Frontier Group Holdings, Inc.ULCC

Frontier Group Holdings, Inc. Fair Value Disclosure

10-KFiled Feb 18, 20263 min read
Fair Value Measurements
Under ASC 820, Fair Value Measurements and Disclosures, disclosures relating to how fair value is determined for assets and liabilities are required, and a hierarchy for which these assets and liabilities must be grouped is established, based on significant levels of inputs, as follows:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company utilizes several valuation techniques in order to assess the fair value of its financial assets and liabilities.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash are comprised of liquid money market funds, time deposits and cash, and are categorized as Level 1 instruments. The Company maintains cash with various high-quality financial institutions. See Note 1 for additional information on the Company’s restricted cash balances. Cash, cash equivalents and restricted cash are carried at cost, which management believes approximates fair value.
Debt
The estimated fair value of the Company’s debt agreements has been determined to be Level 3 measurement, as certain inputs used to determine the fair value of these agreements are unobservable. The Company utilizes a discounted cash flow method to estimate the fair value of the Level 3 debt.
The carrying amounts and estimated fair values of the Company’s debt are as follows (in millions):
December 31, 2025December 31, 2024
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
Secured debt:
Pre-delivery Credit Facilities$348 $352 $329 $333 
Building notes— — 12 12 
2025-1 EETCs105 109 — — 
Unsecured debt:
Affinity card advance purchase of miles101 100 100 98 
PSP Promissory Notes66 65 66 62 
Total debt$620 $626 $507 $505 
The tables below present disclosures about the fair value of assets and liabilities measured at fair value on a recurring basis in the Company’s consolidated financial statements (in millions):
Fair Value Measurements as of December 31, 2025
DescriptionBalance Sheet ClassificationTotalLevel 1Level 2Level 3
Cash, cash equivalents and restricted cashCash and cash equivalents$671 $671 $— $— 
Fair Value Measurements as of December 31, 2024
DescriptionBalance Sheet ClassificationTotalLevel 1Level 2Level 3
Cash, cash equivalents and restricted cashCash and cash equivalents$740 $740 $— $— 
The Company had no transfers of assets or liabilities between fair value hierarchy levels during the years ended December 31, 2025 and 2024.

Historical Timeline

Fiscal YearFiled
2025Feb 18, 2026Showing above
2024Feb 18, 2025
2023Feb 20, 2024
2022Feb 22, 2023
2021Feb 23, 2022

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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