Susquehanna Raises Frontier Group PT to $4 from $3, Maintains Neutral Rating

Susquehanna Raises Frontier Group PT to $4 from $3, Maintains Neutral Rating

Susquehanna Financial Group has recently raised the price target for Frontier Airlines to $4 per share, maintaining a neutral rating. The upgrade comes amidst the ongoing campaign by Frontier Airlines CEO Barry Biffle to address what he perceives as an "exploitative oligopoly" among the four largest U.S. carriers, known as the "Big Four" (American Airlines, Delta Air Lines, United Airlines, and Southwest).

Barry Biffle has been vocal about his seven-point plan to level the playing field for ultra-low-cost carriers (ULCCs), which targets regulations and business practices benefiting the Big Four. Biffle has criticized the "basic economy price dumping subsidized by credit card revenues" from the Big Four's loyalty programs and demanded that smaller airlines get access to the majors' frequent flier mileage inventory at the same internal cost they account for it. He has also issued a direct message to European carriers, urging them to support his cause or risk their transatlantic Joint Ventures (JVs) being suspended with U.S. carriers Frontier's CEO Escalates Campaign for Fair Competition, Targeting Alliances and Loyalty Programs^[1].

The core of Biffle's plan includes demands for an end to "gate squatting," with strict Department of Transportation (DOT) oversight to ensure fair airport access. He also advocates for the elimination of the 1500-hour pilot rule, proposing a system based on modern simulator training instead. Furthermore, Biffle called for an end to Air Traffic Control (ATC)-related cancellations that he claims prioritize private jets over commercial airliners. The CEO confirmed he will meet with the DOT and the Federal Aviation Administration (FAA) next week to advance these proposals Frontier's CEO Escalates Campaign for Fair Competition, Targeting Alliances and Loyalty Programs^[1].

The upgrade in price target by Susquehanna reflects the potential for Frontier Airlines to benefit from regulatory changes and increased competition in the market. However, the neutral rating suggests caution regarding the execution of Biffle's plans and the broader market conditions. Investors should closely monitor the progress of Frontier's initiatives and the potential regulatory responses to gauge the impact on the company's financial performance.