Frontier Group Holdings surged 15% on Tuesday, its sharpest gain in more than five months, as investors bet the ultra-low-cost airline could emerge as the chief beneficiary of turbulence at rival Spirit Airlines. Spirit’s second bankruptcy filing in less than a year, coupled with plans to trim routes and downsize its fleet, has raised expectations that Frontier will capture a greater share of the budget travel market.
Analysts at Deutsche Bank backed that outlook, upgrading Frontier to Buy from Hold while highlighting its significant route overlap with Spirit. The firm noted that among ultra-low-cost carriers, Frontier is best positioned to absorb stranded passengers and capitalize on the reduced competition.
Spirit, which only emerged from its first bankruptcy in March, filed for Chapter 11 protection again on Friday after a failed turnaround left it struggling under heavy debt and lease obligations. Although the Florida-based carrier plans to keep flying, it will cut its fleet size and scale back operations in select markets to preserve liquidity.
The retrenchment could ease pressures across the domestic airline industry. “Generally some portion of Spirit’s capacity is likely to be removed, easing pressure on the domestic market, particularly main cabin, at a time when domestic demand is also improving from the sharp stepdown earlier in the year,” Raymond James analyst Savanthi Syth said in a client note.
Frontier, meanwhile, has been aggressively expanding its footprint. The airline recently unveiled 20 new winter routes and rolled out a wave of promotions designed to strengthen customer loyalty and attract new travelers frustrated by service cuts at rivals. The company’s strategy suggests it is positioning itself to seize market opportunities created by Spirit’s instability.
Still, industry watchers caution that the ultra-low-cost model faces structural challenges in the current environment, with higher labor and fuel expenses testing the sustainability of bargain-basement fares. Some analysts argue that larger full-service carriers such as United Airlines and Delta Air Lines remain better equipped to navigate shifting industry dynamics.
Even so, Frontier’s stock surge highlights investor optimism that Spirit’s misfortunes could mark a turning point for the carrier and potentially reshape the competitive landscape in U.S. budget air travel.
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