Updated version 2 - Frontier Airlines achieves unexpected profitability, driven by rising ticket prices, with quarterly losses smaller than expected

Full article supplemented with details

Reuters, October 28 - Frontier Airlines (ULCC.O) on Wednesday forecast a smaller-than-expected loss for the fourth quarter and reported an unexpected profit for the third quarter, as higher ticket prices helped offset the impact of soaring fuel costs.

The company’s shares surged 9% in early trading.

To counter the rise in jet fuel costs caused by the Iran war (link), Frontier Airlines, like most carriers, has moved to raise ticket prices, cut capacity, and add surcharges including checked baggage fees.

The airline has also reduced costs by returning some leased aircraft, while boosting revenue by introducing first-class seats, Starlink internet service, and enhancing loyalty program income.

Frontier Airlines' unit revenue, a gauge of pricing power, soared 30% in the quarter, surpassing its own forecast for growth of more than 20%. Unit costs, which include fuel, rose 18%.

For the fourth quarter, Frontier Airlines expects unit revenue growth to exceed 20%, but rising fuel costs are expected to dampen this momentum. The company projects average fuel costs this quarter at $4.75 per gallon, up significantly from $3.96 last quarter.

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Earlier this week, rival JetBlue JBLU.O in the leisure airline sector posted a larger-than-expected loss (link) despite higher ticket prices boosting revenue; however, the company defended its financial performance (link) and reiterated its long-term target of $1 earnings per share by 2028.

Unexpected quarterly profit

Frontier Airlines reported adjusted earnings of $0.18 per share for the third quarter, compared with a loss of $0.34 per share a year earlier. Analysts previously expected a $0.04 per share loss.

Quarterly revenue grew 53% year-over-year to a record $1.36 billion.

The Denver-based airline expects a fourth-quarter loss per share between $0.15 and a profit of $0.05. According to data compiled by LSEG, the $0.05 per share loss at the midpoint is slightly better than analysts’ forecast for a $0.06 per share loss.

So far this year, Frontier Airlines shares are up about 17%, making it the best performer in the NYSE Arca Airline Index .XAL, which has fallen 15% over the same period.

(For the convenience of non-native English speakers, Reuters has automated this report’s translation into several other languages. Automated translation may contain errors, or may not include all needed context, and Reuters does not guarantee the accuracy of automated translations and provides them for reader convenience only. Reuters accepts no responsibility for any damage or losses caused by the use of automated translation features.)