Frontier Airlines: Positive Booking Trends, But Execution Risk Keeps Me At Hold
Summary
Frontier Group Holdings has rebounded 29% since my last report but continues to face challenges in its ultra-low-cost airline model.
Industry capacity rationalization and improved booking trends are supporting ULCC's near-term yields, with Q3 RASM expected to rise mid-to-high-single-digits.
Despite positive trends, EBITDA estimates have been cut, and cash burn remains a concern, keeping leverage high and free cash flow negative.
Maintaining a Hold rating on ULCC with a $5.25 price target, reflecting 23% upside but significant execution and balance sheet risks.
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Frontier Group Holdings (NASDAQ:ULCC) has climbed 29% since my last report, strongly outperforming the S&P 500. At the time, I rated the airline a Hold as its ultra-low-cost model came under pressure from soft
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This article was written by
Dhierin-Perkash Bechai is an aerospace, defense and airline analyst.
Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.
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