Frontier Airlines reports steady revenue growth amid capacity expansion

In the second quarter of 2024, Frontier Airlines experienced a modest revenue increase of 1% to US$973 million, driven by a 13% rise in capacity compared to the same period in 2023. The airline also saw a 26% surge in departures, although the average stage length decreased by 13% to 899 miles. The total revenue per passenger stood at US$109, with a flown load factor of 78.1%.

However, revenue per available seat mile (RASM) dropped by 11% to 9.21 cents, mainly due to an oversupply of domestic seats outpacing demand, the introduction of new routes, and the launch of ‘The New Frontier' initiative. This new programme, which eliminates change fees on certain product bundles and offers more transparent pricing, is expected to positively impact RASM in late 2024 and into 2025 as the network matures.

On the cost side, Frontier reported total operating expenses of US$948 million, with US$288 million allocated to fuel costs. The company's cost-saving measures, launched in the third quarter of 2023, have resulted in over US$100 million in annual savings, with more anticipated. Cost per available seat mile (CASM) dropped by 6% to 8.98 cents, and CASM excluding fuel decreased by 10% to 6.24 cents.

Frontier posted a pre-tax income of US$32 million and a net income of US$31 million for the quarter. The airline's cash reserves amounted to US$658 million as of June 30, 2024, with a net cash position of US$206 million, reflecting a US$50 million increase since March 2024.

The airline's fleet consists of 148 Airbus single-aisle aircraft, with 80% of its fleet now comprised of more fuel-efficient A320neo-family aircraft. Frontier has also committed to further 198 aircraft deliveries through 2029. Additionally, the airline recently agreed with Airbus to defer deliveries initially scheduled for 2025-2028 to 2029-2031, which will reduce Frontier's financing and payment commitments over the next few years.