Frontier Airlines

One of the best ways to look for a good stock to buy is to find the most-unloved industry, and pick out that sector’s best stock. It’s no secret that airlines stocks have performed horribly. Make no mistake, the industry is in rough shape, but there are good stocks out there. For example, I think the industry’s woes have given us a good opportunity in Frontier Airlines. The stock is now below $10.
Frontier has a lot going for it. For one, it’s an airline that’s not in bankruptcy. That right there is a big advantage over it competitors. Frontier is small regional airline based in Denver with a solid balance sheet. The company has switched to using all Airbuses. Frontier has slowly expanded its market share.
The airline is popular with its passengers. The company is ranked near the top in customer satisfaction surveys. The downside is rising fuel costs. Frontier is one of the least efficient airlines in handling higher fuel prices. The company should post third-quarter profits in late October. Frontier has posted better-than-expected earnings for the last two quarters.
Frontier was originally based in Denver, one of United’s hubs, to piggyback on their business. Now that United is doing so poorly, Frontier can actually take some of United’s core business.
Today, the Wall Street Journal highlights Frontier’s growing service to Mexico. Two years ago, Frontier flew 33,000 passengers to Mexico. Last year, it flew nearly 100,000, and this year it will fly over 200,000 people to Mexico.

Posted by on September 27th, 2005 at 10:01 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.