Frontier Group Holdings, Inc. Q4 FY2025 earnings call

• Jimmy Dempsey emphasized the role of resetting and stabilizing the business through fleet rightsizing, having entered a nonbinding agreement with AerCap for early termination of 24 aircraft leases and a framework agreement with Airbus revising the delivery profile to a 10% growth rate. • Focus on strengthening cost discipline with a target of $200 million annual run rate cost savings by 2027, including rent savings from lease terminations. • Working on improving operational reliability by reducing cancellations and improving on-time performance through initiatives like optimizing airport workflows and leveraging digital channels. • Driving customer loyalty by modernizing the commercial offering, including fleet-wide rollout of first-class seating, onboard WiFi, and enhanced digital products, and expanding the loyalty program with simplified rewards and elite status benchmarks.

No specific financial performance details for product segments provided in absolute terms and revenue contribution percentages.

• Guidance range exists with a transition year, considering cost savings, supply-demand environment, and revenue initiatives. • Aircraft delivery cadence: 6 in Q1, 8 in Q2, 5 in Q3 and Q4 of 2026, with expectation to end 2026 with the same number of aircraft as start. • Expect to end 2027 at a similar fleet level to end of 2025 and 2026. • Onetime noncash expenses from lease terminations are likely non-GAAPed out and not part of the guidance range.

• Forward-looking statements subject to risks and uncertainties outlined in SEC filings. • Risks related to lease terminations, operational performance, and market conditions affecting financial results.

Q: Atul Maheswari asked about long-term growth plan of 10%, where growth is concentrated and why 10% is the right target.

A: James Dempsey said growth is ~50% infilling existing network and ~50% new markets, with 10% seen as providing stability and utilization flexibility.

Q: Atul Maheswari followed up on guidance, asking about RASM growth needed.

A: James Dempsey and Bobby Schroeter said RASM trends are improved, with stability in revenue and benefits from revenue management discipline and NDC distribution enhancement.

Q: Savanthi Syth asked about delivery cadence and fleet plan.

A: Mark Mitchell provided delivery cadence details, and James Dempsey noted fleet will start and end 2026 and 2027 with same number of aircraft.

Q: Jamie Baker asked about labor assumptions and pilot deal in cost savings.

A: James Dempsey said no pilot deal in guide, cost savings include rent, network shape, and efficiency from stable schedule.

Q: Katherine Kallergis asked about guidance range.

A: Mark Mitchell said guidance range accounts for transition and supply-demand environment.

Q: Duane Pfennigwerth asked about engine return conditions.

A: James Dempsey said deal is positive with minor impact on maintenance costs.

Q: Michael Linenberg asked about revolver collateral and PDP.

A: Mark Mitchell said revolver is backed by loyalty assets, and James Dempsey noted lower PDP debt with deferred aircraft deliveries.

Q: Ryan Capozzi asked about fare vs ancillary revenue trends.

A: Bobby Schroeter and James Dempsey said migration to basic first product and NDC distribution helped both fare and ancillary revenue.

Q: Andrew Didora asked about adding off-peak flying despite lower RASM.

A: James Dempsey said due to improved revenue environment and capacity changes from competitors.

Q: Daniel McKenzie asked about profit metrics and loyalty.

A: James Dempsey said focus on sustained profitability, and Bobby Schroeter talked about loyalty program engagement and revenue growth.

Q: Christopher Stathoulopoulos asked about growth and margins.

A: James Dempsey said growth is from infilling existing network, and focus on free cash flow generation for sustained profitability.