Frontier Airlines

About The Company

Frontier Airlines (ULCC) is a major American ultra-low-cost airline company founded by Frederick Brown and his wife Janice Brown in 1994. Currently, Frontier operates flights to over 120 destinations in the United States, the Caribbean, Mexico, and Central America. In addition, they utilize more than 100 A320 family aircraft. Frontier Airlines generates fees and non-ticket revenue, such as its frequent flyer program and co-branded credit card. They operate under an LCC (low-cost carrier) business model.

Frontier Airlines operates in the following Business Segments: Air Transportation.

Frontier Airlines operates in the Industrials Sector and is the Airline's subsector of the New York Stock Exchange (NYSE) under the ticker ULCC.

Products & Services

Frontier Airlines has the largest A320 Neo Fleet in the Americas compared to other airlines. The use of these aircraft, Frontier's seating configuration, and weight-saving initiates have contributed to the airline's average of 43 percent fuel saving compared to other U.S. airlines. As a result, Frontier is the most fuel-efficient U.S. airline.

Frontier is committed to families, offering the lowest fares and enabling children 14 years and younger to fly free through the airline's Discount Den travel club on qualifying flights.

Frontier has over 140 new Airbus planes on order and will continue to grow on the mission of providing affordable travel across America.

The target market for Frontier Airlines is travelers in USA, Jamaica, and Mexico. Their positioning focuses on low-cost travel.

Competitors

Spirit Airlines (SAVE)

Copa Holdings (CPA)

Allegiant Airlines (ALGT)

Frontier Airlines main competitors are other airline companies focusing on low-cost flights. These competitors are Spirt Airlines, Copa Holdings, and Allegiant Airlines. All the above competing companies operate in the Industrials sector and the Airline industry.

Key Metrics

Figure 1.1: Frontier Airlines 10-k Report 2021. Source: CAPIQ

Figure 1.1 above from Frontier Airlines latest 10-K report displays the company's Net Income and Other Areas of Loss. Unrealized gains and amortization from cash flows hedges net of an adjustment to de-design fuel hedges.

Figure 1.2 below from Frontier Airlines latest 10-k report shows the operating expenses, total revenue, and operating profit. From 2020 to 2021, Frontier Airlines saw an increase in total operating revenue by 64.8%. In addition, Frontier Airlines also saw an increase in net income year over year, even though it is still at a current loss. This loss is due to the impact of the pandemic.

Figure 1.2: Frontier Airlines Income Statement (10-k Report 2021). Source: CAPIQ

Potential Long-Run Changes & Disruptions

The Future of Frontier Airlines is predicted to face some long-term disruptions and uncertainties.

Flight Cancellations and Delays - Due to the lack of employment in the airline sector, Frontier Airlines is facing the challenge of keeping customers happy on and off flights. Frontier is working hard to recruit tomorrow's workforce, from pilots to mechanics to air traffic controllers, and that cannot happen instantly.

Sustainability in Air Travel - Frontier is focused on creating better engines, modeling more aerodynamic planes, and utilizing technology to ensure planes get from Destination to Destination as fast as possible while minimizing the carbon footprint. Frontier also needs to be advanced in changing their aviation fuel and engines. The industry is reinventing its day to day seeing where it can cut flight time, shorten routes, and be more sustainable overall.

Uncertainty of Future Pandemics - Frontier needs to be alert and prepared to ground all planes if another variant arises. This would devastate all airline companies but Frontier because of its low-cost fares.

Long-Term Economic & Political Uncertainties - Economic and political uncertainties, such as the midterm election, pose a potential threat as the company's profit margin shrinks to inflation, fuel cost, and supply issues.

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