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Frontier Airlines Plans IPO for Second Time, “Well Positioned” to Take Advantage of Travel Demand

[Photo: David Zalubowski/AP]

For the second time in four years, Frontier Airlines is preparing to launch an initial public offering on a U.S. stock market. Despite having a $2 million average cash burn per day in 2020, the carrier says they are “well positioned” to take advantage of a post-pandemic travel rush.

On the hopes that more Americans will begin traveling after COVID-19 vaccines are widely distributed, Frontier Airlines wants to offer shares of the company for sale on a U.S. stock market. In a filing with the U.S. Securities and Exchange Commission, the airline announced their intention to launch an initial public offering (IPO) in the coming year.

“We are well positioned to take advantage…as vaccine distribution continues.”

In their filing, the airline touted their advantages as an ultra-low-cost-carrier, starting with the implementation of their “Low Fares Done Right” policy. Although the airline experienced a “significant declines in demand related to the COVID-pandemic” and had an average daily burn rate of $2 million in 2020, the airline believes that they are uniquely positioned to recover as more flyers get inoculated against the novel Coronavirus.

“We have worked diligently to navigate such challenges by implementing disciplined capacity deployment and taking steps to protect liquidity and cash flow and towards being an industry leader with respect to the implementation of new health and safety initiatives,” the airline writes in their filing. “Due to such efforts, we believe we are well positioned to take advantage of the anticipated demand recovery as vaccine distribution continues.”

Their future direction hinges on the continued recovery of “VFR travel,” or visiting friends and relatives on leisure travel. While JetBlue, United Airlines and other carriers have built their recovery plans around the same strategy, Frontier believes their advantage lies in their unbundled airfare pricing.

“a key component of our Low Fares Done Right model has been to attract customers with low fares and garner repeat business by delivering a high value, family-friendly customer experience with a more upscale look and feel than historically experienced on ULCCs globally,” the filing reads. “For instance, we currently offer flexible optional services through both unbundled and bundled service options.”

The latest S-1 filing marks the second time in four years that the airline has debated offering shares on the open market. In 2017, the airline announced a previous attempt at an IPO, but it never came to fruition.

Frontier Becomes Second Low-Cost Carrier to Announce IPO in 2021

With their filing, Frontier is now the second ultra-low-cost-carrier to jump into the stock market this year. Earlier in 2021, Sun Country Airlines announced they would also offer an IPO to investors, with the goal of using the proceeds to pay off their U.S. Treasury loans from the CARES Act.