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With recovery on radar, two U.S. budget airlines plot IPOs

Tracy Rucinski
Updated ·2-min read

By Tracy Rucinski

(Reuters) - U.S. low-cost airlines Frontier and Sun Country plan to raise cash through initial public offerings (IPOs) as they prepare for a rebound in pandemic-hit travel.

Budget carriers are expected to bounce back quicker than larger rivals from the pandemic thanks to their lower-cost structures and focus on domestic leisure travel.

Frontier Airlines, which withdrew listing plans in July, filed again on Monday, after Apollo Global Management-backed Sun Country Airlines launched an IPO to raise around $200 million, regulatory filings show.

In its IPO filing, Denver, Colorado-based Frontier said that it was "well positioned to take advantage of the anticipated demand recovery as vaccine distribution continues."

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Nearly 1.3 million people were screened at U.S. airports on Sunday, Transportation Security Administration data showed, the second-highest day in 2021 but down 40% from pre-COVID levels.

Frontier, which is owned by private equity firm Indigo Partners, is among a few U.S. airlines that have announced plans to resume hiring pilots.

It flies to more than 100 destinations in the United States, Mexico and the Caribbean and operates 100-plus Airbus A320 family aircraft.

The airline posted a net loss of $225 million for the year ended Dec. 31, 2020, hurt primarily by a sharp decline in demand due to the pandemic.

Citigroup, Barclays, Deutsche Bank Securities, Morgan Stanley and Evercore ISI are the lead underwriters for Frontier's offering.

Meanwhile, Minnesota-based Sun Country, which first announced its IPO last month, expects to list around 9 million shares of its common stock at $21.00 to $23.00 per share.

The U.S. airline industry is also preparing for the arrival this year of newcomer Breeze Airways, a start-up by David Neeleman, the entrepreneur behind JetBlue Airways, Canada's WestJet and Azul Brazilian Airlines.

(Reporting by Sohini Podder in Bengaluru and Tracy Rucinski in Chicago; Editing by Uttaresh.V and Alexander Smith)