MIAMI – For the second time this year, an airline in the US has applied for an IPO on the New York Stock Exchange (NYSE).
Frontier Airlines (F9) will operate under the symbol $FRNT, following Sun Country (SY), which announced its IPO last month under ticker $SNCY.
This marks the second attempt at an IPO for the ultra-low-cost carrier (ULCC) F9, based at Denver International Airport (DEN). They had previously filed in March of 2017, although the company later canceled its application in July 2020 as it sought to raise over US$700m in liquidation. The ULCC is now looking to buff up its liquidity by up to US$100m.
Sun Country Airlines Files for Initial Public Offering
LCC SY has since doubled what they are asking for to US$240m up from US$100m. The Minneapolis-based carrier said Monday it will initially price their stock at $21 to US$23 per share and will include 9.1 million shares of common stock, plus the option of another 1.4 million shares offered to the banks managing the listing.
Sun Country Airlines has not indicated when its shares will begin trading. The carrier is a bit different from a typical LCC business model as in addition to operating pax flights, SY also operates charter flights and 12 cargo aircraft on behalf of Amazon. In total, the Minnesota-based airline has 43 Boeing 737 aircraft that were acquired second-hand.
The airline’s plan for the IPO money is to pay off the debt to the loan it took from the US government under the cares act, and the carrier will pay listing fees and use the balance for general corporate purposes using the remaining funds. The airline also looks to add five used Boeing 737-800s in 2021 and grow its fleet to 50 aircraft by 2025. SY wants to focus most of its growth at its Minneapolis/St. Paul (MSP) base.
Apples to Oranges
Frontier is almost double the size of MSP-based SY, with a route network of more than 100 destinations, versus SY’s roughly 50, and a fleet of more than 100 Airbus A320 family aircraft with 156 more planned between now and 2028, compared with SY’s 43 Boeing 737-800, 30 of which are in pax service with the remaining 13 operating for Amazon Air.
Airlines are preparing for the rebound in travel after U.S. passenger levels fell more than 60% to the lowest point since 1984 last year.
Airline IPO’s are rare in the US with regional airline Mesa Air Group (YV) being the last to go public in 2018. The last major carrier to go public was the former Virgin America (YX) when it listed in 2014 and has since merged with Alaska Airlines in 2016.
Featured image: Skinner-Aronovitz/Airways