US ULCCs Frontier and Spirit work to restore pre-crisis margins
Ultra-low cost carriers continue to be some of the fastest growing airlines worldwide, but the US ULCCs Frontier Airlines and Spirit Airlines are experiencing margin pressure as they work towards restoring their pre-crisis financial performance.
Spirit Airlines posted a 16.2% operating margin in 2Q2019, but its forecast for the second quarter of 2023 is 4.5% to 6.5%. The airline believes that there are drags on its margin performance, including issues with the Pratt & Whitney PW1000G engines powering its Airbus A320neos and pilot attrition, which should gradually improve throughout the year.
Frontier Airlines is also working to bolster its margins. In 2019 the airline's adjusted pretax margin was 14.2%. For the first quarter, the airline posted a negative 1.9% margin.
The two airlines realise the importance of restoring their pre-pandemic margins as a means of showing the investment community that the ULCC business model has staying power.
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