Frontier Airlines has predicted lower-than-expected revenue growth for the first quarter of 2025, declaring that it will reduce its capacity for the upcoming quarter due to weakened demand for flights as impacted by the recent implementation of US tariffs.
In a filing with the Securities and Exchange Commission (SEC) dated April 10, 2025, Frontier Airlines announced that it anticipates a revenue increase of about 5% for the first quarter of 2025, driven by capacity growth. This figure is 3% lower than the same quarter last year, which saw an 8% increase in capacity.
Frontier predicts that revenue growth will be less than expected because of reduced demand during March 2025. According to the airline, this decline in demand is reflected in a 17-point drop in the US Consumer Confidence Index, which decreased from 109.5 at the end of 2024 to 92.9 in March 2025.
As of March 31, 2025, Frontier reported it had approximately $885 million in total funds available. This amount includes unrestricted cash and cash equivalents, along with $205 million available from the company’s credit facility that has not yet been used.
The company remarked that it is unable to reaffirm full-year 2025 guidance due to the “uncertain environment”. In response to this, the airline has cut its planned schedule capacity for the second quarter of 2025, meaning that fewer flights will be operated on less busy days of the week.
Frontier anticipates that its capacity in the second quarter of 2025 will be down by low single digits compared to the same quarter last year, which saw a 13% increase. Nevertheless, the company believes that its capacity optimization, along with the strength of its business model, will “provide resiliency in navigating through the current environment”.
These predictions arise amid significant economic uncertainty due to tariffs imposed by US President Donald Trump on April 2, 2025. The negative effects on the aviation sector are already evident, as the stock of major airlines has dropped.
Data from Market Watch shows that the US airline industry has experienced a sharp downturn, influenced by decreased travel demand and rising costs. The S&P 1500 Airlines Index has fallen by about 32.49% so far this year.
Frontier Airlines experienced a 12.5% drop in its stock in just one day on April 10, 2025, and it has lost nearly half of its value since the beginning of the year. Other airlines have suffered even more severe losses. For example, American Airlines and United have each seen declines of over 25% year-to-date.