Frontier Goes Full Euro

As promised, CEO Barry Biffle briefed analysts on several changes he hopes will return the airline to profitability. The gist: he wants to copy Ryanair.

Dear readers,

Frontier, which maintains that the lowest-cost carrier always wins (despite recent comments from United executives that poked at the thesis), plans to turn itself into a European-style discount carrier by spring 2024.

The average customer might have already thought this was the case, because Frontier sells cheap base fares while charging for nearly all extras. But you all know that’s only half of what makes Ryanair so successful. Ryanair squeezes operational efficiency with its rigid out-and-back routings for crews and airplanes. In the United States, Frontier has run a more complex schedule, with many aircraft and crews flowing through several airports on multi-day trips. Soon, however, about 90 percent of trips will be out-and-back, with most aircraft returning to base each night, executives said on Thursday’s third quarter earnings call.

"We are simply going to deepen the modularity and go straight to a best-in-class ULCC model of Europe," Biffle said. "We're finally at a size and scale that makes sense. For us, [the origin cities] have to be a little bigger. If you know much about Ryan[air] or Wizz [Air], they can make a base with just a few aircraft. That doesn't really work with our reserve coverage in the United States. But we're at the point that we can do that."

This was the first earnings call since Biffle appeared Sept. 13 at Morgan Stanley’s 11th Annual Laguna Conference and announced he would implement massive changes to counter a swift decrease in demand and increase in competitive capacity. I was harsh on Biffle after that appearance, but I give him credit for his recent actions: He saw a problem and reacted quickly. He didn’t just beg analysts for more time.

On Thursday’s earnings call, Biffle made clear that executives are not pleased with their third quarter results. Frontier reported a net loss of $32 million on total revenues of $883 million. CASM-ex fuel came in at 6.66 cents, a strong number for most airlines, but well short of the 5.55 cents of full-year 2019.

I'll keep it short since I wrote at length about Frontier's issues last month, but here are three priorities Biffle outlined on Thursday.