Earlier this week we wrote about Vietnamese carrier Bamboo Airways and its plans to go public. Now, US budget airline Frontier has announced its intention to launch its IPO (initial public offering) as well. The carrier is offering 30 million shares of its common stock, which is currently expected to be somewhere between $19 and $21 per share. Let’s take a closer look at the airline’s stock market plans.
Second time’s the charm?
According to Nasdaq, this is Frontier’s second attempt at going public. The airline had tried last year but withdrew its listing plans in July. Frontier filed again this month and hopes to sell 30 million shares.
Of these 30 million shares, the airline says that 15 million are coming from the airline itself. The other 15 million shares will be “sold by certain of Frontier’s existing stockholders.” Frontier says that it will not receive any proceeds from the sale of the shares by the selling stockholders.
According to the airline, the initial public offering price is currently expected to be between $19 and $21 per share. This means that it could raise $285-315 million in capital with the sale of its 15 million shares.
Frontier will be listed on the Nasdaq Global Select Market, under the ticker symbol “ULCC.”
Securities not yet tradeable
While fellow US low-cost-carrier Sun Country Airlines itself went public on the Nasdaq on March 17th, it’s unknown at this time when the general public might be able to trade shares of Frontier.
The airline notes that a registration statement relating to the proposed sale of these securities has been filed with the Securities and Exchange Commission. However, it has not yet become effective. “These securities may not be sold, nor may offers to buy be accepted, prior to the time the registration statement becomes effective,” Frontier’s public statement reads.
Thus, anyone interested in owning a piece of Frontier should start putting money aside and keep an eye on airline’s media channels to find out when it will actually go public.
The pros and cons of going public
The biggest benefit of taking a company public is the ability to raise capital. As Investopedia points out, the funds raised can be used to fund expansion or pay off existing debt. Another benefit might be increased public awareness, which might even lead to a new army of loyal passengers, who will associate the success of the airline to their own financial success.
On the other side, taking a company public will require additional disclosure for investors- which includes periodic financial reporting. This could be an added administrative burden but would also provide customers and investors greater insight into how the business is being run.
Many American carriers are publicly traded as is US planemaker Boeing. American, Hawaiian, United, and JetBlue are listed on the Nasdaq while Southwest, Delta, Alaska are on the New York Stock Exchange (NYSE).
Would you want to invest in Frontier Airlines once it goes public? Or would you prefer to buy up shares of another carrier? Let us know in the comments.