Frontier Airlines
has become another airline that has upgraded its Q4 2024 guidance ahead of the carrier’s quarterly results release on February 7.
Revenue and cost initiatives momentum
On January 6, Frontier Airlines provided an update that its Q4 2024 results should be better than it expected, providing further confidence that the carrier can return to double-digit adjusted pre-tax margins in the summer of 2025.
The airline said that its revenue and cost initiatives momentum had driven the improved results during the quarter, and as such, its pre-tax margin was now expected to be around 4%, an increase of 0.3% from the midpoint of its previous pre-tax margin guidance of 0% to 2%.
Additionally, revenue per available seat mile (RASM) should grow 14% year-on-year (YoY, previous guidance: 11% to 12%). The metric’s growth was primarily driven by the progress made on ‘The New Frontier’ program, network optimization, capacity growth management, and yield management.
Photo: Robin Guess | Shutterstock
“The RASM uplift is further supported by the Company’s shift to network simplification, which is driving improved operational performance reflected in Frontier’s December completion factor rank of second among major US carriers.”
Cirium’s on-time performance (OTP) report showed that in 2024, Frontier Airlines was ranked eighth in North America in terms of its on-time ranking with 71.57%. The low-cost carrier completed 98.34% of its flights during the year.
Delta Air Lines
, which had the best OTP performance in North America, had an on-time factor of 83.46%, despite its struggles following the CrowdStrike-caused IT outage that affected airlines and other businesses in July.
Frontier Airlines announced ‘The New Frontier’ in May, scrapping change and cancelation fees, a blocked middle seat in the first row of the aircraft, and other changes. In December, the airline went a step further, introducing first-class seating in the first two rows of the aircraft, as well as complimentary seat upgrades and unlimited free companion travel for the upper-echelon members of its loyalty program, Frontier Miles
.
Related
Frontier Airlines Scraps Change Fees, Overhauls Pricing As Reality Of FAA ‘Junk Fees’ Rule Bites
The airline’s new pricing model similarly reflects what its legacy competitors offer.
Decreasing capacity
Nevertheless, Frontier Airlines said its quarterly capacity should decrease by 2.1% YoY, with an average stage length of 875 miles (1,408 kilometers) in Q4 and 895 mi (1,440 km) in 2024. In comparison, Q4 2023 and 2023 average stage lengths were 952 mi (1,532 km) and 1,007 mi (1,620 km), respectively.
Q4 2024 adjusted operating expenses, excluding fuel, should be between $725 million and $735 million, lower than the previously expected range of between $725 million and $745 million, supporting Frontier Airlines’ full-year 2024 guidance of a 1% reduction in adjusted cost per ASM excluding fuel (ex-CASM) YoY, stage length adjusted to 1,000 mi (1,609 km).
Photo: Robin Guess | Shutterstock
“Total liquidity as of the end of 2024 is expected to be approximately $930 million, including $205 million of availability from the Company’s revolving credit facility.”
On December 3, 2024, Frontier Airlines also published a guidance update for the quarter. However, the guidance only affirmed its expected Q4 2024 results, which were published together with its Q3 2024 results in October 2024, with the only difference being a higher lower point in the fuel cost per gallon range, increasing from $2.40 to $2.50 per gallon to $2.45 to $2.50 per gallon.
Related
Frontier Airlines Suspends Over 40 Routes Indefinitely
However, these could be preliminary capacity adjustments before Frontier Airlines publishes its full 2025 schedule.
Improving Q4 performance
Frontier Airlines was not the only airline in the US to announce better-than-expected guidance for the last quarter of the year. On December 5, American Airlines
, JetBlue, and Southwest Airlines
announced improving market conditions, allowing the carriers’ shareholders to be more confident in the trio.
American Airlines said that its total RASM (TRASM) should now be flat or improve by 1% YoY, while Southwest Airlines’ unit revenues should improve by 5.5% or 7% YoY (previous guidance: 3.5% to 5.5%).
Photo: HMBSoFL Photography | Shutterstock
JetBlue
said its Q4 revenue should decrease by 5% to 2% YoY, a slight improvement compared to its previously provided range of revenues, decreasing by 7% to 3%. Neither United Airlines
nor Delta Air Lines, two other major US airlines, have issued guidance updates.
Still, Alaska Air Group, now encompassing Alaska Airlines, Hawaiian Airlines, Horizon Air, and other subsidiaries, upgraded its earnings per share (EPS) guidance from $0.20 and $0.40 to $0.40 and $0.50. RASM was upgraded from mid-single digits to mid-to-high single digits during the ‘Alaska Accelerate’ plan presentation on December 10.
Related
Alaska Airlines Announces “Alaska Accelerate” Plan For $1 Billion Profit After Hawaiian Airlines Merger
Alaska Airlines Group expects $500 million of revenue and cost benefits from the merger by 2027.