Good day, and thank you for standing by. Welcome to the Frontier Group Holdings First Quarter 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. Please be advised that this conference may be recorded. I would now like to hand the conference over to your speaker today, David Erdman, Senior Director of Investor Relations.

Thank you, and good afternoon, everyone. Welcome to our first quarter 2022 earnings call. Today's speakers will be Barry Biffle, President and CEO; Jimmy Dempsey, EVP and CFO; and Daniel Shurz, Senior Vice President, commercial. Each will deliver brief prepared remarks, and then we'll get to your questions. But first, let me quickly cover the 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 and with reports we have filed with the SEC. We may also discuss non-GAAP financial measures, which are reconciled to the nearest comparable GAAP measure in the appendix of the earnings announcement. As well, during the call, any commentary regarding the proposed combination of Frontier and Spirit does not constitute an offer to sell or the solicitation of any offer to buy any securities or solicitation of any vote or approval. Our registration statement and subsequent amendment were previously filed in Form S-4 with the SEC, and you should closely read those documents as they contain important information related to the proposed combination. And just lastly, we will be participating in several investor conferences in the coming months, and we hope to see you at one of those events. With that, I'll give the floor to Barry to begin his comments.

Thanks, David. Good afternoon, everyone, and thanks for joining our call. As we progress through the first quarter, we entered a period of post-pandemic when demand for air travel is on a solid path to recovery. Our revenue for the first quarter was 11% higher than the comparable pre-COVID quarter in 2019 and included $69 of ancillary revenue per passenger, 21% higher than the first quarter of 2019. In addition, capacity in the first quarter increased by 20% versus the comparable pre-COVID quarter in 2019. The recovery began in earnest in March and has continued into the second quarter. The strength of recovery is the strongest I've experienced in my career, and we expect it to gain momentum as we progress through the year. Accordingly, we expect record revenue in the second quarter with RASM growth of over 20% compared to the second quarter of 2019 and continued strength in our ancillary performance leading to an expectation of a further improvement to $70 per passenger in the second quarter. As we position the airline to be a leader in the post-pandemic recovery, we are focused on balancing capacity in response to elevated fuel prices and the current demand environment to enable the airline's return to profitability in the second quarter and full year 2022. Utilization in the first quarter was impacted by COVID in January and February and severe weather in March, exacerbated by staffing shortages at the Jacksonville Air Traffic Control Center. Daniel will elaborate further on this in his prepared remarks later. We plan to grow second quarter capacity 10% to 12% versus the comparable quarter in 2019 and full year capacity by 12% to 15% versus the full year 2019. Utilization should continue to improve as overall passenger volumes increase through year-end. Our expectation of record revenue for the second quarter and our industry-leading fuel efficiency validate our ultra-low-cost model even in a high-cost fuel environment, providing confidence in our return to profitability. Before I turn the call over to Daniel for a commercial update, I wanted to highlight how proud I am of team Frontier, which has successfully navigated the airline through the pandemic and positioned us to succeed in the recovery while upholding our mission of Low Fares Done Right. With that, I'll now hand the call over to Daniel.

Thank you, Barry, and good afternoon, everyone. Total operating revenue in the first quarter was $605 million or approximately $111 per passenger. Our total revenue per passenger was in line with the level achieved in the comparable pre-COVID quarter, despite the lingering effect of the Omicron variant in January and February, due in large part to the strength and resiliency of our ancillary products. Our ancillary revenue per passenger of $69 in the first quarter was 21% higher than the amount in the comparable pre-COVID quarter and represented 62% of our total revenue per passenger. We're seeing strength across our ancillary product portfolio. In addition, we introduced new ancillary product offerings during the first quarter, including our Board First and priority check bag programs, which are providing further strength. With this quarter's results, we have significantly surpassed our previously stated ancillary target of $65 per passenger. And as Barry mentioned, we are now targeting $70 per passenger during the second quarter. We will continue to expand and enhance our ancillary product offering to further strengthen our loyalty programs, our customers' ability to personalize their travel experience, and our ability to offer low fares to our customers. We averaged over 420 departures per day during the quarter, 30% higher than the comparable 2019 quarter, while our capacity as measured by ASMs increased by 20% over the same period. Our stage length was 9% lower than the comparable 2019 quarter, the intended consequence of our modular network strategy, which is engineered to reduce costs and enhance operational performance. As travel demand gained momentum during the first quarter, capacity in March 2022 was 26% higher than the corresponding pre-COVID month in 2019, and load factors in March 2022 improved to 80%. Average aircraft utilization was 10.8 hours per day during the first quarter, given the longer demand impact from COVID in January and February and severe weather patterns during March across parts of Florida, where we operate a high concentration of flights. The weather issues and resulting downstream impacts were exacerbated by staffing shortages at the Jacksonville Air Traffic Control Center, which controls our space over the northern two-thirds of Florida. Further improvement to aircraft utilization is expected as operations normalize and the recovery from the pandemic progresses. As Barry mentioned, the demand recovery is expected to continue into the second quarter and lead up to the summer travel season and support an improvement in both load factors and passenger yields. Turning to commercial highlights. Earlier this year, we announced the launch of 14 nonstop routes from two new airports. Service at Chicago Midway commenced today, offering daily flights to eight destinations with another route starting in May and two more set to begin this October. At Houston Hobby, we will offer nonstop flights to Cancun, Las Vegas, and Orlando beginning Memorial Day weekend. This new service complements our existing operations at Chicago O'Hare and Houston Bush Intercontinental and strengthens our position in two of the five largest metropolitan areas in the United States. We also announced 23 new domestic non-stop routes during the quarter, the majority of which will originate from Raleigh Durham and Philadelphia to rapidly growing markets. In our international Caribbean region, we launched service from Orlando to Aguadilla, Puerto Rico, and announced new routes from Las Vegas to Guadalajara and Monterrey, and from Houston and Tampa to Cancun and finally from Miami to Kingston. As part of our western expansion, we announced plans for a new crew base in Phoenix to open in November 2022. It will be our eighth pilot base and ninth flight attendant base and is expected to grow to 180 pilots and 275 flight attendants within the first year, with additional growth planned in the future. Finally, earlier this month, plans were approved to construct a new addition to Denver International, our hometown airport and the third busiest in the United States. The plans call for a new facility to be constructed at the east end of the A Concourse to include 14 ground loading gates for our preferential use. The gates will be configured to facilitate in-planning and deplaning through the front and rear aircraft doors, providing us with the ability to improve our efficiency with shorter turn times. The expansion is expected to be completed in 2024 and will provide our customers traveling out of Denver with even more travel options at ultra-low fares. That concludes my remarks, and so I'll now hand it over to Jimmy.

Thank you, Daniel, and welcome everyone. Our financial results for the first quarter reflect the soft travel demand experienced in January and February due to the lingering effect of the pandemic followed by a substantial recovery in demand and passenger yields in March. Fuel prices were elevated during the quarter, resulting in $215 million of fuel expenses at an average fuel cost of $2.99 per gallon. Total operating expenses for the first quarter were $758 million, including $11 million of transaction and merger-related costs, and adjusted total operating expense excluding fuel was $532 million. This resulted in CASM of $0.1019, with an adjusted CASM excluding fuel of $0.715 in the first quarter compared to $0.083 and $0.055 in the first quarter of 2019, respectively. The increase in adjusted CASM excluding fuel was driven by the reduction in average stage length, lower average daily aircraft utilization, the timing of aircraft deliveries and returns, and labor rate increases. We consequently recognized a $121 million net loss for the quarter on a GAAP basis and a $109 million adjusted net loss after adjusting for transaction and merger-related costs and costs associated with the repayment of our treasury loan. We ended the first quarter of 2022 in a strong financial position with $727 million of unrestricted cash and cash equivalents after the repayment in February of the $150 million previously outstanding treasury loan. Our loyalty program brand assets are now unencumbered and available for debt issuance should the need arise. We ended the first quarter with 112 aircraft in our fleet after the delivery of two A320neo. Our fleet is 5% larger than the comparable prior year quarter and 30% larger than the comparable pre-COVID quarter in 2019. Our fleet continues to be the most fuel-efficient of all major US carriers when measured by ASMs per fuel gallon consumed. Frontier is positioned to build on its fuel efficiency advantage with the introduction of the A321neo aircraft in the second half of 2022. Consistent with earlier comments, the A321neo aircraft will also enable the company to continue its trend to increase average seats per departure, driving cost efficiency into the business. Looking forward to the second quarter and the balance of 2022, we expect continued strength in demand and resulting passenger yields as the travel recovery progresses, and our primary focus is on returning the airline to profitability. Capacity is anticipated to grow by 10% to 12% in the second quarter versus the comparable quarter of 2019, bolstered by continued strength in ancillary revenue per passenger. RASM is expected to improve by over 20% in the second quarter versus the comparable 2019 quarter. Fuel costs are anticipated to be between $3.85 and $3.90 per gallon. And adjusted total operating expenses excluding fuel are expected to be between $545 million and $555 million in the second quarter. As utilization improves and capacity is restored, we expect a downward trend in our unit cost metrics of almost $0.01 as the year progresses. As Barry mentioned, the benefit from the anticipated strength in demand for the balance of the year is expected to more than offset forecast fuel prices and non-fuel expenses, resulting in the company's expectation of profitability for both the second quarter and full year 2022 excluding special items. The adjusted pre-tax margin in the second quarter is expected to range between 1% and 5%. With that, I'll turn the call back to Barry to deliver closing remarks before we enter the Q&A.

Thanks, Jimmy. As we fully transition into the post-pandemic recovery, I'm as optimistic for this business as I've ever been as we showcase the merits of the ultra-low-cost model. We're here to win. We have the right people, an optimal fleet of modern fuel-efficient aircraft, and with more on the way, a strong brand and the financial flexibility to meet that objective. Before we move to questions, I'd like to comment on our pending merger with Spirit Airlines. Our signed agreement remains in place and we continue to be excited about completing the merger and delivering the significant benefits that will come with it. For shareholders, this combination offers tremendous value. In addition, the structure of the transaction will enable both Spirit and Frontier shareholders to benefit from the substantial upside potential of the combined company. Our regulatory process is already well underway and many months ahead of any alternative. For consumers, this merger will supercharge the ULCC model. You've heard it before and I'll say it again. Together, Frontier and Spirit will offer even more ultra-low fares to more people in more places and deliver $1 billion in annual savings for consumers. For employees, we expect the combination to create 10,000 new direct jobs and thousands more at our business partners. For the competition, the dominant Big Four airlines and other high-cost airlines like JetBlue will be faced with a true nationwide ultra-low fare competitor. With that said, we're here today to talk about our results for this quarter and our strong outlook, so I ask that you keep your questions focused on these topics. We appreciate everybody's time this afternoon. Let's open the call for questions.

Thank you. Our first question comes from Duane Pfennigwerth with Evercore ISI. Your line is open.

Thanks. And I might violate your request on my first one just as an attempt. Look, this might be a really dumb question, and clearly there was a sort of spirited defense of the benefits that you see on this call. But I guess, why hasn't there been more of a campaign? Why haven't you been more vocal about those benefits since the JetBlue bid?

Well, I think we've been pretty clear. I don't think we have to keep repeating it. And I think, if we read what's going on, I think people understand it. But like I said a while ago, we think this benefits consumers, we think it benefits the employees, and we think it benefits shareholders, and there's not much else to say.

Okay Barry that's…

We'll let you ask a real question Duane, if you don't…

All right. Yes, I will. That's all I'm going to do on that. I appreciate it. Just with respect to the 2Q and just the massive change, the massive inflection that happened over the course of the first quarter, how much of 2Q was maybe given away or sold in a very different revenue environment? And said differently when you think about closing inventory, do you feel like you have enough of that left kind of in this environment are there enough of those seats available in your network to benefit from those much higher closing fares? And I would think that those sort of drive the value proposition of what Frontier brings very clearly in a closing environment?

Sure. Thanks, Duane. It's a good question. We sell relatively close-in compared to some other airlines. To clarify, while March revenue really started to take off, sales began to pick up back in February. Our revenue management team recognized that we needed to be more conservative about under-selling, especially in the Eastern markets and beyond. While we may have undersold a small portion of April, over 80% of the quarter was still available for sale when we noticed the shift in mid to late February. That's why you're seeing the majority of the benefit this quarter. However, it could have been slightly better if we had known this back in December.

Yes. I mean I guess the point is as you look beyond the second quarter into third quarter and beyond and you had made some bullish comments about the summer, which obviously falls across both quarters. So I guess the question is, is there incremental upside as sort of everybody adjusts to this new normal? And thanks for taking the questions.

Yes, thanks, Duane. I did mention a small amount in my prepared remarks, but we expect the momentum to continue. While we may have undersold for the quarter, we will not have that issue in future quarters. Interestingly, demand continues to recover every day. Despite how positive things are, it's important to remember that the mask rule changed just last week. People are excited, and I’ve noticed that maybe one out of ten people are still wearing masks. That barrier is largely gone. However, international testing remains a challenge, which several people in this room can attest to, and that still affects the international side. Additionally, some communities, particularly in New York and parts of the Northeast and California, are still catching up. With the return to office and the full resumption of business travel, I believe things will keep improving throughout the summer and certainly by fall. There is significant potential for further growth, which is why we believe there will be ongoing sequential improvements in demand.

Our next question comes from Jamie Baker with JPMorgan. Your line is open.

Hey, good afternoon. So, the press release guys was refreshingly bereft of any pointed language on the topic of labor strain outside of some ATC commentary. You're obviously aware of what other airlines are saying about pilot challenges. Are you sweeping the topic under the rug or do you just think the narrative is a bit overblown here?

Well, I don't know if it's overblown for some airlines. I mean I think there's some airlines with some real challenges. But in our particular case in the near term, we have an excess of pilots for example. And so, while we've seen some attrition greater than years past, Frontier is really in a fortunate position. We actually have a lot of tailwinds in our pilot workforce and our recruiting success versus some of the low-cost and regional airlines. I mean, number one, we're the best brand in the low-fare space. So, there's kind of a natural affinity that folks want to work here. You've also got the fact that our growth enables people to upgrade to Captain within four years. So, when you look at your first 10 years of W-2s, you're going to make as much or more money at Frontier than you will at the big airlines, even though we have lower pay rates because you upgrade to Captain so much faster. And then you have to add in not just pay, but lifestyle. And when you look at the fact that we've got probably one of the best portfolios of bases available in selection and choice, in some of the best cities including the fact, Daniel mentioned a while ago, we're opening Phoenix later this year. We've got a lot of attractive places people want to live. And also because of the growth, the other benefit to lifestyle is you're going to have holidays and weekends off a lot sooner, maybe a decade sooner than going to one of the big airlines. So, when you put all that together that's just a completely different, much more compelling value proposition that we offer to pilots versus an airline that might base you in JFK or Boston and you're living in a crash pad, sitting reserve for a long time. So that's why Frontier's just a much better home for pilots and I don't think we have the distress that you've seen at some of these other airlines.

Barry, were you ready for the question or was that just spontaneous because that was a really good answer? Regarding the fleet, if you hypothetically find yourself in a year or a year and a half needing more planes, how would that work with the Indigo order book? I know the allocations have already been made, but if you can show that you could generate a better return on the next airplane than JetSmart, is there a way to address that, or would you need to explore options outside of the Indigo order?

We have disclosed the large order you mentioned. We can adjust the percentage of aircraft among the carriers that placed that order. We can also obtain white tails from leasing companies, which is another significant way to manage our capacity growth. One option available to us is extending leases. Over the next three to five years, we have a number of aircraft that will be coming off lease. If we determine that we want to increase our capacity growth beyond our current plans, we can do so quite rapidly.

Okay. Very helpful. Thanks a lot, gentlemen. Thanks Barry.

Thanks Jamie.

Thank you. Our next question comes from Mike Linenberg with Deutsche Bank. Your line is open.

Good afternoon everyone. Barry, since you mentioned some issues with the Jacksonville ATC in the release, could you or Daniel share what percentage of your capacity touches Florida during the June to September quarter? I suppose it's more relevant to know what touches Orlando, Tampa, and Jacksonville specifically. I'm curious to understand those numbers. Additionally, we heard during the Southwest call about an all-hands meeting with the FAA in May to address the ongoing situation, which has become unworkable. Could you elaborate on that as well?

Sure. And Daniel can get you the percentages here in a moment. But overarching, we're going to be smaller in Florida in the near term as a result. Jimmy mentioned the reduction in capacity and talked about the headwinds that, that causes and that's a large reason why we have excess staff in the near term, but we did trim near term. And it's simply that, the Air Traffic Control is an unsustainable thing. We're really excited that the FAA is stepping in knee-deep on this and they are going to have a summit in the next couple of weeks, and we'll go through it. We've got everything from spatial launches to general aviation and other factors. But the good news is, ourselves and other carriers have reduced some of the schedule flying. And I can tell you that in our particular case, we have looked at some of the most at-risk flying. So, for example, if an airplane was to transit Jacksonville Center, if it transits once, you have a one to three-hour delay that's not the end of the world. It transits twice, you could have two to four hours of delay. If it transits three times, then almost in every case we've seen that that results in the crew timing out. So we will be taking, as we do with everything that the company faces, a very active and aggressive role in taking steps that we can to control our destiny and kind of schedule around this. And then, hopefully that summit results in some things that will help us by fall. But I can tell you in the near term, we're actively looking at rescheduling like I mentioned, changing some of the pairings as well as reducing the overall capacity in the impacted airports. And as far as percentages Daniel.

Sure. If it naturally adjusts in our summer schedule, we are seeing strength across the rest of the country. We experienced a decline from the mid-50s in March to 50% in April, and by June, after making some adjustments to the schedule, we're down to 40% of our operations in Florida. As Barry mentioned, we are taking the appropriate actions within our control. We are making adjustments to ensure we maintain our operational integrity.

That's great to hear. I just wanted to follow up on the pilots. It's encouraging to know that you either have a solid pipeline or some extra capacity, as Barry mentioned. One issue we often come across is the entire onboarding process for pilots, including classroom training and then waiting three months for simulator time. I never thought to ask this before, but do you have a training center equipped with several simulators, or are you facing challenges with simulator availability? Any insights on this would be helpful, as it seems to contribute to the bottleneck.

Sure. We've been managing the situation, moving from very low attrition to a more noticeable level, although not as high as other carriers. This has led to the need for more hiring and training. Despite a pilot shortage due to this bottleneck, we're receiving 14 to 15 strong applications daily, and we have a good number of candidates in training classes. The main challenge for Frontier is the simulator availability, but I'm happy to report that we've secured this resource after months of effort. By August, we will effectively double our monthly class sizes. We don’t foresee any major obstacles and everything appears to align well with demand, fuel conditions, and air traffic control factors. Thus, we believe we will more than compensate for any shortfall as we approach the fourth quarter. We are still on track to meet our pilot targets, although aligning simulator time has become more challenging.

Great. Thanks. Thanks Barry.

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

This is actually Matt on for Savi. Thanks for the time. I hate to belabor the labor point, but maybe if you could just quantify the surplus in the pilot that you talk about a little bit more. When you look at your 2022 growth rate, how big is that surplus versus year-end 2021 levels? And then if you have any idea out into 2023 based on growth expectations there, I mean is it sufficient or how much further do you have to go to…?

To give you an idea of the scale, we currently have over 2,000 qualified applicants on file. Our pipeline is strong, and there's more to come. As I mentioned, we will be expanding our training capacity starting in August. For 2023, we believe that with our strong pipeline and the appeal of Frontier, we should manage for the year. The excess we expect is likely to be in the range of high single-digit percentages this summer, but we hope to see this stabilize as we improve utilization and find effective solutions for ATC. By fall, we are optimistic that we will not have any excess, as having too many pilots is not ideal, and they are eager to work. We aim to resolve this and reduce any surplus by the fall.

Okay. Great. Really appreciate the extra detail there. And then maybe to 2023, if you could provide any color about how you're thinking growth there if possible?

Yeah, Matt. This is Jimmy Dempsey here. We're not providing guidance for 2023 at this time. Clearly, the business is set to grow by mid-teens every year. We'll go through the planning process as the year progresses. We expect to have sufficient training capability to meet the pilot needs for next year. We anticipate adding around 200 to 250 pilots annually. Given the number of applicants we have, we feel confident in our ability to fill that capacity, especially if actual utilization increases beyond current levels.

Great. Thank you all for the time.

Thank you. Our next question comes from Myles Walton with UBS. Your line is open.

Good afternoon. I was wondering if you could touch on the ancillary expectation here in the second quarter. Obviously, you've got pretty boundless opportunity on the RASM side. So I'm just wondering why $70 is the number you're using given you did $69 in the first quarter.

Thanks Myles. It's Daniel. Look we're saying that is our current expectation. We were as I said able to roll out some new products in the first quarter. We made pricing adjustments. We've been focused on ancillary since the pandemic's been going on. And we've been looking for the opportunities. The team has been working on ideas and working on ways we can further increase our non-ticket revenue. And we're going to continue to work to build the pipeline and to build our performance in this area. Based on what we see currently that's our expectation and we would expect that to continue to increase beyond the second quarter. We're, obviously, focused on non-ticket because it's more stable. And we're also focused on it because it allows us to offer the lowest fares.

Maybe one question I should probably know this, but how close-in or how disparate is the timing of booking the ancillary from the actual ticket itself? How coincident are those two occurrences?

It's a mix. We have a healthy portion of customers who book directly who book by their ancillary at the time of booking; that's when they get their best value. We incentivize paying for your ancillary as soon as possible. The longer you wait, the more you will pay. We, obviously, do our customers who pay at check-in notably a higher rate of third-party customers who pay at check-in. But we do everything we can to incentivize earlier payment and communicate that customers will save money if they buy early. And, obviously, we also give customer savings with bundles. We encourage customers to buy bundles of products that's been another successful part of our business. And we optimize the price and we optimize the offerings we make to customers and that's part of how we're increasing the revenue.

Okay, all right. Thank you.

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

Thanks very much, Operator. Hi everybody, thank you for the time. I have a question for Jimmy about the treasury loan. You paid that off. Are there any warrants or anything outstanding that treasury still has related to the Cares Act?

Yes, Helane, I hope you're well. We have warrants associated with the treasury loan that are still outstanding, as well as those related to the payroll support program we participated in.

Okay. Would you consider buying those back if it was available to you?

Certainly, we would consider it. It's not something we've been focusing on in the short term, but we would definitely evaluate it if an opportunity arose.

Okay, great. That's helpful. My other follow-up question is regarding an article I saw about four or five weeks ago about hiring pilots from Australia on an E3 visa. Are you actually doing that? If so, how many pilots can you hire? I know they can only stay for 24 months, but is that something you’re pursuing or was it just a casual comment?

No, Helane, I wouldn't throw away. We're excited about it. Look, we've always been aggressive and creative and innovative and we've been looking at this for a while and we've been really successful with it. And there's the E3 program from Australia, but we're looking at other parts of the world and we think the E3 program alone could do at least 50-plus pilots a year. So you could saw call it one-quarter of your demand just from that we're looking at other parts of the world. And so I just think that, yeah, it just kind of shows how creative we are. But they want the job and there's lots of opportunities, and some of these can end up depending upon their situation and whatever type of lease program, it can be a lot longer than 24 months they could end up possibly with citizenship. But I think what's really important too that people seem to miss on the pilot side with us is Jimmy mentioned it; it's not a throwaway comment. The A321neo that's coming in later this year has 240 seats. And so think about the precious use and how the scarce resource is getting used here at Frontier. And we're going to be able to spread two pilots over 240 seats not 120, not 140, not 180, 240 seats. So we're getting aggressive to make sure we have plenty of pilots but we're also using them in a very efficient and productive way by ensuring that we're getting plenty of passengers moved per pilot.

Great, got it. Yeah. That’s totally helpful. Thank you very much. Have a nice afternoon.

Thank you. And our next question comes from Andrew Didora with Bank of America. Your line is open.

Hey. Good afternoon everyone. Jimmy, I know you are highly focused on the balance sheet in the pandemic. And it's in a good spot right now. I guess, when you look out into more recovered earnings power later this year into 2023, at what leverage level do you have kind of the most comfort running your business? And kind of what's an upper cap we should be thinking about in terms of net leverage levels?

Well, I suppose during the pandemic we've been really focused on spending as little money as possible and preserving as much liquidity as we could, without actually burdening the business with debt. And so we've emerged from the pandemic in a really good shape from a balance sheet perspective. Our focus at the moment is really getting our liquidity levels back to like if you look at that pre-COVID, we always had about 30% of trailing 12 months in cash on the balance sheet. And the only debt we had on the balance sheet was effectively productive debt. So we had debt related to PDP facilities for pre-delivery payments to Airbus. And then also clearly operating lease debt linked to the aircraft fleet that we have. And so we want to get back to that type of scenario where the depth that's sitting on the balance sheet is really for funding growth into the business. And so my focus at the moment and across the business is really getting our cash as a first measure to 30% of trailing 12 months of normalized revenues and we're a little bit short of that at the moment. We do sit in a good place, but we're a little bit short of it. And then, normalizing our leverage ratios based on the productive aircraft we have in the business. We don't disclose publicly our leverage targets but if you look at us pre-COVID you can get a sense of where we would anticipate to get to.

Got it. That's helpful. And I guess, I want to go back to the non-ticket front just a really good result in the quarter. Obviously, the $70 kind of already exceeding your prior targets, we get a lot of questions around demand elasticity around fares as they continue to move higher here but I guess how do you think about that in terms of non-ticket? Where do you think it maybe maxes out in terms of percentage of total fare or something like that, just curious to get your thoughts. Thanks.

Andrew, I'll begin, and I believe Barry may have some input as well. We are unsure of the ceiling for our growth. We have numerous ideas and a wealth of experience to keep advancing. As observed during the pandemic, we established targets last year of $63 and then $65, and we consistently exceeded those goals. We will continue to seek opportunities and develop products. Much of our current focus is on initiatives that do not significantly affect fares. We are launching new products that our customers find valuable, and we believe there are still many opportunities ahead. Additionally, as we've mentioned, our third-party programs and discounts on our credit card offers will become increasingly robust as we expand as an airline, making our products more pertinent to customers and driving additional revenue. Barry, do you have anything else to add?

No, I just want to add I'm really proud of Daniel and his team. I mean, we've got an impressive result. And we didn't waste the pandemic. They've been really busy in growing the non-ticket. And in years past, I think we thought a 50-50 split of non-ticketing ticket was a good idea. We've kind of learned in the pandemic that the non-ticket is a lot more sticky and if you'll be creative and to Daniel's point work on things that are truly incremental that don't have any degradation to the ticket that's where the real profit potential is. So I'm really pleased with what they put together. As you said, we announced last year a target of $63 then $65 we keep blowing through these. So all I can tell you is that they're not done, they're really busy and really excited about what we get done but 50-50 is no longer the idea. We think it's going to be considerably higher and we'll deliver a lot more sustainable profitability in the years to come if we can grow that percentage.

Okay. Thank you.

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.

Thanks everyone for joining. We'll talk next quarter.