Goldman upgrades Frontier Airlines (FRNT) to outperform from in-line.
Analyst Glenn Engel says revenues in the Western U.S. improving faster than expected and raises estimates despite higher fuel prices.
He narrows his 29-cent fourth-quarter loss estimate to a 25-cent loss, his 85-cent fiscal 2005 (ending March) loss to a 81-cent loss, 55-cent fiscal 2006 loss to a 20-cent loss, and 25-cent fiscal 2007 loss to 20 cents earnings per share.
Engel says his return to sustained profitability rests on events out of each airline's control: a big drop in fuel prices and/or grounding of at least 5% of industry supply. He's seeing some evidence of pricing progress in the industry. He notes Frontier will see positive cost and revenue leverage in fiscal 2006.