Frontier Airlines, buoyed by surging revenue and the demise of Spirit, is forecasting a potentially profitable second half of the year.
The discount carrier on Wednesday reported second quarter operating revenue of $1.28 billion, a 38% improvement year over year. Revenue per available seat mile, a key industry metric, was up an impressive 28% from last year.
Overall, Frontier absorbed a net loss in the quarter of $90 million, due in large part to fuel expenses that were $180 million more than would have been expected in early February. But second quarter adjusted losses per share of $0.10 easily bested the forecast Frontier issued in early May of adjusted losses of between $0.45 and $0.60 per share.
Strong industrywide demand and more than 30% growth in cobranded credit card earnings worked in Frontier's favor during the June quarter. So did the collapse of Spirit on May 2.
Since that time, Frontier has aggressively bolstered service in former Spirit strongholds, such as Fort Lauderdale, Orlando and Las Vegas. In May, Frontier forecast that Spirit's absence would result in a long-term uplift of its revenue per available seat mile by between 3% and 5%. During an earnings call Wednesday, CEO Jimmy Dempsey said the actualized improvement is probably slightly higher than that.
Dempsey also credited a more disciplined approach to revenue management for some of Frontier's revenue improvement.
"The progress we've delivered this quarter validates the actions we have taken to strengthen the airline and position the business for sustained profitability," he said.
Starlink WiFi and first-class seats
Looking ahead, Frontier is projecting adjusted earnings per share of between -$0.10 and $0.10 this quarter, and adjusted earnings per share of between break even and $0.20 in the fourth quarter.
Early next year, Frontier will begin a fleetwide rollout of high-speed Starlink WiFi, which will be its first onboard connectivity. And the airline now plans to launch its delayed first-class-style seats across the winter months, Dempsey said.
Both figure to further bolster revenue, executives said.
Frontier stock was up more than 5% in midafternoon trading amid a generally losing day on the markets for the broader U.S. airline sector.