Give Frontier Airlines (ULCC) credit; it is prepared to make a pivot when something is not working. To that end, the budget airline is taking a step up to go after the well-heeled traveler, and offering first-class seating. Investors, however, cried foul and sent shares down nearly 6% on the news.
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Frontier is aggressively pursuing the high-end traveler, and redoing its airplanes accordingly. Its Airbus (EADSY) aircraft will now feature two rows of first-class seats and will also offer an array of new perks for travelers. The move is expected to mean a brisk jump in revenue. CEO Barry Biffle looks for over $250 million in revenue in 2026 as a result, and double that in 2028.
So what perks will be coming for high-dollar travelers? First, more room; the three-by-three economy seats will now be two-by-two first-class seats. Second, the loyalty program will get retooled, giving gold members and better complimentary seat upgrades as well as free companion tickets for the platinum-grade traveler. Seating upgrades and waived baggage fees are also on offer.
Upseller’s Banquet
In a move that is sure to do no good for in-flight anxiety, reports also noted that Frontier is offering incentives for workers to charge customers for bags and seats on flights. Reports claim that Frontier and fellow low-cost airline Spirit (SAVEQ) shelled out $26 million to employees who charged the fees.
There was even a price list. Since 2022, Frontier offered $10 for each carry-on bag purchased at the gate, $3 for carry-on bags purchased at the ticket counter, and $3 for selling a seat with extra legroom.
Is Frontier Airlines a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on ULCC stock based on one Buy, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 30.02% rally in its share price over the past year, the average ULCC price target of $4.96 per share implies 14.48% downside risk.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
