Frontier Group Holdings: A Bearish Thesis on ULCC's Unprofitable Operations and Fragile Liquidity Position

Frontier Group Holdings, Inc. (ULCC) has a bearish thesis due to its reliance on sale-leaseback transactions to mask its unprofitable core business. Despite a 18% increase in revenue per passenger mile, total unit revenues remain modestly above 2019 levels, while ex-fuel costs have surged, compressing margins. Strategically, management remains committed to expanding capacity on heavily contested routes dominated by major carriers, resulting in significant route overlap and limited pricing power. The company's liquidity position looks fragile, with rising maintenance costs, potential pressure from aircraft lessors, and high sensitivity to economic downturns or fuel price shocks.