Frontier Takeover Rumors Revived

Speculation surfaced again Tuesday that Frontier Airlines could become a takeover target, giving the company's shares a boost.

Raymond James analyst James Parker wrote in a research note to clients that Frontier could be acquired in a round of consolidation among low-cost carriers. He said Alaska Airlines, AirTran, JetBlue Airways and even discount giant Southwest Airlines might benefit by linking up with Frontier.

The Denver-based airline has been the subject of such speculation before, although the carrier long has said it intends to go forward on its own. Last fall, an analyst wrote that Frontier and JetBlue were strong merger candidates, saying the combination would create a more balanced route system for the carriers.

Frontier spokesman Joe Hodas said Tuesday that the company's stance "hasn't changed as of now" but declined to comment further.

Southwest Airlines also indicated that it isn't actively looking to participate in consolidation.

On Tuesday, Parker said that an acquisition of Frontier "is not highly probable." But he said that the mere possibility of such a deal puts a floor under the stock price in the near term.

Parker, who changed his rating on the stock to "market perform" from "underperform," added that Frontier's assets are undervalued and that the company's diversification into new markets will help boost profits.

"Frontier's regional airline operations will enable it, we believe, to generate substantial traffic that is not subject to competition with Southwest in Denver," Parker wrote.

Investors responded by sending Frontier's stock up 5.6 percent to $6.25.

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