• Total Operating Revenue: $912 million, a 5% increase from the prior year quarter.
• Revenue per Available Seat Mile (RASM): $0.0917, roughly in line with the prior year quarter.
• Total Revenue per Passenger: $116, down 6% from expectations.
• Fuel Expense: $238 million, 10% lower than the previous year quarter.
• Adjusted Non-Fuel Operating Expenses: $720 million or $0.0724 per available seat mile, 8% higher than the previous year quarter.
• Pre-Tax Loss: $40 million, yielding a 4.4% loss margin.
• Net Loss: $43 million or $0.19 per share.
• Total Liquidity: $889 million, including $684 million in unrestricted cash and cash equivalents.
• Aircraft Fleet: 163 aircraft at quarter end, with four A321neo aircraft and two spare engines delivered during the quarter.
• Capacity Reduction Impact: Expected to reduce costs and capital expenditures by over $300 million combined.

• Warning! GuruFocus has detected 8 Warning Signs with ULCC.

Release Date: May 01, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Frontier Group Holdings Inc (NASDAQ:ULCC) reported a 5% increase in total operating revenue for Q1 2025 compared to the prior year, reaching $912 million.
• The company has implemented significant capacity reductions, expected to save over $300 million in costs and capital expenditures.
• Frontier's loyalty program enhancements, including free check bags for co-brand cardholders and simplified elite status, are showing positive growth and engagement.
• The introduction of the 'New Frontier' economy bundle has been well-received, offering competitive advantages with features like free changes and seat assignments.
• Frontier's digital upgrades, including a new Android app and upcoming iOS app and website redesign, aim to improve customer experience and engagement.

Negative Points

• Q1 2025 results were below original expectations due to a disruption in travel demand in March, driven by macroeconomic uncertainty.
• The average fare per passenger decreased by 6%, with total revenue per passenger also falling short of expectations.
• Frontier experienced a pre-tax loss of $40 million and a net loss of $43 million for the quarter.
• The company is facing challenges with lower average daily aircraft utilization and increased station costs.
• Despite efforts to stabilize, the company anticipates a loss in Q2 2025, with a projected per-share loss of $0.23 to $0.37.

Q & A Highlights

Q: Can you explain why the average fare was down despite launching premium products and upselling? A: Barry Biffle, CEO: The premium products are performing well, but March saw a significant drop in demand, which affected fares. We had concentrated capacity in March, and the sudden demand drop led to lower loads and average fares.

Q: With capacity reductions planned, will you focus more on core profitable markets in the second half of the year? A: Barry Biffle, CEO: Yes, we will focus on core markets. The capacity reduction will help us manage costs and align with demand, particularly by reducing off-peak flying.

Q: What factors will drive profitability in the second half of the year? A: Barry Biffle, CEO: Stabilizing demand, capacity reductions, and revenue initiatives like the new Frontier economy bundle will contribute to profitability. We expect industry capacity moderation to also help improve margins.

Q: How are the new hub markets like LAX and JFK performing? A: James Dempsey, President: These markets are performing well, attracting both leisure and VFR traffic. Early results are promising, and we plan to continue growing in these high-traffic areas.

Q: Can you provide insights into the growth of your loyalty program? A: Robert Schroeter, Chief Commercial Officer: We've seen a 30% increase in spend year-over-year. The new benefits and opportunities are attracting more sign-ups and engagement, aligning with our growth expectations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.