Frontier (ULCC) Q2 2024 earnings summary

Executive summary

• Q2 2024 operating revenue rose 1% to $973 million on 13% capacity growth, but net income fell to $31 million and pre-tax margin declined to 3.3% due to lower fares and load factor.

• Navigated industry oversupply with network and revenue diversification, focusing on peak-day flying, cost advantage initiatives, and launching The New Frontier product and pricing strategy.

• Deferred 54 Airbus aircraft deliveries (2025–2028), moderating growth to ~10% per year and optimizing fleet planning; converted 18 A320neo to A321neo.

• Achieved over $100 million in annual run-rate cost savings from network simplification and lease extensions.

• Fleet modernization continued with six A321neo deliveries, raising the A320neo family share to 80% of the fleet.

Financial highlights

• Adjusted CASM ex-fuel was 6.24¢, down 10% year-over-year; stage-adjusted CASM ex-fuel was 5.92¢, down 16%.

• Operating expenses rose 7% to $948 million, mainly due to higher fuel, salaries, and station costs; fuel expense increased 18% to $288 million.

• Adjusted pre-tax margin was 3.3% for Q2; EBITDA was $43 million, down from $91 million in Q2 2023.

• Q2 2024 EPS was $0.14, compared to $0.31 in Q2 2023.

• Ended quarter with $658 million in unrestricted cash and $206 million net cash.

Outlook and guidance

• Full-year 2024 adjusted CASM ex-fuel, stage-adjusted, expected down 1%-2% versus prior year.

• Q3 2024 adjusted pre-tax margin expected between -3% and -6%, including a 4-point impact from IT and weather disruptions.

• Full-year adjusted pre-tax margin forecasted in the range of -1.5% to 1.5%.

• Capacity growth expected at 4%-6% in Q3 and 5%-7% for full year 2024; 2025 capacity growth targeted at mid to upper single digits.

• Fuel costs for Q3 expected at $2.60–$2.70/gallon; full-year at $2.70–$2.80/gallon.