Frontier Group Holdings, Inc. Q1 FY2025 earnings call

• Demand was disrupted due to macro uncertainty, leading to aggressive pricing. Current booking trends show May and early summer travel demand has stabilized.
• Significantly reduced capacity through mid-November selling, expecting capacity to be down low single digits in Q2 and similar in the second half of the year, with cost and capital expenditure reductions of over $300 million.
• Simplified network provides flexibility, reliability, and cost savings. Enhanced product offerings include economy bundle, loyalty program upgrades (free check bags for co-brand cardholders, simplified elite status, seat upgrades), new apps and website, and Frontier vacations.
• Total revenue was $912 million, 5% higher than the 2024 quarter. Fuel expense down 10% due to lower fuel cost. Took delivery of 4 A321neo and 2 spare engines, expecting 3 A321neos in Q2 and 13 in the second half of 2025.

Total operating revenue in the first quarter was $912 million, a 5% increase versus the prior year quarter. RASM was $0.0917 cents, roughly in line with the prior year quarter. Fuel expense totaled $238 million, 10% lower than the 2024 quarter due to a 13% decrease in the average fuel cost. Adjusted non-fuel operating expenses were $720 million, or $0.0724 per available seat mile, 8% higher than the 2024 quarter. Enplanements were 12% higher and departures were up 6% on an average stage length of 925 miles, 3% below the prior year quarter.

• Capacity is expected to be down low single digits in Q2 and similar in the second half of the year. Targeting profitability in the second half of the year based on stabilized demand and capacity moderation.
• Q2 loss per share is expected to be $0.23 to $0.37, reflecting softer travel demand in April, higher non-fuel costs, and tax provisions.

• Macro uncertainty impacting travel demand. - Aggressive pricing and promotions across the industry. - Capacity adjustments and cost management challenges.

Q: About average fare down and premium products uptake A: Premium products are doing well, but the March demand shock drove the average fare down due to concentrated capacity and lower loads.

Q: Capacity shrinkage and core markets A: Shrinking capacity focuses on core profitable markets, and booking trends are starting to stabilize.

Q: Return to profitability in H2 A: Driven by capacity reduction, stabilizing demand, and revenue initiatives like the economy bundle.

Q: Loyalty program and Southwest comparison A: Loyalty program has upgrades, with leapfrogging benefits and faster benefits realization compared to others.

Q: Q2 guidance and RASM A: Q2 RASM is expected to be positive despite lower capacity, driven by network adjustments and cost alignments.

Q: M&A and fleet leases A: There are no M&A plans, and 14 aircraft leases were extended for fleet strategy alignment.

Q: Market trends and regions A: Vegas and Florida markets are moderating, with demand shock in March-April, but sales are starting to recover.

Q: Fleet and engine impacts A: One aircraft delivery shifted, and GTF engines are not causing significant issues.