While air travel may be coming back in the days beyond the COVID-19 pandemic, the news is not universally good for every airline stock. For Frontier Group (NASDAQ:ULCC), a disappointing earnings report sent the stock plunging over 15% at one point in Thursday afternoon trading.
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Frontier Group brought in $0.18 per share in earnings, which was about what consensus figures suggested would happen. However, there was a fairly significant break with expectations in revenue. Frontier Group posted $906 million in revenue, which faltered against expectations calling for $931.15 million. Further, Frontier also posted lower-than-expected available seat miles. Frontier noted 8.67 billion available seat miles, but analysts were looking for 8.81 billion. With operating expenses up 41% in a year-over-year comparison, it meant disappointment all around.
Barry Biffle, Frontier’s CEO, noted that Frontier would seek recovery by “…driving further improvement in ancillary revenue per passenger and unit costs.” This, in turn, would allow Frontier to keep building on its total cost advantage, which is significantly wider than the industry average, a point that’s likely to give Frontier some edge. Thanks to Frontier’s recent move to offer an all-you-can-fly plan known as the “GoWild!” plan, and a recent award for having the youngest fleet in the field, Frontier Group may have more advantages than some realize.
Overall, analyst consensus unanimously declares Frontier Group a Strong Buy, which also offers 57.71% upside potential thanks to its average price target of $18.20 per share.
