Frontier Airlines IPO Raises $570 Million at Low End
(Bloomberg) -- Frontier Group Holdings Inc., which operates budget carrier Frontier Airlines, priced its U.S. initial public offering at the bottom of a marketed range, according to people familiar with the matter.
The company’s shares sold for $19 apiece, according to the people, who asked not to be identified because the information wasn’t public yet. The company and its shareholders sold 30 million shares in all, one of the people said. The company and the investors had each offered 15 million share for $19 to $21 each.
At $19 a share, Frontier will have a market value of about $4 billion based on the outstanding shares listed in its filings.
William Franke, Frontier’s 83-year-old chairman and biggest shareholder, planned to sell 14.2 million of the shares, filings with the U.S. Securities and Exchange Commission show.
A representative for Denver-based Frontier didn’t respond to a request for comment.
Like Sun Country’s IPO earlier this month, Frontier is betting that investors will turn to low-cost airlines that focus exclusively on the leisure-travel market given the severe decline in U.S. business travel and the widespread closure of international borders.
The up-tick in domestic travel has prompted many of the largest carriers, including American Airlines Group Inc. and United Airlines Holdings Inc., to revamp large parts of their networks to serve more leisure destinations.
United’s domestic leisure business has nearly recovered from the steep pandemic decline, Chief Executive Officer Scott Kirby said Wednesday at a U.S. Chamber of Commerce aviation event.
Frontier could return to pre-pandemic sales and profits by next year, Bloomberg Intelligence analysts wrote in a March 29 report, noting that the airline aimed to raise funds with a valuation nine times its value based on 2022 earnings before interest, taxes, depreciation and amortization. Compared with low-cost peers like Spirit Airlines Inc., the valuation “looks rich to us,” analysts George Ferguson and Francois Duflot wrote.
Franke is a co-founder of Indigo Partners, a private equity firm that invests in low-cost airlines around the world. Indigo Partners acquired Frontier in 2013.
Frontier previously filed to go public in 2017 but the effort languished and the carrier withdrew that effort last July.
Citigroup Inc., Barclays Plc., Deutsche Bank AG, Morgan Stanley and Evercore Inc. are leading the share sale. Frontier is expected to begin trading on the Nasdaq Global Select Market Thursday under the symbol ULCC.
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