By Doyinsola Oladipo
NEW YORK, Feb 19 (Reuters) – Frontier Group Holdings, the parent of Frontier Airlines, is making a bold bet on budget travelers who have tightened their belts while much of the industry insists that premium spenders are the way to go.
James Dempsey, Frontier’s new chief executive, told Reuters that flying more on off-peak days and cutting fares can still be a winning strategy in 2026, as the ultra‑low‑cost carrier looks to capture market share left by no-frills pioneer Spirit Airlines, which filed for bankruptcy protection for a second time in August 2025.
Dempsey, who became Frontier’s CEO in January after the abrupt departure of previous chief exec Barry Biffle, said that the airline will not follow Spirit Airlines into bankruptcy, after several media outlets reported that travelers could not book flights on Frontier past April.
“They are categorically untrue,” Dempsey said of published reports that raised the specter of a bankruptcy filing. The airline said that the previous inability of some travelers to book flights past April was due to a schedule overhaul ahead of the spring and summer. “We are very focused on the go-forward plan on Frontier and right-sizing our fleet,” he said. “It puts us in a very strong position to bring the airline back to profitability.”
Wall Street is skeptical of the carrier’s plan to revive its old playbook, the high-utilization model, where carriers maximize aircraft use and spread fixed costs over more flights, driving unit costs down. The stock has dropped 19% in the past five days and 44% over the last year.
“We offer value to customers at fares that enable people to travel who would not otherwise travel,” Dempsey said. “We think that the model is phenomenally beneficial to consumers.”
The high-utilization model has been challenging since the pandemic, as operating costs have risen and legacy airlines have encroached on the discount carriers’ market share, according to aviation equity analysts. If budget demand falls flat, the carrier faces the prospect of deepening losses amid mounting investor pressure.
“Frontier’s deeply negative margins are second only to Spirit’s, and remain among the worst peacetime margins we’ve ever witnessed,” said Jamie Baker, a JP Morgan equity analyst, in a research note.
Those challenges have led to talk of consolidation in the industry, including a potential Frontier-Spirit tie-up.
TOUGHER ENVIRONMENT
Frontier’s fourth-quarter profit – excluding gains from sale-leaseback transactions – fell 9.6% while costs per available seat mile excluding fuel rose 7% year-on-year, Baker estimated. Frontier said that lower aircraft utilization contributed to higher costs in 2025, according to a spokesperson.
The airline increased seat capacity by 18% at the beginning of 2024, said Cirium, a data analytics firm. However, the airline flew 3.5% fewer seats in 2025 compared with 2024 in the tougher demand environment.
Dempsey, who spoke to Reuters after its February 11 quarterly results, said he is encouraged by a pickup in demand over the past couple of months as the company invests in its loyalty program and as Spirit exits overlapping markets.
Frontier said revenue per available seat mile (RASM) is up 10% in the current quarter, an indication of improved pricing power.
“It’s a testament to some of the changes that we’ve made around disciplined pricing and giving customers clarity and transparency around what they’re purchasing,” Dempsey said.
It is still chasing premium spenders, with plans to introduce first-class seats later this year, and Wi-Fi before the end of 2027.
“We’re very focused on having a diversified product in the cabin,” he said. “You’ve seen post-COVID the change in customers’ appetites to pay for premium products.”
Since the end of the pandemic, many U.S. carriers including Delta Air, United Airlines and American Airlines have been doubling down on high-end travel to drive up profits and reduce their vulnerability to economic swings.
Dempsey said Frontier also plans to reduce the size of its fleet, and is targeting $200 million in annual cost savings by 2027 while it addresses its performance. Frontier ranked last among 10 North American airlines in on-time performance in 2025, according to Cirium.
SPIRIT TALKS
Spirit and Frontier have been in merger talks since 2022, but have never reached an agreement. Dempsey declined to comment on whether they were still in discussions.
During Spirit’s first Chapter 11 bankruptcy filing, the airline rejected at least two proposals from Frontier in early 2025, including a $2.16 billion offer. Following Spirit’s subsequent bankruptcy filing in August 2025, Frontier made another offer, which sources told Reuters was unviable.
“We look at opportunities as they arise, and we’ll be disciplined in how we assess those opportunities,” Dempsey said. “If it’s favorable to Frontier, we would pursue it.”
Smaller carriers Sun Country and Allegiant announced plans to merge in January, as post-pandemic shifts in pricing power have exposed vulnerabilities in low-fare carriers.
“Sun Country and Allegiant make business sense, and I’m not sure that same box is checked when you look at a Frontier-Spirit,” said Jeff Potter, Frontier’s CEO from 2002 to 2007.
“You have two companies that for lack of better terms are finding their way through some financial challenges and I don’t think that improves if there were a combination now.”
(Reporting by Doyinsola Oladipo in New York; Editing by David Gaffen and Matthew Lewis)
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