Frontier Airlines’ stock price and financial projections are faltering, as competitors Southwest and United Airlines grow in Denver and Frontier’s Cancún business continues to suffer.
JPMorgan on Tuesday dropped Frontier from its “focus list” and replaced it with US Airways, which it says has “greater forecasted upside potential than envisioned at Frontier.”
Frontier’s stock price fell 35 cents, or nearly 4.8 percent, to close at $7 Tuesday. It employs 4,600, mostly in Denver, and has a market capitalization of $253 million.
The investment company’s report said one investor called Frontier chief executive Jeff Potter a “dead man walking,” but that “we wholeheartedly disagree.”
Frontier chief financial officer Paul Tate told participants at an investors conference Tuesday “There’s an implied demise of our company. There is no demise.”
Frontier is still JPMorgan’s top-rated low-cost carrier, the report said.
“We continue to believe that Southwest will grow Denver to no larger than that of an average Southwest city, or about 12 destinations and 50 daily departures,” the report said.
Tate said Southwest “will continue to be a distant third unless something unforeseeable occurs, simply because of our control and United’s control of a vast majority of the gates” at Denver International Airport.
Tate said Frontier would increase its capacity by about 17 percent in the fiscal year that starts in April, followed by about 6.5 percent growth in the subsequent four fiscal years.
Southwest recently added 29 employees in Denver, bringing its total to about 70 here, Southwest spokeswoman Paula Berg said.
Southwest has about 20 daily flights from Denver. It is discontinuing Saturday flights to San Diego but continuing Saturday flights to Oakland, Calif.
Frontier’s unit revenue performance in January and February “was not up to expectations,” Potter said Monday night in a report on February traffic. Results will fall short of break-even.
“We were a little bit aggressive, perhaps in retrospect a little too aggressive” in adding flights, Tate said. “We’ll take another hard look at right-sizing capacity in those markets. We’re not necessarily thrilled about losing money.”
Tate also said that in Cancún, a major Frontier destination, only about half the hotel rooms are back in service since Hurricane Wilma hit in October.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@ denverpost.com.
