Originally Posted by
fairviewroad
Certainly, doing some basic things like building bathrooms post-security and installing at least a post-security vending machine would be a good idea regardless. But my comment was based on two things:
1. The history of commercial service at TTN. Over the past 20 years, most service at TTN has been on small aircraft and frequently of short duration. The Frontier service is an outlier and as such I wonder at the advisability of spending big money on capital improvements. Yes, I realize it's a bit of a chicken-egg thing, but previous attempts at starting service at TTN should be a stark warning.
2. The long-term viability of Frontier Airlines itself. True, waiting 6 months might not shed any light on that situation, but given the airline's
ever-changing route map, its struggle to find a niche that works, and the cutthroat competition at its DEN hub, I have to wonder whether Frontier will be flying
anywhere, much less TTN, a year from now. (I know, that's a topic for a separate thread.)
Whether Frontier has long-term viability is unknown to me - I can't predict the future - but Dave Siegel appears to be achieving what he was brought in to do. The airline will report a full year 2012 profit - the first full year profit since 2003.
And since the bulk of its operations are at DEN, it appears to be doing this in spite of being squeezed by the two giants.
Which is surely not to say that Frontier is out of the woods.
A profit is one thing (even a good profit) but the airline is still cash negative, largely because of forward payments on the Airbus Neo order. Normally, these might be met from cash reserves, but of course, Frontier has no cash reserves - Republic does.
(As a positive side note, I understand there will be some quite jolly news involving Airbus before too much longer).
In order to be cash neutral (the start of cash generation) with the present encumbrances (the Neo) the airline needs to make $50 million a year and it looks as if it will be (about) $10 million or so short of that in 2012.
The next issue is ROI - return on investment - which is the first thing any potential investor will look at.
There are various numbers for ROI - some investors will be content with 12%, some will demand 18%. Southwest Airlines (according to its CEO) is "aiming for"15%, but, despite its profitability, is not quite there yet.
But for me, the greatest test of the restructured Frontier is happening now - Q1.
Q1 has, historically, been its weakest quarter - I can't recall when Frontier last made a profit in Q1. And despite all the good financial news for 2012, it didn't make a profit in Q1 last year, either.
If Siegel can make it happen - even a small profit - then it will be four quarters of consecutive profit and from that many goodies flow, and to the staff.
The best I am hoping for is break even, or close to it.
But there is a positive picture on Wall Street. The revised guidance for Frontier Q4 was issued on December 31, 2012. Since then the RJET stock price has risen from (about ) $5.60 to today's $9.60.
Some will argue that it is't all because of Frontier and to some extent that may be true. Even so, the stock rose 22% on the first trading day after the revised guidance. Compare this to the later Republic news - the new deal with American Airlines - when the stock rose just 30 cents for a moment, and then fell back to negative 50 cents.