Frontier Group Holdings, Inc. (ULCC) Q1 2025 Earnings Summary

Executive Summary

Q1 2025 revenue was $0.912B (+5% YoY) with RASM 9.17¢, but EPS diluted was $(0.19) as domestic leisure demand weakened in March; management cited close‑in bookings and industry-wide promotions as drivers of the miss versus internal expectations .
Versus S&P Global consensus, revenue missed ($925.1M est vs $912.0M actual)* while EPS beat (−$0.213 est vs −$0.19 actual); Q4 2024 was a clear beat on both revenue and EPS, highlighting a reversal from a strong end to 2024 into a softer early 2025 demand environment.
Guidance pivoted: FY25 adjusted EPS guidance (“at least $1.00”) was withdrawn, and Q2 2025 adjusted loss per share guided to $(0.23)–$(0.37); capacity cut “low single digits” for Q2 and the balance of 2025, focused on Tue/Wed/Sat .
Management targets profitability in 2H 2025 driven by capacity moderation and commercial initiatives (Economy bundle, loyalty program, digital upgrades), with demand noted as stabilizing in May/early summer. Capacity reductions and other actions expected to reduce costs and capex >$300M this year .
Potential stock reaction catalysts: near-term estimate revisions lower (Q2 loss guide, FY guide withdrawal), but improving booking trends, loyalty monetization, and industry capacity moderation could support sentiment into 2H if RASM inflects positively .

What Went Well and What Went Wrong

What Went Well
- Record first-quarter revenue ($912M) and operational efficiency: 107 ASMs per gallon (+1% YoY), reinforcing fuel-efficiency leadership; 82% of fleet is A320neo family .
- Commercial initiatives gaining traction: Economy bundle positioned to compete head-to-head with other economy fares; loyalty enhancements (companion travel, upgrades) and app rollouts, with cardholder spend up 30% YoY recently and 19% YoY in Q2 context .
- Fleet and financing progress: four A321neo deliveries; lease extensions on 14 aircraft aligned heavy checks and lowered future maintenance costs; sale-leasebacks committed through 2025 and ~40% of 2026 .
What Went Wrong
- Demand shock in March: close-in bookings amplified weakness, forcing discounts/promotions and lowering average fare; management explicitly cited March concentrations as the drag despite strong January/February .
- Unit costs up: CASM ex fuel rose to 7.24¢ (+8% YoY) on lower utilization (−8%), shorter stage length (−3%), higher station costs, fleet growth, and lower sale-leaseback gains .
- Guidance reset: FY25 adjusted EPS withdrawn; Q2 loss guided; sequential cost headwinds from delivery timing and first-quarter lease-return benefit not repeating, plus lag in aligning costs to capacity reductions .

Financial Results

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$0.935	$1.002	$0.912
Diluted EPS ($USD)	$0.11	$0.23	$(0.19)
Pre-tax Margin (%)	2.9%	5.1%	(4.4)%
RASM (¢)	9.28	10.23	9.17
CASM (¢)	9.10	9.78	9.63
CASM ex fuel (¢)	6.51	7.44	7.24

Versus S&P Global consensus: | Metric | Q1 2024 | Q4 2024 | Q1 2025 | |--------|---------|---------|---------| | Revenue Estimate ($USD Millions) | 861.5* | 986.5* | 925.1* | | Revenue Actual ($USD Millions) | 865 | 1,002 | 912 | | EPS Estimate ($USD) | −0.1838* | 0.1259* | −0.2131* | | EPS Actual ($USD) | −0.09 | 0.23 | −0.19 |

Values retrieved from S&P Global.*

Notable: Q1 2025 revenue missed, EPS was a modest beat; Q4 2024 delivered strong beats on both.
Operating revenue mix: | Revenue Component ($USD Millions) | Q3 2024 | Q4 2024 | Q1 2025 | |-----------------------------------|---------|---------|---------| | Passenger | 910 | 978 | 884 | | Other | 25 | 24 | 28 | | Total Operating Revenues | 935 | 1,002 | 912 |
KPIs: | KPI | Q3 2024 | Q4 2024 | Q1 2025 | |-----|---------|---------|---------| | ASMs (MM) | 10,075 | 9,798 | 9,949 | | Departures | 56,725 | 53,807 | 51,358 | | Avg Stage Length (miles) | 856 | 874 | 925 | | Load Factor (%) | 78.0% | 78.3% | 74.9% | | Avg Daily Utilization (hrs) | 10.2 | 9.6 | 9.7 | | Fuel Cost/gal ($) | 2.67 | 2.48 | 2.55 | | Fuel Gallons (000s) | 97,767 | 92,330 | 93,212 | | Total Liquidity ($MM) | 781 | 935 | 889 |

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted diluted EPS	FY 2025	At least $1.00	Withdrawn (no FY guide)	Lowered/Withdrawn
Adjusted diluted EPS	Q1 2025	Breakeven to $0.07	Actual $(0.19)	Missed vs guide
Adjusted loss per share	Q2 2025	N/A	$(0.23) to $(0.37)	New (loss)
Capacity vs PY	Q2 2025	N/A	Down low single digits	New (lower)
Capacity vs PY	H2 2025	N/A	Down low single digits	New (lower)
Fuel assumption	Q2 2025	N/A	$2.38/gal (all-in)	New
Tax expense	Q2 2025	N/A	$2–$5M valuation allowance	New

Management also flagged >$300M combined reduction in costs and capital spending in 2025 from capacity and cash outflow actions .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Demand/Macro	RASM inflected positive by mid‑Aug as capacity moderated; hurricane impacts noted	Record Q4 revenue; strong RASM 10.23¢; planned peak vs off-peak discipline	Demand shock in March; promotions; May/early summer stabilizing	Deteriorated in March; stabilizing thereafter
Capacity strategy	Shift to off‑peak reductions; network simplification	Continued disciplined allocation; guided to strong 2025 RASM	Cuts low single digits Q2/H2; focus Tue/Wed/Sat	More aggressive cuts
Loyalty/Product	Route additions; “New Frontier” underway	Next phase: First Class seats, companion passes	Companion travel launched; card spend up; Economy bundle traction	Improving engagement
Operations/ATC/Weather	Hurricane Helene impact	High completion factor (99.4%) in Dec	ATC/weather disrupted late May/June (context for Q2 release)	Mixed; external headwinds
Fleet/Engines	Five A321neo deliveries; defer certain deliveries	Six A321neo; 82% neo family	Four A321neo; 82% neo family; lease extensions	Continued modernization

Management Commentary

“First quarter results reflect softer travel demand primarily during March… current booking trends suggest demand for May and early summer travel has now stabilized.” — Barry Biffle, CEO .
“We’re targeting a return to profitability in the second half of the year… supported by moderating industry capacity, the leverage from our commercial investments and continued close management of… capacity optimization and aggressive cost and capital expenditure management.” — Barry Biffle .
“Our simplified out-and-back network… enables flexibility… provides reliability… and lowers our costs.” — James Dempsey, President .
“We transformed our product and bundle merchandising… added free check bags for co-brand cardholders… and simplified the path to Elite status.” — Bobby Schroeter, CCO .
“We extended 14 eight-year leases… aligning heavy maintenance checks and optimizing timing and related costs.” — Mark Mitchell, CFO .

Q&A Highlights

Demand trajectory: January RASM up ~19% YoY; March demand froze; load factors and fares pressured; recent sales improved notably, indicating stabilization .
Capacity reductions: Focused on Tue/Wed/Sat midweek flying; expect positive YoY RASM in Q2 on lower capacity; profitability targeted in 2H as schedule rebalanced .
Loyalty monetization: Cardholder spend up ~30% YoY; program delivers faster, tangible benefits at lower elite tiers; expected to drive growth and financial upside .
Fleet strategy: Lease extensions (4–6 years) improve maintenance economics; deliveries paced with sale-leaseback commitments; flexibility to sublease aircraft if needed .
Tariffs/engines: No plans to pay tariffs; continued engine supply adequate for ops (GTF context addressed in subsequent quarter materials) .

Estimates Context

Q1 2025: Revenue missed (est $925.1M vs actual $912.0M); EPS beat (est −$0.213 vs actual −$0.19).
Q4 2024: Revenue beat (est $986.5M vs actual $1,002.0M); EPS beat (est $0.126 vs actual $0.23).
Q1 2024: Revenue in line/slight beat (est $861.5M vs actual $865.0M); EPS beat (est −$0.184 vs −$0.09).
Values retrieved from S&P Global.*

Implication: Near-term Street models likely revise down on Q2 loss guide and FY guide withdrawal; watch for estimate stabilization if bookings and RASM trends improve alongside capacity moderation .

Key Takeaways for Investors

Expect near-term pressure: Q2 guided to a loss per share; FY 2025 EPS guide withdrawn—Street expectations likely reset lower near term .
Watch demand normalization into summer: Management cites stabilizing bookings; positive YoY RASM expected in Q2 on reduced capacity .
Strategy execution matters: Economy bundle and loyalty enhancements are traction points; companion travel and app upgrades could support revenue quality and engagement .
Cost discipline and capacity cuts: >$300M combined cost/capex reductions; lease extensions and sale-leasebacks underpin cash preservation while maintaining fleet efficiency .
Efficiency moat: Best-in-class fuel efficiency (107 ASMs/gal) and high A320neo mix (82%) remain structural advantages in a price-sensitive leisure market .
2H profitability goal is the swing factor: Achieving targeted profitability hinges on industry capacity moderation, successful network pruning on off-peak days, and continued commercial momentum .
Tactical trading: Near-term weakness on guide reset; potential relief as evidence of RASM improvement and booking stabilization accumulate; monitor ATC/weather impacts and any incremental capacity actions .