The parent of Frontier Airlines had a better-than-expected fourth quarter and gave investors reason to believe it could fly through whatever headwinds might lie ahead. The stock took off as a result, with shares of Frontier Group Holdings (ULCC -2.08%) up 42.5% for the month, according to data provided by S&P Global Market Intelligence.

Growth should continue into 2024 and beyond

Airline investors have been taken for a ride in recent years. The industry sank during the pandemic but rebounded nicely, only to see fears of a slowing economy and questions about long-term demand pressuring stocks in 2023. Frontier holders have also endured some company-specific course corrections, as JetBlue Airways broke up Frontier's planned acquisition of Spirit Airlines.

Frontier is smaller than most of its rivals, but if all goes to script, it could end up being one of the industry's better growth stories. Investors got a reminder of that potential when the airline released fourth-quarter results.

The airline lost $0.17 per share in the quarter, better than the $0.23 per share expected, on revenue of $891 million, which was in line with expectations. The airline is doing a good job controlling costs, posting expenses that were down 8% year over year on a per-seat-mile basis.

Frontier is also still seeing opportunities to expand, guiding for 5% to 7% capacity growth in the first quarter and 12% to 15% for the year. In a statement, CEO Barry Biffle said the results provided "a strong foundation as we enter 2024" and that he sees opportunities ahead.

"Leveraging this momentum, we intend to expand profitability in 2024 by executing on our network simplification plan, focusing growth on overpriced and underserved markets, further diversifying our revenue stream, enhancing customer engagement, and further lowering our unit costs," Biffle said.

Is Frontier a buy following a strong February?

As impressive as February was, the jump only returned Frontier shares to cruising altitude. The stock is still down about 40% from its March 2023 52-week high before investor focus turned to the potential impact of a slowing economy on airline results.

The turbulence has not faded, and Frontier could run into some rough patches in the quarters to come. But the airline is well on its way to solidifying its business. The airline is set up well to outperform the industry in the coming years, thanks to its substantial order book and its position as a cost leader. While there are no guarantees, if growth materializes the way management expects, the stock seems likely to respond as well.

It will take time for that growth to materialize, and there are risks involved in owning cyclical stocks, including airlines. But for those willing to accept some risk in return for the potential for outsize rewards, Frontier is demonstrating it is worthy of consideration.