Frontier’s fourth quarter results drew a negative market reaction, as investors focused on flat year-over-year sales despite surpassing Wall Street’s revenue and non-GAAP EPS expectations. Management attributed the lack of growth to ongoing fleet adjustments and operational initiatives, with new CEO James Dempsey highlighting a need to “do better across the business and deliver increased value for all our stakeholders.” Dempsey described 2025 as a “transition year,” marked by efforts to rightsize the fleet, improve cost discipline, and enhance operational reliability, acknowledging that previous underperformance in on-time metrics and cancellations required urgent attention.
Is now the time to buy ULCC? Find out in our full research report (it’s free for active Edge members).
Frontier (ULCC) Q4 CY2025 Highlights:
- Revenue: $997 million vs analyst estimates of $974.4 million (flat year on year, 2.3% beat)
- Adjusted EPS: $0.23 vs analyst estimates of $0.13 (71.8% beat)
- Adjusted EBITDA: $75 million vs analyst estimates of $257.1 million (7.5% margin, 70.8% miss)
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.05 at the midpoint, beating analyst estimates by 318%
- Operating Margin: 4.9%, in line with the same quarter last year
- Revenue passenger miles: 7.74 billion, in line with the same quarter last year
- Market Capitalization: $1.22 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Frontier’s Q4 Earnings Call
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Atul Maheswari (UBS) asked about the balance between network infill and new market growth. CEO James Dempsey explained half of growth will come from utilizing the existing network more efficiently, while the other half targets new opportunities resulting from competitor capacity reductions.
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Jamie Baker (JPMorgan Securities) questioned assumptions behind the $200 million cost savings, specifically regarding labor costs. Dempsey clarified that no pilot contract changes were included in the guidance, and savings will primarily come from reduced rent and operational efficiencies.
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Katherine Kallergis (Morgan Stanley) sought clarity on guidance range drivers. CFO Mark Mitchell explained that the wide range reflects timing of cost savings, operational reset, and uncertainties in a transition year, with upside tied to revenue initiatives and productivity gains.
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Ryan Capozzi (Wolfe Research) inquired about the divergence between fare and ancillary revenue. Chief Commercial Officer Bobby Schroeter attributed ancillary growth to new product bundles and expanded direct distribution, improving conversion and attachment rates.
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Daniel McKenzie (Seaport Global) asked about the Board’s profit expectations and long-term performance metrics. Dempsey responded that the primary focus remains on sustained profitability and customer loyalty, with incentives tied to shareholder value and operational execution.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will monitor (1) progress on fleet rightsizing and its impact on unit costs and utilization, (2) improvement in operational reliability metrics such as on-time performance and cancellations, and (3) customer adoption of new loyalty and premium product offerings. Execution on cost savings and maintaining competitive fares will remain critical markers of strategic progress.
Frontier currently trades at $5.34, down from $5.96 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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