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1. Company Snapshot

1.a. Company Description

Frontier Group Holdings, Inc., a low-fare airline company, provides air transportation for passengers.The company operates an airline that serves approximately 120 airports throughout the United States and international destinations in the Americas.It offers its services through direct distribution channels, including its website, mobile app, and call center.


As of December 31, 2021, the company had a fleet of 110 Airbus single-aisle aircraft comprising, 16 A320ceos, 73 A320neos, and 21 A321ceos.Frontier Group Holdings, Inc.was incorporated in 2013 and is headquartered in Denver, Colorado.

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1.b. Last Insights on ULCC

Negative drivers behind Frontier Group Holdings' recent performance include reduced consumer confidence, leading to lower demand and fare discounting. The airline's Q1 2025 guidance was revised downward, with a loss of $0.20 to $0.24 per share, and full-year guidance was pulled due to economic uncertainty. Frontier also cut its first-quarter outlook and reduced capacity to match weaker-than-expected demand. Additionally, the airline's parent company, Frontier Group Holdings, reported a pre-tax loss of $40 million and a net loss of $43 million in Q1 2025. The company's revenue per available seat mile (RASM) was flat to the comparable 2024 quarter, while cost per available seat mile (CASM) was 1% above the comparable 2024 quarter.

1.c. Company Highlights

2. Frontier Airlines' Q3 2025 Earnings: A Stronger Outlook Amidst Industry Shifts

Frontier Airlines reported total revenue of $886 million for Q3 2025, a slight decrease from the previous year's capacity due to a 4% reduction in capacity year-over-year. Despite this, revenue per passenger rose to $106, up 1% from the prior year, supported by an 81% load factor. The airline's non-GAAP EPS was -$0.31, slightly missing estimates of -$0.28. Nonfuel operating expenses were $729 million, down 6% sequentially, and fuel expense was $234 million, down 10% year-over-year.

Publication Date: Nov -30

📋 Highlights
  • Q3 Revenue and Performance:: Generated $886M in revenue with $106 revenue per passenger, up 1% YoY, despite 4% lower capacity.
  • Competitive Capacity Shifts:: Largest low-fare competitor reduced capacity by 2% sequentially, creating a more balanced supply-demand environment.
  • Loyalty Program Growth:: Frontier Miles generated $7.50 revenue per passenger in Q3, up 40% YoY, with plans to double to $7.5 range in loyalty earnings.
  • Cost Efficiency:: Nonfuel operating expenses fell 6% sequentially to $729M, while fuel costs dropped 10% YoY to $234M.
  • Q4 Guidance:: Adjusted earnings projected between $0.04–$0.20/share with flat capacity and $2.50/gallon average fuel cost (up $0.09/qtr).

Operational Highlights and Outlook

The airline's operational performance was noteworthy, ranking third and fourth in completion factor among domestic carriers in September and October, respectively. Looking ahead, Frontier expects a more balanced supply-demand environment due to its largest low-fare competitor significantly reducing capacity. The company anticipates capacity to be roughly flat year-over-year with an average stage length of approximately 890 miles in Q4 2025. Adjusted earnings are expected to be between $0.04 and $0.20 per diluted share.

Loyalty Program and Revenue Initiatives

Frontier's loyalty program, Frontier Miles, generated approximately $7.50 in revenue per passenger in Q3 2025, up more than 40% year-over-year. The airline has expanded redemption options and improved boarding for its most loyal customers. The introduction of first-class seats is expected to drive significant revenue increases, with the company targeting a 4% premiumization of its fleet by year-end 2026. According to Barry Biffle, "First Class is going to be wildly accretive, right, because we haven't had that product, and we know the demand is there."

Valuation and Growth Prospects

Frontier's current valuation metrics indicate a 'P/S Ratio' of 0.28 and an 'EV/EBITDA' of -131.11. Analysts estimate revenue growth of 14.0% for the next year. The company's efforts to expand its loyalty program and introduce new revenue initiatives, such as premium economy seats, are expected to drive growth. With a more balanced supply-demand environment and reduced competition, Frontier is poised for a stronger outlook.

Industry Dynamics and Competitive Advantage

The reduction in capacity by Spirit Airlines has created opportunities for Frontier, with Spirit exiting 36 routes that overlap with Frontier and reducing frequencies by 30% on 41 other markets. This change is expected to benefit Frontier, particularly in the Western region. Barry Biffle expressed excitement about the future, stating that things have turned around for the company from a foundational perspective.

3. NewsRoom

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Frontier Economics Report Finds Vertical Aerospace Set to Drive £3bn a Year in UK Economic Value by 2035

Dec -04

Source: businesswire.com

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Amazon Introduces Four New Frontier Nova Models, a Pioneering Nova Forge Service for Organizations to Build Their Own Models, and Nova Act for Building Reliable Browser Agents

Dec -02

Source: businesswire.com

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AWS Unveils Frontier Agents, a New Class of AI Agents That Work as an Extension of Your Software Development Team

Dec -02

Source: businesswire.com

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Investor Exits $3.4 Million Frontier Communications Stake as Verizon Deal's Potential Closure Looms

Nov -29

Source: fool.com

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Frontier Group Holdings, Inc. $ULCC Shares Sold by Creative Planning

Nov -29

Source: defenseworld.net

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Nvidia: The Next Growth Frontier Is Sovereign AI

Nov -25

Source: seekingalpha.com

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Amex Sees Healthcare's Payment Pain as Its Next Frontier

Nov -13

Source: pymnts.com

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Verizon seeks $10 billion from bond sale tied to Frontier deal, Bloomberg News reports

Nov -10

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.75%)

6. Segments

Fare

Expected Growth: 12.3%

Low fares and additional fees for services drive growth, appealing to budget-conscious travelers. Increasing demand for affordable air travel and strategic route expansion contribute to market growth.

Service

Expected Growth: 4.3%

Growing demand for high-speed internet and increasing adoption of cloud-based services drive growth in the telecommunications industry. Frontier Communications' expansion into new markets and investments in network infrastructure also contribute to growth.

Baggage

Expected Growth: 12.3%

Frontier's baggage policy, allowing one free personal item and one free carry-on, drives growth through increased customer satisfaction and loyalty. The fee-based checked bag system generates additional revenue. This policy attracts budget-conscious travelers, contributing to the airline's market share growth.

Seat Selection

Expected Growth: 12.3%

Growing demand for personalized travel experiences, increasing adoption of ancillary revenue streams, and rising passenger willingness to pay for comfort and convenience drive the growth of Frontier Airlines' Seat Selection.

Non-fare Passenger- Other

Expected Growth: 4.5%

The non-fare passenger segment, comprising airline employees, guests, and infants, is expected to grow steadily driven by increasing airline capacity, route network expansion, and rising employee travel demand.

Other

Expected Growth: 4.5%

The 'Other' segment of Frontier Group Holdings, Inc. is expected to grow driven by increasing regulatory fees and miscellaneous revenue streams. The growth is also fueled by the company's efforts to diversify its revenue streams and reduce dependence on traditional business segments.

7. Detailed Products

Spirit Airlines

Low-cost carrier offering affordable fares and optional services

Frontier Airlines

Low-fare carrier providing affordable travel options with modern aircraft

Lynx Air

Ultra-low-cost carrier offering no-frills fares with optional services

Travel Services

Vacation packages, hotel bookings, and car rentals through partnerships

8. Frontier Group Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Frontier Group Holdings, Inc. is medium due to the availability of alternative transportation services, but the company's strong brand and customer loyalty mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low due to the company's diversified customer base and lack of concentration, making it difficult for individual customers to negotiate prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium due to the company's dependence on a few key suppliers, but the company's large scale of operations and long-term contracts mitigate this risk.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the transportation industry, including regulatory hurdles and significant capital requirements.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the transportation industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 87.22%
Debt Cost 3.95%
Equity Weight 12.78%
Equity Cost 17.07%
WACC 5.62%
Leverage 682.25%

11. Quality Control: Frontier Group Holdings, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Air Transport Services Group

A-Score: 5.1/10

Value: 6.7

Growth: 4.9

Quality: 4.8

Yield: 0.0

Momentum: 9.0

Volatility: 5.0

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Sun Country Airlines

A-Score: 4.8/10

Value: 7.2

Growth: 6.7

Quality: 5.7

Yield: 0.0

Momentum: 6.5

Volatility: 3.0

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Blade Air Mobility

A-Score: 3.9/10

Value: 8.2

Growth: 5.4

Quality: 3.1

Yield: 0.0

Momentum: 4.0

Volatility: 2.3

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Wheels Up Experience

A-Score: 3.7/10

Value: 9.4

Growth: 3.7

Quality: 5.2

Yield: 0.0

Momentum: 3.0

Volatility: 0.7

1-Year Total Return ->

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Allegiant Travel

A-Score: 3.2/10

Value: 6.1

Growth: 3.0

Quality: 1.7

Yield: 0.0

Momentum: 5.5

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Frontier

A-Score: 2.8/10

Value: 7.0

Growth: 3.9

Quality: 2.9

Yield: 0.0

Momentum: 2.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.09$

Current Price

5.09$

Potential

-0.00%

Expected Cash-Flows