It's a Crummy Time for ULCCs

Frontier says business is bad and promises to cut capacity, while Avelo shared an honest assessment of its business. Plus: the United/American saga in Chicago has reached a new chapter.

Dear readers,

Until Frontier came out with some bad news on Friday, we assumed that the two big U.S. ULCCs would be hurt more than full-service carriers by the soft market for domestic economy seats that several carriers have identified. But we didn't know for sure, because Spirit is a private company, and Frontier hadn't released anything in months.¹

Now we know. Frontier issued an investor update on Friday, and while the first quarter was OK overall² (year-over-year revenue growth of 5 percent on 5 percent more capacity), the airline reported major slippage in March. Frontier cited "weakened demand" during the month, "resulting in fare discounting and promotions across the industry." Frontier said it was hit hard, presumably because in the past two years, it returned to its roots as a spill carrier, and the big airlines didn’t spill much traffic. Frontier reported that it had trouble attracting close-in bookings.

Frontier said it could not affirm its full-year guidance, which (in the much happier days of the Feb. 7 fourth quarter earnings call) called for adjusted diluted earnings per share of at least $1.

'Action Barry' is back

Judging by stock price, Frontier CEO Barry Biffle is far from the most successful airline leader.³ But he does like to move fast, as was very clear in September 2023 when he said Frontier was flying in many of the wrong markets to make money and promised to change things quickly. And he did, replacing his chief commercial officer and re-orienting the airline’s network away from oversaturated leisure destinations.

This time, Biffle is taking out his meat clever.