CHICAGO: U.S. budget airline Frontier Airlines is already making money and flying more than in 2019 before the coronavirus pandemic disrupted air travel last year, the chief executive told Reuters Barry Biffle to Reuters ahead of the company’s Nasdaq debut on Thursday.
The airline started generating positive cash flow in early March, a key milestone for an industry that is burning money after drastically cutting flights last year as demand dwindled.
Frontier is now enjoying a recovery driven by domestic pleasure travel, its specialty, which steals more capacity in March than in the same month of 2019.
“Coming out of this we are in the best position we believe of anyone in the space given our focus in the domestic leisure industry and our ability to make money with low fares,” Biffle said in a virtual interview from New York.
The airline, owned by private equity firm Indigo Partners, whose managing partner is no-frills mogul Bill Franke, is seeking to raise around US $ 600 million through its IPO, its second attempt to go public. stock Exchange.
Frontier on Wednesday valued its initial public offering of 30 million shares at US $ 19 per share, the low end of its marketed range of US $ 19 to US $ 21, likely underscoring the risks involved as the airline industry exits. of his worst crisis.
Airline investments have been notoriously volatile in the past. Aircraft maker Boeing Co said on Wednesday that the pace of vaccinations was key to restoring the industry to previous levels.
Environmental groups have questioned industry plans to cut emissions and say cheap fares such as those charged by ultra-low-cost carriers are over-stimulating demand for air travel and contributing to global warming.
Frontier, now valued at around US $ 4 billion, is offering 15 million shares and will receive net proceeds of around US $ 266 million, the carrier said.
It will use the proceeds, half on its balance sheet and half for Indigo and other selling shareholders, to finance growth and manage debt, including repaying a portion of the $ 150 million in government loans from a COVID-19 relief program.
This will help restore its balance sheet to near pre-pandemic levels and allow it to continue to grow at 10-15% per year, CFO Jimmy Dempsey said.
The list follows the stellar debut of Sun Country Airlines, backed by Apollo Global Management, last month.
Like other US budget carriers, Frontier took on less debt and consumed less cash than the traditional big airlines, creating a better financial position for a recovery that Biffle said would come quickly.
Frontier, with $ 1.25 billion in revenue in 2020, aims to grow all of its major U.S. cities beyond its home base, Denver, where it offers approximately 100 non-stop flights, including Popular destinations in Florida such as Orlando and Miami. He plans to open the roads to Tampa and Atlanta later this year.
The airline avoided employee leave during the pandemic and was among the first to announce the hiring of pilots and flight attendants. It plans to hire around 700 employees this year, as it will receive six new devices.
It hires about 100 employees per aircraft, including mechanics and ground crew, executives said.
Frontier has ordered 156 planes with Airbus SE and the new jets will feature lighter seats launched last week to reduce fuel consumption.
The airline generates 43% fuel savings compared to other U.S. airlines, making it the most fuel-efficient U.S. carrier, according to a Frontier statement last week.
“We live in Colorado,” Biffle said, adding, “ESG is real.”
(Reporting by Tracy Rucinski, editing by Sherry Jacob-Phillips)