Frontier Group Holdings, Inc. Q2 FY2025 earnings call

• Barry noted Q2 results were within guidance, overcame weather and ATC delays, with third quarter guidance incorporating similar impact for July. Frontier markets saw greater reduction in competitive capacity. - Jimmy recapped revenue performance, launched 35 new routes, expected stage-adjusted RASM up mid- to high single digits in Q3. - Bobby discussed 40% year-over-year increase in co-brand loyalty revenue, first-class seating rollout, digital distribution improvements. - Mark provided financial updates on expenses, fuel costs, liquidity, and aircraft fleet with 3 A321neo deliveries and 2 A320ceos returned.

Total revenue in the second quarter was $929 million, down 5% on 2% lower capacity versus the prior year quarter. RASM was $0.0901, while RASM stage length adjusted to 1,000 miles was $0.0874, slightly higher compared to the same period last year. Total revenue per passenger was $109, flat to the prior year quarter on a 79% load factor, up 1.2 percentage points. Adjusted nonfuel operating expenses in the second quarter were $774 million or $0.075 per available seat mile. Fuel expense totaled $230 million, 20% lower than the '24 quarter.

• Expect third quarter adjusted loss between $0.26 and $0.42 per share. - Fuel average all-in cost expected at $2.51 per gallon (up $0.15 from Q2). - Capacity in third quarter expected down 4% to 5% year-over-year. - Mid- to high single-digit RASM growth in third quarter stage length adjusted. - Tax expense expected in range of $2 million to $4 million.

• Consumer sentiment fluctuations can impact sales and revenue. - Industry capacity adjustments may not play out as expected. - Potential exogenous events (e.g., geopolitical issues) could affect demand.

Q: Ravi Shanker asked about the path back to positive margins and double-digit pre-tax margin.

A: Barry discussed sales trends, competitive capacity reductions, less new flying, product and loyalty enhancements as key building blocks.

Q: Savanthi Nipunika Prelis-Syth asked about capacity utilization and cost evolution.

A: James discussed reduced utilization on off-peak days, Mark mentioned transition costs and aircraft inductions weighted to fourth quarter.

Q: Duane Pfennigwerth asked about book yields and acceleration.

A: Barry said sales up double digits, driven by yield increases including fare and ancillary, starting mid-July for future periods.

Q: Michael Linenberg asked about wide guidance range.

A: Barry explained it's due to month-to-month consumer sentiment and recent history of dips, but optimistic on current trends.

Q: Scott H. Group asked about growth and profitability.

A: Barry stated the model needs growth, industry domestic flying not profitable now, but industry will react to capacity reductions.

Q: Atul Maheswari asked about third quarter RASM guidance.

A: Mark mentioned stage was approximately $0.0915.

Q: Andrew Didora asked about load factor progression.

A: Barry said load factor continued to improve through Q2, driven by product mix and value.

Q: Brandon Oglenski asked about reconciliation of capacity shrinkage and order book.

A: Barry stated domestic oversupply issue, Frontier will be beneficiary of capacity reductions, aiming for double-digit margins.

Q: Jamie Baker asked about sale-leaseback market and disclosure.

A: Barry and James discussed sale-leaseback commitments, financing hedging, and cautious optimism on monthly reporting.

Q: Christopher Stathoulopoulos asked about capacity and revenue dynamics.

A: Barry discussed capacity matching demand, focusing on peak days, and James mentioned fleet order growth on peak periods.

Q: Tom Fitzgerald asked about other revenue and risk of another glut.

A: Robert discussed loyalty program growth, product enhancements, and digital distribution benefits, with Barry stating Frontier's strong balance sheet and expected capacity reductions leading to profitability.