Frontier Airlines Delivers Unexpected Moments, Focuses Its Attention on JFK
In a surprising turn of events, the top performer in the 2025 airline industry's stock market hails from the low-cost segment, a segment some had considered doomed. Leading the pack is Frontier Airlines, whose shares have soared by 16% year-to-date, outperforming the five major U.S. airlines.
Contrary to expectations, Frontier Airlines is not playing it safe. Instead, the carrier intends to test its luck on one of the nation's most competitive routes, JFK-LAX, in May, as well as on two American Airlines JFK hub-to-hub routes in March and April. This bold move reflects the airline's confidence in its revenue and cost initiatives and improving operational performance.
The boost in Frontier Airlines' stock began with an SEC filing on January 6, when the carrier updated its guidance. The filing stated, "Revenue and cost initiatives continue to gain momentum alongside improving operational performance and customer experience, all of which is driving better than expected fourth quarter 2024 results and further confidence in the company’s target to return to double-digit adjusted pre-tax margins in the summer of 2025."
Frontier Airlines' shares saw a significant surge after this announcement, with a 17% increase between January 3 and January 7. As of the latest stock market close, Frontier's year-to-date gain of 16% surpasses industry leader Delta's 14% growth.
The skepticism surrounding low-cost carriers has persisted, primarily focused on Spirit, Frontier's only rival, which filed for bankruptcy protection in November. However, Frontier's CEO, Barry Biffle, has remained optimistic. In an earnings call, he said, "We will be the clear low-cost winner in 2025 and beyond."
Even before the surge in Frontier's stock, doubts about the viability of low-cost carriers were widespread. In June, United CEO Scott Kirby stated, "I think they’re going out of business. It’s a fundamentally flawed business model. The customers hate it.” Similarly, Spirit CEO Ted Christie denied any plans for a Chapter 11 filing.
Despite the challenges, Frontier Airlines continues to expand its network. This month, the airline announced it will launch service from JFK to Miami, Dallas, and LAX, with daily flights to Miami and Los Angeles starting in March and April, respectively. Frontier already serves several destinations from JFK, including Atlanta, Las Vegas, Orlando, San Juan, and Tampa.
Barclays analyst Brandon Oglenski praised Frontier's optimistic outlook, stating that "Frontier's more optimistic outlook is continuing a favorable trend of improved industry unit pricing outcomes as the industry settles in to a lower growth environment." With shares at $7.11, he maintained a price target of $10.
However, Bank of America analyst Andrew Didora expressed concern about Frontier's profitability, noting, "We forecast just 6.2% pre-tax margin, which is below the double-digit rate the company has targeted since early last year."
Despite the criticism, Frontier Airlines' performance and future plans paint a picture of a carrier that is not only surviving but thriving in the challenging airline industry.
[1] Source: Frontier Airlines Q4 2024 Earnings Call[2] Source: Frontier Airlines Press Release, January 6, 2025[3] Source: Cirium OTP Report, 2024[4] Source: Investopedia, Frontier Airlines Stock (FTR)[5] Source: Routehappy, Frontier Airlines Route Expansion, 2025
- Interestingly, Frontier Airlines is planning to compete on Delta's turf, as they announced intentions to test their luck on two Delta-operated hub-to-hub routes at JFK airport in March and April.
- United Airlines' CEO, Scott Kirby, expressed his skepticism about low-cost carriers in the past, stating that they have a flawed business model, but Frontier Airlines remains unaffected, with their shares outperforming United's in the stock market.
- American Airlines, like Delta, has routes that Frontier intends to challenge, as the low-cost carrier plans to test its luck on one of the nation's most competitive routes, JFK-LAX, in May, alongside two American Airlines hub-to-hub routes at JFK.
