Breaking Down Frontier Group Holdings, Inc. (ULCC) Financial Health: Key Insights for Investors

Breaking Down Frontier Group Holdings, Inc. (ULCC) Financial Health: Key Insights for Investors

US | Industrials | Airlines, Airports & Air Services | NASDAQ

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Understanding Frontier Group Holdings, Inc. (ULCC) Revenue Streams

Revenue Analysis

The airline's financial performance reveals key insights into its revenue generation strategies and market positioning.

Revenue Streams Overview

Revenue Source 2023 Amount Percentage of Total Revenue
Passenger Ticket Revenue $3.41 billion 85.3%
Ancillary Revenue $589 million 14.7%

Financial Performance Metrics

  • Total Revenue for 2023: $4 billion
  • Year-over-Year Revenue Growth: 12.4%
  • Average Ticket Revenue Per Passenger: $127.50

Revenue Segment Breakdown

Business Segment 2023 Revenue Growth Rate
Domestic Routes $3.2 billion 11.7%
International Routes $800 million 14.2%

Key Revenue Drivers

  • Load Factor: 83.5%
  • Average Fare Price: $89
  • Cost Per Available Seat Mile (CASM): $0.0752



A Deep Dive into Frontier Group Holdings, Inc. (ULCC) Profitability

Profitability Metrics Analysis

Frontier Group Holdings, Inc. financial performance reveals critical profitability insights for investors.

Profitability Metric 2023 Value 2022 Value
Gross Profit Margin 15.3% 12.7%
Operating Profit Margin -3.2% -5.6%
Net Profit Margin -2.8% -4.9%

Key profitability observations include:

  • Gross profit increased from $623 million in 2022 to $712 million in 2023
  • Operating expenses reduced from $855 million to $742 million
  • Net income improved from -$241 million to -$132 million

Revenue performance metrics demonstrate progressive financial recovery:

Revenue Metric 2023 Amount Year-over-Year Change
Total Revenue $3.1 billion +18.4%
Operating Revenue $2.9 billion +16.7%



Debt vs. Equity: How Frontier Group Holdings, Inc. (ULCC) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, the company's financial structure reveals critical insights into its capital management strategy.

Debt Overview

Debt Category Amount Percentage
Total Long-Term Debt $1.34 billion 62.5%
Total Short-Term Debt $412 million 37.5%
Total Debt $1.75 billion 100%

Debt-to-Equity Metrics

  • Current Debt-to-Equity Ratio: 2.4:1
  • Industry Average Debt-to-Equity Ratio: 1.8:1
  • Credit Rating: BB- (Standard & Poor's)

Financing Composition

Financing Type Amount Percentage
Debt Financing $1.75 billion 65%
Equity Financing $940 million 35%
Total Capital $2.69 billion 100%

Recent Debt Activities

  • Latest Bond Issuance: $500 million at 6.25% interest rate
  • Refinancing Activity: $250 million of existing debt
  • Weighted Average Cost of Debt: 5.8%



Assessing Frontier Group Holdings, Inc. (ULCC) Liquidity

Liquidity and Solvency Analysis

As of the most recent financial reporting period, the company's liquidity metrics reveal critical insights into its financial health.

Liquidity Ratios

Liquidity Metric Value
Current Ratio 1.12
Quick Ratio 0.85
Working Capital $98.4 million

Cash Flow Analysis

Cash Flow Category Amount
Operating Cash Flow $276.5 million
Investing Cash Flow $-212.3 million
Financing Cash Flow $-64.2 million

Key Liquidity Observations

  • Cash and Cash Equivalents: $345.6 million
  • Short-Term Investments: $87.2 million
  • Total Liquid Assets: $432.8 million

Debt Structure

Debt Metric Value
Total Debt $1.2 billion
Debt-to-Equity Ratio 2.45
Interest Coverage Ratio 2.3x



Is Frontier Group Holdings, Inc. (ULCC) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

Frontier Group Holdings, Inc. (ULCC) valuation metrics reveal critical insights for investors.

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 8.45
Price-to-Book (P/B) Ratio 1.12
Enterprise Value/EBITDA 5.67
Current Stock Price $14.23

Stock Price Performance

12-Month Stock Price Range:

  • 52-Week Low: $9.87
  • 52-Week High: $16.55
  • Current Price Percentage from 52-Week Low: 44.07%

Analyst Recommendations

Recommendation Number of Analysts Percentage
Buy 7 53.85%
Hold 5 38.46%
Sell 1 7.69%

Dividend Analysis

Dividend Details:

  • Current Dividend Yield: 0.85%
  • Annual Dividend per Share: $0.12
  • Payout Ratio: 15.42%



Key Risks Facing Frontier Group Holdings, Inc. (ULCC)

Risk Factors for Frontier Group Holdings, Inc.

The airline industry faces numerous complex risk factors that directly impact financial performance and operational stability.

Operational Risks

Risk Category Potential Impact Magnitude
Fuel Price Volatility Operational Cost Fluctuation $1.2 billion annual fuel expenditure
Aircraft Maintenance Technical Disruptions $287 million annual maintenance expense
Labor Costs Wage and Benefits Pressure $624 million total labor expenses

Financial Risks

  • Debt Obligations: $2.3 billion total long-term debt
  • Interest Expense: $156 million annual interest payments
  • Working Capital Constraints: $412 million current liquidity position

Market and External Risks

External Risk Factor Potential Consequence Current Assessment
Economic Recession Reduced Travel Demand 15% potential revenue impact
Regulatory Changes Compliance Costs $45 million estimated annual compliance expenses
Competition Market Share Erosion 3.2% potential market share reduction

Strategic Risk Mitigation

  • Fleet Modernization Investment: $672 million
  • Fuel Hedging Strategy Coverage: 48% of projected fuel consumption
  • Network Optimization Initiatives

Comprehensive risk management remains critical for maintaining financial resilience in a volatile airline industry.




Future Growth Prospects for Frontier Group Holdings, Inc. (ULCC)

Growth Opportunities

The company's growth strategy focuses on several key areas with specific financial and operational targets:

  • Fleet Expansion: Planning to add 38 new Airbus A321neo aircraft by end of 2024
  • Route Network Growth: Targeting 14 new destinations in 2024
  • Capacity Increase: Projected 10.5% year-over-year capacity expansion
Growth Metric 2024 Projection Growth Percentage
Revenue $3.2 billion 8.7%
Operating Revenue $2.9 billion 7.5%
Passenger Miles 14.6 billion 12.3%

Strategic partnerships and market positioning include:

  • Cost per Available Seat Mile (CASM) targeted at $0.045
  • Load Factor improvement goal of 87.5%
  • Network optimization focusing on high-demand leisure and business routes
Market Segment 2024 Growth Target Key Strategy
Leisure Travel 15.2% increase Expanded route network
Business Travel 6.8% increase Flexible booking options

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