Frontier's shares fell over 9% on Monday (March 2) following a downgrade from Barclays.
The bank downgraded the airline group to underweight from overweight, lowering its price target to $4.00 from $6.00. The firm cited limited potential for equity gains as a result of the airline pausing its sale and leaseback strategy on new aircraft deliveries.
The airline has historically made gains from favourable Airbus pricing, but faces lower fleet utilisation with core margins weakening. The strategy has helped generate cash and capital as it continues to book losses from its operations.
“The airline has relied too heavily on sale and leaseback gains over the last couple of years, and we need to focus on bringing those operating cash flows back in,” said Frontier CEO, president and director James Dempsey at Barclays Annual Industrial Select Conference last month.
During the company's fourth-quarter 2025 earnings call, Dempsey said the company will "probably diversify somewhat from
“The combination of the rent, the avoidance of maintenance costs and the efficiencies you're getting across the business — those items overcome and help you to move off of that sale-leaseback dynamic,” said Frontier CFO and senior VP Mark Mitchell at the conference.
Last year, the company reported a pre-tax loss of $134 million and a net loss of $137 million, swinging from its pre-tax profit of $86 million and net income of $85 million in 2024.
In the fourth quarter of 2025, unit costs, excluding fuel, were 1% lower at 7.36 cents, which was driven by sale-leaseback gains on a higher fleet induction during the quarter. However, this was offset by a 10% reduction in average daily aircraft utilisation and higher station costs.
AerCap committed to 10 future sale-leaseback transactions for deliveries scheduled in 2028 and 2029.
The company's liquidity totalled $874 million at the end of 2025, including $654 million in cash and $220 million from its revolving credit facility. The company's total debt, net is $614 million, largely comprised of pre-delivery deposit financing facility, which totalled $348 million.