Frontier Group (NASDAQ:ULCC) leadership used its fourth-quarter and year-end 2025 earnings call to outline a strategic reset aimed at returning the ultra-low-cost carrier to “sustained profitability,” with newly appointed CEO Jimmy Dempsey emphasizing that the board has given him a mandate to enact change across the business.
Dempsey said his plan centers on four priorities: rightsizing the fleet, strengthening cost discipline, reducing cancellations and improving on-time performance, and driving customer loyalty. Management skipped prepared financial and commercial remarks on the call to allow more time for Q&A, but noted that the prepared remarks were available on the investor relations website.
Fleet “rightsizing” and moderated growth profile
Separately, the company reached a non-binding framework agreement with Airbus to revise aircraft deliveries from its order book. Dempsey said the updated delivery profile supports a more measured long-term growth rate of approximately 10%, a “meaningful moderation” versus Frontier’s prior trajectory, which he described in the Q&A as including periods of high-teens growth and, in some years, more than 20%.
In response to questions about where growth will be concentrated, management said roughly half of the expected growth comes from “infilling” the existing network—putting capacity back on Tuesdays, Wednesdays, and Saturdays—with the other half tied to new markets and opportunities created by shifts in industry capacity. Executives cited activity in airports such as Atlanta and Las Vegas.
Cost savings target and labor assumptions
Dempsey said Frontier is targeting $200 million of annual run-rate cost savings by 2027, largely from network optimization, productivity enhancements, and other efficiencies across the business. He said this includes approximately $90 million of expected annual rent savings associated with the early termination of the 24 aircraft leases.
On labor, management said there is no pilot deal included in the full-year guide and that negotiations with pilots are continuing through the mediation process. Dempsey said the cost savings target does not assume crew economics changes beyond efficiency benefits that come from operating a more stable schedule through the week.
Operational reliability push: utilization, cancellations, and maintenance planning
Operational reliability was another focus for 2026, with Dempsey saying the airline is not satisfied with its historical performance on cancellations and on-time metrics. He said the company is pursuing a “long list” of initiatives, including turn-time improvements, optimizing airport workflows, strengthening head-start performance, and improving day-of-travel communications.
Management highlighted that over 85% of customers use Frontier’s updated mobile app, which it plans to leverage for alerts and guidance during disruptions. Dempsey also said the airline is working to better integrate scheduled maintenance into early-stage network design to take advantage of its enhanced maintenance footprint.
On utilization, Frontier said it is targeting about 11.5 hours across the fleet, compared with an average of about 9 hours last year. Management noted that newer engine technology can reduce productivity on some aircraft, influencing the target. Executives said the removal of 24 aircraft is expected to create a step-change in utilization around the middle of the second quarter, with the airline building toward the 11.5-hour target into summer 2027 as staffing ramps.
Revenue initiatives: “basic first,” NDC, and loyalty expansion
Executives attributed recent revenue momentum to both the macro environment and internal initiatives. Management said it moved back to a “basic first” product architecture with three defined bundles—economy, premium, and business—and reinforced revenue management discipline around that structure. The company also pointed to expanding its NDC (New Distribution Capability) footprint, which management said improves conversion and allows bundles to be merchandised more effectively through online travel agencies and aggregators.
In the Q&A, management said it is seeing RASM improvement “above 10%” early in the year, with favorable trends through March and into April and May, though executives cautioned that the year remains a transition as fleet productivity and cost initiatives are implemented.
On loyalty, executives described the loyalty ecosystem as a key long-term lever and said enhancements introduced last year—simplified elite benefits, improved redemption opportunities, and easier status benchmarks—have begun to resonate with customers. Management also discussed planned modernization across the commercial offering through 2027, including:
- Fleet-wide rollout of first-class seating
- Onboard Wi-Fi
- An upgraded website and mobile app
- Enhanced digital products and communications
Management noted that the revolver is backed by loyalty assets and said loyalty cash flows have continued to perform well, citing a third consecutive quarter of double-digit growth and that Q4 was up over 30%. Executives also discussed loyalty-related products including the co-brand card and subscription programs, including Discount Den and GoWild.
Aircraft deliveries, guidance range drivers, and lease termination accounting
On fleet deliveries, management said Frontier has 24 aircraft scheduled for delivery this year: six in the first quarter, eight in the second quarter, and five in each of the third and fourth quarters. With 24 inductions and 24 early terminations, the company expects to end the year with the same number of aircraft it began with: 176. Executives also said they expect to start and end 2027 with the same aircraft count as 2026, describing growth as coming primarily from higher utilization rather than net fleet expansion.
Regarding guidance sensitivity, management said the range reflects the timing and execution risk of a transition year as productivity resets and cost savings are implemented, balanced against a more constructive supply-demand environment and anticipated traction from revenue initiatives. Dempsey said the AerCap lease termination deal carries no liquidity penalty in 2026, though there will be a one-time non-cash expense when final agreements are executed that management expects to be adjusted out of non-GAAP results. Executives said the guidance range incorporates real costs associated with return conditions.
Management also said that deferring aircraft deliveries with Airbus reduces near-term pre-delivery payment requirements and could result in lower associated debt, noting an expectation of net PDP deposit returns and a lower PDP balance at year-end.
Closing the call, Dempsey reiterated that Frontier has “a lot of work to do,” but said the plan outlined is intended to put the airline back on a sustainable profitability path and support long-term value creation for shareholders, employees, and customers.
About Frontier Group (NASDAQ:ULCC)
Frontier Group, trading on Nasdaq under the ticker ULCC, is the holding company for Frontier Airlines, an ultra-low-cost carrier based in Denver, Colorado. The company’s core business centers on providing no-frills air travel across a point-to-point network while generating ancillary revenue from add-on services such as baggage fees, seat selection, priority boarding and in-flight refreshments. This fare-plus-a-la-carte model allows Frontier to offer competitive base fares and maintain low operating costs.
Founded in February 1994 by industry veterans Andrew Levy and Russell Beardsmore, Frontier Airlines commenced operations with a small fleet of MD-80 aircraft.
