Frontier Airlines said Thursday that it expects to reduce capacity in the second quarter in response to economic uncertainty in the “current environment,” a warning that comes amid a volatile week in financial markets sparked by shifting policies by the Trump administration.
The ultra-low-cost carrier said in a securities filing that it expects revenue growth to be lower-than-expected as a result of weakened demand in March, which has led airlines across the industry to discount fares and offer promotions.
Frontier added that it is anticipating a net loss for the first-quarter and that it cannot release a 2025 outlook because of the uncertainty.
Delta Air Lines, which reported first quarter earnings on Wednesday, offered similar guidance.
The capacity cuts will primarily affect off-peak days, but Frontier said it would closely monitor the demand environment and make adjustments as needed.
Recession Risks
The carrier’s outlook offers a glimpse into how the economic uncertainty is affecting ultra-low-cost airlines. While President Donald Trump said on Wednesday that he would pause his administration’s sweeping tariffs for 90 days, some tariffs remain, including hefty ones on Chinese goods.
Airline stocks have continued to plunge and analysts are still forecasting that the U.S. could go into a recession.
Wall Street analysts have said legacy airlines are more likely to fare better in a recession because of their diversified products.
“While we do expect some consumers to trade down, we believe there is greater likelihood that consumers trade down within the same carrier’s cabin (e.g., moving from Premium Economy to Standard Economy) than they pivot to a low-cost carrier,” TD Cowen analyst Tom Fitzgerald wrote in an investor note.
Delta noted in a call with analysts on Wednesday that its premium cabins and international routes continued to perform well. But Delta CEO Ed Bastian was critical of the tariffs, saying that the company wouldn’t accept any aircraft deliveries with tariffs.
“It’s hard to know how this is going to play out, given that this is somewhat self-imposed,” Bastian said during the call. “And I’m hopeful that sanity will prevail and we’ll move through this period of time on the global trade front relatively quickly.”
