A 'rare step': Deutsche Bank upgrades Frontier Airlines and doubles target price

Low-cost carrier Frontier Airlines, with a market capitalization of $1.28 billion on the Nasdaq, could be “the biggest beneficiary” of peer Spirit Airlines’ bankruptcy, Deutsche Bank says. That prompted the bank to take the “relatively rare step” of upgrading its price target on Frontier Airlines shares as it upgraded their rating, MarketWatch noted. Spirit filed a new bankruptcy petition in late August – its second in the past year.

Yesterday, September 2, Deutsche Bank raised its recommendation on Frontier shares from "hold" to "buy" and doubled its target price to $8.00 per share, MarketWatch reported. The new target price is nearly 43% above current quotes, and that is after yesterday's rally in which shares gained 14.5% to $5.61 apiece. That marked the highest closing price since March 24. Such an upgrade to both the rating and the target price is a “relatively rare step,” MarketWatch noted.

Frontier, headquartered in Denver, is “best-positioned to be the biggest beneficiary of Spirit’s bankruptcy given their network overlap,” according to Deutsche Bank analysts. For the July-September quarter, about 35% of Frontier’s network overlaps with Spirit Airlines', and the figure should increase to about 40% by the fourth quarter given Frontier’s plan to add some 20 new routes later in the year, of which 18 are currently served by Spirit, said the Deutsche Bank analysts, led by Michael Linenberg.

Downsides to Frontier’s "buy" rating include a worsening economy and rising operational costs, the analysts said. In the first half of 2025, the latter were up 6.4% year over year at $1.96 billion, the company reported.

Spirit, a pioneer low-cost airline, filed its second Chapter 11 bankruptcy petition in the past year on August 29.

The airline initiated the first procedure in autumn 2024. Its business model proved insufficient to cover substantial debt payments, the Wall Street Journal noted. The company sought to improve its financial situation through a merger with one of its competitors, including Frontier, but negotiations stalled.

In March, Spirit announced that it had completed a financial restructuring. Six months later, however, it has again filed for bankruptcy protection. As Spirit CEO Dave Davis said, "there is much more work to be done."

“Spirit is expected to materially scale-back its operations” and will likely end up with a much smaller fleet, generating surplus aircraft, Deutsche Bank said.

Since the beginning of the year, Frontier shares are down 21%. Wall Street remains cautious on the stock's prospects, according to MarketWatch data. Eight analysts have assigned a "hold" rating on the stock, two a "buy," and one a "sell." Their average target price of $5.44 per share is below current quotes.

Spirit shares, after the first reorganization, were transferred to the NYSE American exchange, which is for small companies. With the start of a new bankruptcy procedure, Spirit expects to be delisted in the near future, although no timeline has been set.

The AI translation of this story was reviewed by a human editor.