Key takeaways: Frontier Group Holdings, Inc. (ASX: ULCC) saw its average ticket price jump 71% year over year in the third quarter. The budget carrier posted a loss for the quarter as fuel costs continued to weigh on results. The company projected it could achieve adjusted profitability in the fourth quarter, sending its shares higher on the news.
An Airbus A321 operated by Frontier Airlines taxis on a runway at Los Angeles International Airport in Los Angeles, California, on January 2, 2025. To pass along the pressure from a sharper rise in jet fuel prices, Frontier Airlines, the largest budget carrier in the United States, raised its average ticket price by 71% in the third quarter.
Frontier's average revenue per passenger ticket came to $67.82 in the third quarter, up from $39.74 a year earlier. When including the many ancillary fees such as checked bags and carry-on bags, total revenue per passenger rose 30% year over year to $138.22.
The higher fares did not dampen consumers' appetite for booking. Passenger volume grew 18% in the quarter, surpassing 9.8 million, adding 1.5 million travelers compared with the same period last year. The company said demand remained strong even with fares at elevated levels, but it still remained in a loss-making position.
Third-quarter losses widened to $104 million, compared with a loss of $77 million a year earlier. Total fuel expenses soared 82% to $425 million. Frontier provided fourth-quarter guidance: adjusted earnings per share in a range from a loss of $0.15 to a maximum profit of $0.05, implying the possibility of achieving adjusted profitability in the fourth quarter.
From Delta Air Lines to Frontier Airlines, a number of carriers have said travel demand has remained broadly resilient despite higher ticket prices. But jet fuel prices have hit new highs — fuel is the second-largest expense after labor costs and is steadily eating into airline profits. In early trading on Wednesday, Frontier's shares rose about 6%. Even before Spirit Airlines ceased operations in May of this year, Frontier had already overtaken it to become the largest budget airline in the United States.
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