No-frills US carrier Frontier hikes margin forecast on moderating capacity growth

Frontier expects its third-quarter margins to improve compared to its prior forecast as capacity cuts offset the impact of moderating domestic travel demand, the no-frills U.S. carrier said on Wednesday, sending its shares up 11%.

The airline hiked its adjusted pre-tax margin to a range of down 2% to flat, compared with a prior view of down 4% to down 6%.

It lowered its capacity growth forecast to between 4% and 5% from the earlier forecast of 4% to 6%.

Airlines have been pulling back on capacity as they had increased seats in the domestic market in excess of demand following the COVID-19 pandemic, pressuring airfares at the price-sensitive end of the market.

Frontier added it is expecting to benefit from the changes to its flight network.

CEO Barry Biffle had said in April the company would add flights to "high-fare" markets, where it faces less competition from other carriers and can charge more.