Key Highlights

  • Consensus EPS of negative 0.06 sits within third-quarter adjusted EPS guidance of negative 0.10 to positive 0.10.
  • Consensus revenue of USD 1.29 billion compares with second-quarter operating revenue of USD 1,279 million, against USD 929 million.
  • Second-quarter diluted EPS was negative 0.39, and the adjusted net loss was USD 22 million, or 0.10 per share.
  • Management guided fourth-quarter adjusted EPS of break-even to 0.20, with fuel at USD 3.50 per gallon.

Frontier Group Holdings (NASDAQ:ULCC) reports third-quarter results on Wednesday, Oct. 28, before the market opens. Consensus stands at EPS of -0.06 on revenue of USD 1.29 billion, and the company has a market capitalization of USD 1.13 billion.

Frontier Group Holdings operates Frontier Airlines, an ultra-low-cost carrier with 165 Airbus aircraft at the end of the second quarter. Operating revenues were USD 1,279 million against USD 929 million, and the net loss was USD 90 million against USD 70 million.

Estimates Against Third-Quarter Guidance

Management guided third-quarter adjusted EPS of negative 0.10 to positive 0.10, and the EPS estimate of negative 0.06 sits inside that range. The estimates table does not state its EPS basis. The revenue estimate of USD 1.29 billion is above the USD 1,279 million of second-quarter operating revenue.

Second-quarter diluted EPS was negative 0.39 against negative 0.31, and the adjusted net loss of USD 22 million, or 0.10 per share, compared with prior guidance of a loss of 0.45 to 0.60 per share.

What Management Guided and What It Left Open

Management guided third-quarter capacity growth of 17% to 18% and fourth-quarter capacity growth of approximately 7%, with fuel at USD 3.70 per gallon in the third quarter and USD 3.50 in the fourth. It estimated sale-leaseback gains of USD 50 million to USD 60 million in the third quarter and 2026 capital expenditures of USD 170 million to USD 220 million.

Management left open the path of oil prices, saying volatility is difficult to predict, as is the consumer's willingness to continue paying higher fares. It targets USD 200 million of annual run-rate savings by 2027 and a fleet of 170 aircraft held steady for approximately two years.

Revenue, Unit Revenue and Cost Detail

Revenue rose 38%, and RASM was 11.52 cents, up 28%. Total revenue per passenger was USD 131, up 20%, while adjusted total ancillary revenue per passenger was USD 68.42 against USD 68.33. Flown load factor was 80.3% on capacity of 11.1 billion available seat miles, up 8%.

Fuel expense was USD 436 million at USD 4.17 per gallon, approximately USD 180 million above February expectations. Adjusted CASM excluding fuel was 7.42 cents, up 2%, and aircraft utilization was 9.7 hours per day. The operating loss was USD 97 million against USD 75 million.

Liquidity, Fleet and the Barclays Agreement

Total liquidity was USD 1.16 billion. The company returned 24 A320neo aircraft under an early return agreement and took delivery of six new aircraft. A TSA reserve charge of USD 73 million followed a court ruling on fees for unused travel from 2016 to 2018.

The Barclays credit card agreement was extended through 2037, with a pre-purchase mileage facility capped at USD 375 million. Co-brand card revenue rose nearly 30%. The estimates table lists a market capitalization of USD 1.13 billion.

Figures to Follow in the Release

Reported EPS against negative 0.06 and operating revenue against USD 1.29 billion are the headline comparisons. Other markers are fuel cost, capacity growth and the fourth-quarter guidance range.