Frontier Group Holdings, the parent of Frontier Airlines, has yanked its registration for an initial stock offering, ending years of speculation on whether and when it would become a public company, according to a letter filed with the U.S. Securities and Exchange Commission on Friday.
On March 31, 2017, the Denver-based carrier filed an S-1 seeking to raise $700 million from shareholders to fuel plans for a rapid expansion.
“The filing has remained dormant for some time now, pre-dating the pandemic, and withdrawing the registration made procedural sense both from Frontier’s and the SEC’s perspective,” said Jennifer de la Cruz, director of corporate communications at Frontier Airlines.
Frontier Airlines was publicly-traded until a drop in business during the Great Recession resulted in a bankruptcy filing in 2009. Republic Airways Holdings acquired Frontier for $108.8 million out of bankruptcy and sold it in 2013 to Indigo Partners for $145 million, including $36 million in cash.
“Frontier had laid out a pretty aggressive expansion plan back in 2017 that would triple the size of the airline in just 10 years. This type of expansion would require Frontier’s owners to raise sufficient capital beyond just the retained earnings,” said Lowell Valencia-Miller, an assistant professor at the University of Denver’s Daniels College of Business.
He said a stock offering would have been a great way to leverage expectations of future revenue gains to raise money. Before the outbreak, the ultra low-cost airline was doing well enough to exercise an option to add new aircraft to its fleet.
Of course, the pandemic caused airline traffic to plummet and disrupted the plans of everyone in the travel industry. But because Frontier isn’t as dependent on business or international travelers, it has bounced back more strongly than its rivals, aided by promotions such as $11 one-way fares.
“Since the pandemic, Frontier has been slowly adding back capacity to meet the increasing number of leisure travelers. Based upon industry schedule data, Frontier is flying approximately 45% of the schedule that it was flying a year ago,” Valencia-Miller said.
Barry Biffle, Frontier’s CEO, stated that the airline’s load factor is approaching 70%, which is much better than many of its domestic competitors, he added. And that is with the Frontier Airlines leaving middle seats open after a failed attempt to charge nervous passengers $39 for that extra space.
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