Frontier Airlines is ready to go from private to public.
According to a report in the New York Times, Denver-based Frontier Airlines is preparing an Initial Public Offering (IPO) and has hired several high-profile banks to help launch the initiative.
Frontier has contracted Deutsche Bank AG, JPMorgan Chase & Co. and Evercore to manage the debut, the newspaper reported. The carrier is looking to raise about $500 million, valuing the company at about $2 billion, the Times said.
A spokesman for Frontier Airlines declined comment to the Times; the banks could not be reached for comment.
The Times noted that it could be the right moment for an airline to go public. Virgin America had success with its IPO in 2014 and merged with Alaska Airlines last year. And as recently as November, financier Warren Buffett went against his longtime personal policy and bought airline stocks.
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By sheer dollars and cents, Buffett spent more than $1.2 billion on airline stocks - $797 million on American, $249 million on Delta and $237 million on United. Many viewed it as a signal that the aviation industry is poised to continue its torrid growth, which included a collective $25.6 billion in profits in 2015, according to the Department of Transportation.
Frontier is, in the vein of Spirit Airlines, a low-cost, a la carte carrier. It charges some of the lowest fares in the industry but supplements that with add-on charges for everything from a bottle of water to extra legroom to seat selection to bags.
Frontier is owned by Indigo Partners, a private equity firm based in Phoenix. The carrier celebrated its second decade in business by turning a profit for the first time in 2014. It has also developed one of the lowest cost-per-seat ratios in the industry, which should make it enticing to investors.
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