While we know that airline Frontier Airlines (ULCC) has been having a rough time of it following a series of setbacks, it is still in there and swinging, and looking to capitalize on a stumble at Southwest (LUV). In fact, Frontier’s plan is simply to do the opposite. Oddly, Shareholders were displeased, and shares plunged about 3.5% in Tuesday afternoon’s trading.
When Southwest rolled out its plan to start raising money by charging for seat assignments and checked bags, Frontier—already known as a discount carrier—decided to make hay while that sun shined. It announced the “Divorce Your Old Airline” deal, likely a reference to the LUV ticker symbol Southwest carries.
With this deal, customers booking a flight for between March 24 and August 18 will be able to get a seat assignment and a carry-on bag without any upcharge. That was a noticeable pivot away from the growing move toward “a-la-carte” pricing plans that many carriers, including Southwest, were looking to put into play. For its part, however, Southwest remained quiet on Frontier’s jab.
Hardly Immune to Swipes Itself
But even as Frontier got a jab in at Southwest’s expense, so too is Alaska Airlines (ALK) getting in a blow at Frontier. Alaska has long been in competition with Frontier, in particular at Everett, Washington’s Seattle Paine Field. Frontier was looking to add flights in there, an airport Alaska frequently dominated.
Thanks to this, Alaska Airlines actually stepped up its own service at Seattle Paine, now adding on flights to Las Vegas and Phoenix. These were destinations that Frontier was looking to service from Seattle Paine, but now, these are also destinations Alaska will handle, which will likely cut into Frontier’s potential profit in those runs.
Is Frontier Airlines Stock a Good Buy?
Turning to Wall Street, analysts have a Hold consensus rating on ULCC stock based on one Buy, nine Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 15.29% loss in its share price over the past year, the average ULCC price target of $9.50 per share implies 59.66% upside potential.
Questions or Comments about the article? Write to editor@tipranks.com