Frontier forecasts better-than-expected quarterly profit on improving fares

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(Reuters) -Frontier Group Holdings, parent of U.S. low-cost carrier Frontier Airlines, forecast better-than-expected fourth-quarter profit on Wednesday, helped by improving air fares.

U.S. carriers have scaled down capacity in recent months to support pricing power after a slowdown in domestic travel earlier this year — driven by economic uncertainty caused by President Donald Trump’s sweeping tariffs — had left airlines in a bind, pushing them to cut fares to fill seats.

Frontier said it expects a fourth-quarter adjusted profit of 4 cents to 20 cents per share, with the midpoint of 12 cents coming in higher than analysts’ average expectation of 10 cents per share, according to data compiled by LSEG.

The Denver-based airline has been betting on network changes, capacity cuts and improved product offerings to lift its earnings.

The discount airline reported a third-quarter loss of 34 cents per share, while total operating revenue dropped 5% to $886 million.

Frontier plans to roll out first-class seating in early 2026 and is aiming to double its loyalty revenue to $6 per passenger by next year.

The company expects delivery of seven A320neo aircraft, three A321neo aircraft and 10 PW1100 spares engines in the fourth quarter of 2025, all of which are expected to be financed with sale-leaseback transactions.

A sale and leaseback transaction includes a carrier selling its used or newly acquired jets to leasing firms and renting them back for their own use.

During the third quarter, its unit revenues dipped 1.5%, but unit costs rose 9.3%.

(Reporting by Nandan Mandayam in Bengaluru; additional reporting by Doyinsola Oladipo in New York; Editing by Alan Barona)