image: Airbus
Ultra-low-cost carrier Frontier is right-sizing its fleet by reducing the number of leased aircraft in active service and deferring future deliveries from Airbus, it said on February 11. New CEO Jimmy Dempsey is focused on “resetting and stabilising the business” and returning Frontier to profitability after reporting a $137 million net loss for 2025.
Frontier operates a fleet of 176 Airbus A320s and A321s, both Ceos and Neos, all on operating leases that expire between 2027 and 2037. On February 1, the Airbus backlog consisted of 12 A320neos and 148 A321neos, totalling 160 aircraft. This includes the deferral of 54 deliveries from 2025-2028 to 2029-2031 that was announced in August 2024, when it also cancelled its order for the A321XLR.
In today’s announcement, the carrier said it has reached a non-binding agreement with lessor AerCap to return 24 Airbus aircraft in the next quarter, Q2 2026. These lease terminations are two to eight years ahead of schedule, resulting in one-time termination expenses. AerCap will commit to the sale and leasebacks of ten deliveries that are scheduled in 2028-2029.
In the earnings call, Dempsey motivated the lease restructuring by saying: “We plan to take advantage of this by increasing utilisation across our remaining fleet to support our planned growth and drive efficiency. AerCap will remain one of our largest lessors, and we look forward to expanding our partnership with an additional 10 sale and leasebacks in the future as part of this agreement.”
Airbus
Frontier also reached a non-binding framework agreement with Airbus to defer deliveries of 69 A320neo family aircraft from 2027-2030 to 2031-2033. “It supports a more measured and sustainable long-term growth rate of approximately ten percent, representing a meaningful moderation versus our prior growth trajectory”, Dempsey said.
“Including the fleet transactions we expect to execute in the first quarter, we anticipate exiting 2026 with 176 aircraft, similar to year-end 2025, as the 24 inductions scheduled for this year are offset by the 24 planned early lease terminations”, said CFO Mark Mitchell.
Both initiatives, which should be finalised later this quarter, are part of Frontier’s “strategic priority” to strengthen its cost discipline. “We are targeting $200 million of annual run rate cost savings by 2027, largely from network optimisation, productivity enhancements, and other efficiencies across the business, which includes approximately $90 million of expected annual rent savings from the early termination of the 24 aircraft leases.”
Compared to its rival and at one time project partner Spirit Airlines, Frontier is still doing reasonably well. But it is another US ULCC that is struggling for some time, suffering from reduced domestic demand, higher costs, and growing competition from the US majors that offered appealing products.
Profit
Frontiers’ December quarter profit of $53 million was the first quarterly profit in 2025 and the first since Q4 2024, with operating revenues of $997 million only slightly below the $1.002 billion in 2024. The FY25 $137 million loss compares to a slim $85 million profit in the previous year on stable revenues of some $3.7 billion. However, expenses were $100 million up to $3.8 billion.
Dempsey’s second priority for this year is “improving operational reliability by reducing cancellations and improving our on-time performance. We’re simply not satisfied with our past record in these areas. The status quo is not acceptable, and every available option is on the table to improve our performance.”
The carrier will also invest in its commercial offering through the fleet-wide rollout of first-class seating, onboard Wi-Fi, an upgraded website and mobile app, and enhanced digital products and communications.
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