Frontier celebrates impressive turnaround but faces challenges in finding long-term suitors

Frontier Airlines deserves much credit regarding its efforts during the last year to transform itself into an ultra low-cost carrier, most recently evidenced by a 3% drop year-on-year in 3Q2012 unit costs. The airline has also sustained a solid revenue performance during a network revamp that eliminated its underperforming Kansas City and Milwaukee hubs in lieu of seizing on opportunities created by ongoing US industry consolidation.

But even as Frontier management has successfully executed a USD136 million cost improvement scheme it initiated in 2011 as part of a broader strategy by parent Republic Airways Holdings to separate the Frontier business, the carrier's fate remains highly uncertain as the appetite for would-be buyers for airlines in the current macro-economic environment is presumably weak. Still, Republic's executive management team has declared it is reasonably confident of sealing Frontier's fate through a sale in early 2013.