our mainline operations.

To evaluate the separate segments of our operations, management has segregated the revenues and costs of our operations as follows:  Passenger revenue for our Regional Partners and for Lynx Aviation represents the revenue collected for flights operated by these carriers.  Operating expenses for Regional Partner flights include all direct costs associated with the flights plus payments of performance bonuses if earned under the contract.  Certain expenses such as aircraft lease, maintenance and crew costs are included in the operating agreements with our Regional Partners in which we reimburse these expenses plus a margin.  Operating expenses for Lynx Aviation include all direct costs associated with the flights and the aircraft including aircraft lease and depreciation, maintenance and crew costs.  Operating expenses for both Regional Partners and Lynx Aviation also include other direct costs incurred for which we do not pay a margin.  These expenses are primarily composed of fuel, airport facility expenses and passenger related expenses. We also allocate indirect expenses between mainline, Regional Partners and Lynx Aviation operations by using departures, available seat miles, or passengers as a percentage of system combined departures, available seat miles or passengers.

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The following table provides certain of our financial and operating data for the three and nine months ended December 31, 2007 and 2006.  Mainline and combined data exclude the expenses of Lynx Aviation prior to receiving FAA approval to fly.  The start-up costs excluded were $3,396,000 and $8,454,000 for three and nine months ended December 31, 2007, respectively, and $920,000 and $1,677,000 for the three and nine months ended December 31, 2006, respectively.  Lynx Aviation began revenue service on December 7, 2007.  We do not believe that the results of Lynx Aviation during the quarter ended December 31, 2007 are indicative of future results because the fleet was flown in sub-optimal routes, additional crew were required for training and Lynx Aviation had low completion factors.  The costs of operations of Lynx Aviation for the month of December 2007 were $4,096,000.