Shares of Frontier Airlines (FRNT) are off 12% today to $2.23. The shares have a 52-week high of $7.46.
Early this morning the The International Air Transport Association speaking about industry profits said "This could easily turn into a net loss should the current economic environment deteriorate further," according to the AP. The price of jet fuel is now about $3.50, about double what it was a year ago.
JP Morgan recently cut airline credit ratings to "underweight". Frontier’s traffic was strong in February but probably not strong enough to offset rising costs.
Last quarter, Frontier revenue rose from $261 million in the period a year ago to $322 million. But the company’s operating loss widened to $26 million. Add in interest expense of $9 million.
If revenue begins to fall or fuel prices push up operating losses further Frontier has real problems.
Douglas A. McIntyre