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F​rontier Airlines is the second low-cost carrier in a month to file for an initial public offering, clearly seeing opportunity in the prevailing assumption that affordable leisure travel will rebound first from the pandemic.

Denver-based and private equity-owned, Frontier filed paperwork Monday with the Securities and Exchange Commission, stating it is looking to raise $100 million in the offering.

The filing comes on the heels of Sun Country Airlines filing for an IPO in February, a rarity within the industry but amid the growing anticipation that vaccines will encourage more flyers to book flights.

Wall Street is clearly encouraged by that prospect as well. The S&P 500 Airlines Index, tracking carriers’ stock performance, is up 24 percent year-to-date.

Frontier is twice the size of Minneapolis-based Sun Country, with a route network of more than 100 destinations, versus Sun Country’s roughly 50, and a fleet of more than 100 aircraft, compared with Sun Country’s 43.

Sun Country Monday said it hoped to raise $240 million in its IPO.

Also like Sun Country, which is owned by Apollo Global Management, Frontier is owned by a private equity firm, in its case, Indigo Partners, an investment group that specializes in budget airlines. In addition to Frontier, Indigo has invested in Europe’s Wizz Air, Mexico’s Volaris, and Chile’s JetSmart.

The similarities with Sun Country end there, however. Frontier, like all Indigo-owned airlines, is aggressively low-cost, famous for its “unbundled fares,” or, in layman’s terms, for charging passengers for such amenities as carry-on bags and seat selection. This is a strength, the carrier said in its filing with the SEC, giving it more pricing power and more sources of revenue. The lack of onboard amenities also contributes to its lower costs, the carrier said.

And Frontier is laser-focused on costs, telling the SEC that its costs are among the lowest in the industry. Its unit costs — a metric the industry uses to measure costs per mile — were 10.3 cents last year, compared with an average of 16.52 cents for United Airlines, American Airlines, Delta Air Lines, and Southwest Airlines. Only Allegiant Air and Spirit Airlines had lower unit costs, Frontier said.

Along with its low costs, Frontier points to its leisure-customer base as another strength, particularly now. The airline industry has been battered by the pandemic, with a key source of profits — business travel — all but shut off. Frontier, however, has always focused on leisure travelers, who are expected to return to travel as the pandemic recedes. This focus puts it in a better position than carriers, like American, Delta, and United, which derived much of their profits from business travelers.

Its focus on leisure travelers could also pose risks, Frontier noted. If the Covid pandemic lingers and causes a prolonged recession, price-sensitive leisure travelers may opt not to fly. Advances in technology, such as videoconferencing, could cause some people — particularly business travelers — to postpone trips.

The carrier is confident, however, that its base in Denver provides a strong home market from which to grow. After Denver, its top five markets are Orlando, Fla., Las Vegas, Philadelphia, and Phoenix — all growth markets in and of themselves as well as being top leisure destinations. The carrier did warn, however, that its ability to expand could be stymied by further congestion in Denver as well as its inability to secure landing rights at some of the country’s most desirable airports, like New York’s John F.  Kennedy International Airport and LaGuardia Airport, and Washington Reagan National Airport.

Frontier also warned that Covid itself poses a risk to its future growth, if the disease is not contained or if fresh outbreaks prolong the duration of the pandemic.

Frontier has 104 Airbus A320 aircraft in its fleet and plans to take delivery of up to 156 more between now and 2028. The carrier sees opportunity to operate 518 additional routes that are not currently served by ultra-low-cost carriers. Last year was bad for the carrier financially, though. Frontier reported a loss of $225 million last year, compared with a net income of $251 million in 2019.   Revenues plunged from $2.5 billion in 2019 to $1.3 billion last year.

Before Sun Country announced its intention to go public last month, the last major airline to float shares was Virgin America, in 2014, although regional carrier Mesa Air Group went public in 2018.

This story is developing and will be updated.

Photo Credit: Frontier Airlines is the second airline in two months to file the paperwork to go public. Skift