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Frontier's outlook for 2026 points to a potential profit from deep cost reductions

Frontier Group, the parent company of Frontier Airlines, issued a forecast on Wednesday that indicated a potential profit for '19, while analysts expected a loss. It is betting on tighter cost controls.

The shares of the airline?rose by 4.4% during early trading after it announced it would cancel certain aircraft leases and delay deliveries of some jets in order to reduce capacity and conserve cash.

According to the airline, a range of losses ranging from 40 cents to 50 cents per a share in 2026, adjusted, was forecast, with a 5 cent profit at the midpoint. According to data compiled from LSEG, analysts on average predicted a 'loss' of 1 cent per share.

Frontier's wide forecast range shows how difficult it is for airlines to predict near-term demand. This is especially true for economy class seats as budget-conscious travelers pull back in the face of a challenging economic environment.

Even though rivals who offer premium fares are able to charge higher fares, budget airlines still struggle with high maintenance costs, fuel and crew costs.

Frontier's earnings have been boosted by network changes, capacity reductions and better product offerings.

The Denver-based airline's adjusted profit per share for the fourth quarter was 23 cents. Street estimates were 12 cents.

Frontier has also reached an agreement with AerCap, a lessor of aircrafts to terminate the leases for 24 jets that are currently in service and were otherwise due to expire within two to eight years.

It?also struck a deal to delay the introduction of 69 A320neo aircraft, which had been contractually scheduled to be delivered between 2027 to 2030.

Frontier finished 2025 with total liquidity of $874 million, including $220 from an expanded revolving loan facility.

The airline plans to introduce first-class seating early in 2026, as part of its effort to offer a broader range of?higher margin products than its current all-economy configuration.

The airline said that it aims to double its revenue from loyalty to $6 per passenger at the end of 2026. (Reporting and editing by Shilpi Magumdar in Bengaluru)

(source: Reuters)