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Frontier Group Holdings , Inc. (NASDAQ:ULCC), the parent company of Frontier Airlines, has revised its guidance for the first quarter of 2025, indicating a tempered revenue growth due to weakened demand in March. According to InvestingPro data, the stock has seen a significant decline of over 42% year-to-date, though analysis suggests the company may currently be undervalued based on its Fair Value assessment. The company, in a recent SEC filing, reported that it expects revenue growth of approximately 5% on capacity growth of the same percentage compared to the first quarter of the prior year. This update reflects a downward adjustment from the company's previous forecast announced on February 7, 2025.
The softened revenue outlook is attributed to fare discounting and promotions across the industry, exacerbated by the close-in nature of Frontier's bookings. A significant drop in The Conference Board Consumer Confidence Index, which fell from 109.5 at the end of 2024 to 92.9 in March, evidences this weakened demand.
In response to the current market conditions, Frontier has proactively reduced its scheduled capacity for the second quarter of 2025, particularly on off-peak days. The company plans to continue monitoring demand and adjust capacity and related costs accordingly. It anticipates a low single-digit decrease in capacity compared to the second quarter of the prior year.
Frontier's adjusted pre-tax loss margin for the first quarter is expected to be around 5%, with an adjusted net loss that includes a net tax expense. The adjusted loss per share is projected to be between $0.20 and $0.24, based on approximately 227 million weighted-average shares outstanding. However, the company has stated it cannot reaffirm its full-year guidance for 2025 due to the uncertain environment.
As of March 31, 2025, Frontier reported total liquidity of approximately $885 million, which includes unrestricted cash and cash equivalents, as well as $205 million available from an undrawn revolving credit facility. InvestingPro analysis reveals concerning financial metrics, including a high debt-to-equity ratio of 7.4 and a current ratio of 0.53, suggesting potential liquidity challenges. The company emphasizes its focus on maximizing liquidity through careful management of business elements within its control. For deeper insights into Frontier's financial health and extensive analysis, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
The preliminary results are subject to the completion of financial closing procedures, and final figures may vary. Frontier is scheduled to release its first quarter 2025 financial results on May 1, 2025, after the market closes, followed by a live webcast with analysts. InvestingPro subscribers have access to 15+ additional ProTips about ULCC, including insights on profitability trends and valuation metrics, which could be particularly valuable ahead of the earnings release.
This article is based on a press release statement and SEC filings by Frontier Group Holdings, Inc.
In other recent news, Frontier Group Holdings Inc. reported impressive fourth-quarter earnings, which led UBS analyst Thomas Wadewitz to raise the company's price target to $10.00 from $8.50, maintaining a Neutral rating. The airline's strong performance included a 15% increase in Revenue per Available Seat Mile (RASM) and a notable improvement in pretax margin. Frontier's guidance for fiscal year 2025 projects earnings per share (EPS) of at least $1.00, exceeding UBS's estimate of $0.66 and the consensus of $0.69. Meanwhile, TD Cowen analyst Tom Fitzgerald also revised the price target to $10.00, citing positive developments in Frontier's revenue and network strategies. Citi analyst Stephen Trent (NSE:TREN) resumed coverage of Frontier with a Neutral rating and a $7.25 price target, highlighting improved operational performance and positive free cash flow, though noting challenges such as potential tariff impacts and increased labor costs. Additionally, UBS had previously reduced Frontier's price target to $7.00 due to softer demand trends, but later adjusted it upwards following the company's earnings report. In corporate news, Frontier's Chief Accounting Officer, Josh Wetzel, announced his resignation effective May 30, 2025, with the company yet to name a successor. These developments come as Frontier navigates a competitive airline industry landscape.
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