Underperformance of Frontier Group Holdings Stock Persists Despite Upgrade

Frontier Airlines' stock has suffered a 38% decline since May, along with a 60% drop over a year. Despite a previous buy rating from the author, the airline's Q2 2024 earnings outlook reveals an aggressive capacity expansion of 12-14%, potentially higher than competitors. The company expects pre-tax margins of 3-6%, contrasting with Spirit Airlines' anticipated losses. Frontier's fleet grounding issues are minimal compared to Spirit's, benefiting from engine choice. Analysts forecast a 6.6% revenue growth for Q2, but downward revisions signal weakening unit revenues. Earnings per share are expected to grow by 55%, though revisions have been mixed.