On the Frontier Airlines Feb. 7th earnings call, four of the ten analysts’ questions were asked by a substitute for the firm’s primary analyst – perhaps an indication that Wall Street still thinks the likely last survivor in the “ultra-low-cost carrier” segment is not quite ready for prime time in the airline industry.
Yet for all the insistence that the industry now belongs to the big carriers who have finally found a way -- through pricing strategies and strangleholds on key gateways -- to demolish the ULCC model, Frontier is breaking through the assumptions.
The clearest indication is the stock price. Frontier shares rose 15% on Friday, after the carrier reported earnings. Year-to-date, Frontier shares are up 29%, substantially ahead of the rest of the industry, as of Friday’s close.
Year-to-date, Alaska shares were up 17%, Delta up 15%, United up 14%, and American up 1%. Southwest shares were down 7% and JetBlue was down 11%.
On the earnings call, Frontier executives repeatedly discussed the practices they have used to create a profitable model in their forsaken space.
None of those practices are news to the airline industry. It’s just that under CEO Barry Biffle, the combination seems to be working.
Biffle has played every hand. He has been at Frontier since 2014. Before that, he spent nine years at Spirit.
Before that, he was a network planner at Crystal City-based US Airways in the 1990s and early 2000s.
In an interview last year, he noted the irony of having encouraged high fares before becoming the person who is doing the most to reduce them.
During 2024, Frontier had a cost advantage of 48% to the rest of the industry.
Biffle said the advantage will remain over 40% even after new labor contracts are signed in 2026.
Here are some of the techniques Frontier executives discussed on the earnings call.
Fly Less On Offpeak Days
“As I always joke, the way to stop losing money is to stop doing things that lose money,” Biffle said on the call.” Last year, he said, flying on Tuesday, Wednesday and Saturday lost money.
“We’re fixing that by reducing the capacity, and we expect to continue to do that,” he said. “We are going to fly on the days and periods people want to go. We’re not going to chase utilization.”
Operate Out and Back Flights from 13 Bases
“We’ve spent the last about 18 months trying to adjust our network to meet the demand patterns that exist in today’s environment,” said Frontier President Jimmy Dempsey.
“We’ve also launched over that period quite a dramatic change in the way we operate our business with an out-and-back network from 13 bases across the United States.
“We suffered from immaturity throughout last year as we established our network,” Dempsey said. “One of the things that you’re seeing from a revenue perspective is some maturity coming into that business."
Bases launched last spring, “even though they’re still in the first year of operation, they’re starting to mature and mature relatively quickly,” he said..
Frontier has bases in Atlanta, Chicago, Cincinnati, Cleveland Dallas, Denver ,Las Vegas, Miami, Orlando, Philadelphia, Phoenix, San Juan, Tampa and Trenton.
Look For More Profit In Loyalty And Premium
“Loyalty remains a significant financial opportunity,” said Bobby Schroeter, Frontier chief commercial officer. “Today, our co-brand revenue per passenger is under $3 compared to over $30 at legacy and other low-cost carriers.”
In the fourth quarter, he said, acquisitions of the Barclays Bank Frontier card rose 35%, and spend per cardholder increased 11% year.
Frontier has launched “upfront plus,” where passengers can buy a blocked middle seat in their row. It will launch a 2X2 first class product late this year “Our customers look for a premium experience,” Biffle said.
Control Capacity
“We don’t see a whole lot of growth in the first half for sure,” Biffle said. “We’re not going to commit to a capacity growth number until we see where things are at. We’re not going to commit to that yet until we see how the summer sets up.”
Fly New Airplanes.
In its fourth quarter earnings report, Frontier said it generated 106 available seat miles per gallon, reaffirming its "position as the most fuel-efficient of all major U.S. carriers and its ongoing commitment to being ‘America's Greenest Airline’ (as measured by ASMs per fuel gallon consumed during the fourth quarter compared to all other major U.S. carriers).”
The average age of the global fleet has risen to a record 14.8 years, a significant increase from the 13.6 years average for the period 1990-2024, the International Air Transport Association said in December.
Frontier Airlines apparently has the world’s youngest fleet, with an average aircraft age around 4.6 years.
And On Mergers?
As for a potential merger with Spirit, Biffle offered a brief statement. Last month, Frontier made its second bid for bankrupt Spirit and Spirit quickly rejected.
Biffle said the bid would benefit Spirit shareholders, employees, and customers. “We obviously know Spirit very well and are prepared to move quickly to engage to make this compelling opportunity happen,” he said, adding that the call was not the place to discuss the effort.
What might threaten Frontier’s continuing improvement? The history of airline industry mergers is not necessarily good for acquirers, at least not in the short term. On this, the industry would have to trust Biffle.
