Frontier Airlines executives are all about optimism even as financial results show COVID cut revenue in half

Frontier Airlines has been a publicly traded company for six weeks now.

Executives with the Denver-based low-cost carrier marked the milestone on Thursday by holding their first financial results call, focusing on the bright side as the country and airline industry slowly crawls out of the hole created by the COVID-19 pandemic.

Frontier brought in $271 million in revenue over the first three months of the year, down 50% compared to the first quarter of 2020, before the virus took hold, numbers released Thursday show. It’s a demonstration that surging COVID cases last fall depressed air travel demand into the New Year.

But CEO Barry Biffle stressed it’s about what’s ahead not what’s behind after the airline went cash positive in March for the first time since the pandemic began.

“First and foremost, we’re pleased with what we’re seeing in the demand for travel,” Biffle said during the call. “The vaccine is truly unlocking the pent-up demand everyone anticipated and bookings are getting stronger every week. We believe our focus on leisure travel coupled with our low fares done right strategy positions us as the industry leader in this recovery.”

Biffle said the airline’s goal is to get back to full utilization of its 107-aircraft fleet by the end of the year ahead of what he expects will be a strong 2022.

Frontier’s operating expenses were also down significantly at $363 million, 44% lower than the first quarter of 2020. That decrease was brought on by a 36% decrease in passenger capacity as measured by available seat miles and through payroll support and grant funding made available through the CARES Act, according to a company news release.

The company had access to $853 million in cash through a federal lending program at the end of the first quarter of the year and another $271 million generated by its $570 million initial public offerings on April 1.

Right now, fares are still depressed but Biffle predicted that with announcements like national mask recommendations being relaxed demand will begin to outpace supply later this year and fares will rise.

George Ferguson, senior airlines analyst with Bloomberg Intelligence, isn’t quite as bullish as Biffle on that, mainly because there are still so many planes on the ground.

“We see 25% of the U.S. narrow-body fleet as parked,” Ferguson said. “And of the airplanes that are flying, they’re well underutilized.”

While Frontier has added some new international destinations in the Caribbean and Latin America recently, Ferguson doesn’t see those routes as differentiators with all airlines crowding to serve the leisure market. Still, with a focus on low fares, Frontier is well-positioned for 2021.

“Frontier is a good story,” Ferguson said. “(It’s) the kind of airline that is absolutely going to capitalize on this bounce.”

After closing the day at $19.72 a share, Frontier’s price went up to $20.75 in after-hours trading following Thursday’s call.

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