Frontier Airlines expects to raise about $630 million in IPO

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Stocks on January 14, futures

Frontier Airlines said Tuesday that it expects to raise about $630 million from the initial public offering of a small number of its shares. In fact, the carrier hopes that the transaction will raise the budget airline’s value to about $4.5 billion.

Frontier’s parent company and its current owners expect to sell about 30 million shares at $19-21 per share.

Frontier Group Holdings said it is in an excellent position to recover from the pandemic. It focuses on domestic vacation travel, which is expected to recover more quickly than business or international flights.

After the initial public offering, the company will have 215 million shares and operate under the symbol “ULCC,” an acronym for the ultra-low-cost carrier. Frontier became a budget airline after it was acquired by private finance company Indigo Partners in 2013.

It plans to follow the lead of another vacation travel airline, Sun Country Airlines. This month, the Minneapolis-based carrier sold its shares to the public and has a market value of $1.9 billion.

Like other airlines, Frontier was hit by the coronavirus pandemic that swept through the air transport sector. In 2019, the Denver-based company’s revenue fell by half to $1.25 billion, and it lost $225 million.

Frontier has a hundred Airbus jets and orders for 156 more for delivery by the end of 2028. It focuses on vacation spots and has its headquarters in Denver, Orlando, and Las Vegas.

Dow Jones futures decreased

Early in today’s trading, Dow Jones futures dropped lower, along with S&P 500 futures. Nasdaq futures increased slightly as Intel announced plans for two big chip plants in Arizona. The news supported gear makers such as Applied Materials, ASML, and KLA. Meanwhile, it hit chip foundry giant Taiwan Semiconductor.

Adobe, GameStop, and At Home headlined key earnings after the close.

Coronavirus concerns and other economic issues hindered the stock market rally on Tuesday. Tech stocks dropped even though Treasury yields declined. All the major indexes fell significantly, and small caps and many recent winners suffered significant losses. 

Crude oil and commodity prices plunged as coronavirus shutdowns expanded in Europe. It raises doubts about the global recovery.

Another evidence for the coronavirus fears has been a rally in Zoom Video Communications and Peloton Interactive, although they are near recent lows. 

Microsoft stock, Amazon.com, Netflix, and Alphabet increased slightly. However, they dropped from the session highs. 

Netflix and Amazon stock are coronavirus plays too. Meanwhile, Microsoft and Google prospered well during the pandemic.

Microsoft, Netflix, and Google stock are shooting tentative buy signals, along with Facebook. Amazon is trying to recover critical levels.

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