Frontier said to delay IPO as rivalry with United heats up
Frontier Airlines pushed back its initial public offering, people familiar with the matter said, as competitive tensions flared between the nofrills carrier and United Airlines.
The share sale could slip until September or later, said the people, who asked not to be identified because the matter is private. Frontier Group Holdings Inc., which is backed by private equity firm Indigo Partners, had been planning to hold the IPO as soon as the second quarter, people familiar with the matter said in March.
The delay comes as Frontier prepares to more than double routes — an expansion that drew a warning from United President Scott Kirby. He vowed to stave off any attempt by Frontier to grab a bigger share of the Denver market. The discount carrier is based in the city, which is the most profitable hub for United, the thirdbiggest airline in the U.S.
Frontier on Tuesday detailed plans to add 21 cities to its network and more than double total routes by mid-2018, while offering limitedtime fares for as low as $39.
On Wednesday, Kirby said the expansion means that Frontier is moving toward a network more like United’s, with connecting flights through major airports instead of focusing on the point-to-point service typically favored by low-cost carriers.
“They’re now competing on our turf and trying to be a network carrier in Denver,” Kirby said in a conference call after United reported its earnings. “That is a battle I guarantee United will win.”
Frontier already offers connecting flights over Denver, so there’s no change in its business strategy, said Jim Faulkner, a spokesman for the carrier. Competition from such discounters prompted United, Delta Air Lines Inc. and American Airlines Group Inc. to offer a basic economy fare that doesn’t come with the normal amenities of a coach ticket.
“Kirby’s statement simply isn’t true,” Faulkner said.
Frontier in March filed for a U.S. IPO of $100 million, a placeholder amount subject that typically changes and is used to calculate fees. Frontier and Indigo Partners, which acquired the carrier in December 2013, plan to sell shares in the offering.
Representatives for Frontier and Indigo declined to comment about delaying the IPO.