AP

Frontier CEO talks about airline merger, travel outlook

Apr 11, 2022, 6:34 AM | Updated: 6:57 am

DALLAS (AP) — Barry Biffle is juggling his day job as CEO of Frontier Airlines while also working to save a proposed merger with Spirit Airlines that would create the nation’s fifth-biggest carrier by some measures.

This figures to be a bounce-back year for airlines like Frontier that cater to leisure travelers. After two years of hunkering down during the pandemic, more people are flying.

Biffle says the recovery in travel will enable his Denver-based airline to return to profitability this summer. And he’s puzzled by doubters, including investors who are shorting the stock — betting that the shares will fall in price.

On the merger, Biffle says Frontier and Spirit are answering regulators’ questions, and he is not alarmed that several liberals in Congress are urging the Biden administration to take a close look at whether the deal will hurt consumers.

The bigger obstacle to a Frontier-Spirit deal is JetBlue Airways, which made its own $3.6 billion bid for Spirit last week. JetBlue’s offer is higher than Frontier’s $2.9 billion bid, which was announced in February.

Frontier declined to make Biffle available after the JetBlue announcement. In an interview days earlier, Biffle discussed regulatory review of the Frontier-Spirit merger proposal, travel demand and other topics with The Associated Press. The answers have been edited for length.

Q. Where is travel demand now?

A. We have gone from possibly the worst revenue period at the beginning of Q1, in January and February, to one of the best sales periods. Fare levels and total revenue per passenger in the early March time frame exceeded 2019 levels — over $120 per passenger. COVID has held everyone back, but eventually after two years, it would appear people are ready to get back to their lives.

Q. Why do you think that’s happening?

A. We have been talking a lot about the bad side of inflation; this inflation is driven by higher incomes. We have never seen incomes jumping at the levels that they are, especially at the bottom. That is giving you people cooped up for two years wanting to get back to travel, and they have got more income than they have ever had.

Q. What does that mean for Frontier?

A. Historically that would actually get you back to 2019 levels in revenue. You actually need a little more though, unfortunately, to cover fuel. But with that trajectory, we believe that we can be profitable by the summer.

Q. The number of flyers has gone up and down during the pandemic. Is it hard to schedule the right number of flights?

A. We were really optimistic about the recovery a year ago … but then the delta variant hit and we were caught with way too much capacity. And we were going to have a great fourth quarter, and then the omicron hit. We have looked at other carriers — Alaska, for example — that has kept their capacity constrained (while) we were operating 90%, 95% of utilization in some periods, and we have been punished for that. While (demand) is great, it’s still not great in all the off-peak periods. While Fridays and Sundays are great, Tuesdays and Wednesdays, not so much. While spring break-Easter is still great, I don’t yet know how the first two weeks of May are going to be, I don’t yet know how the first two weeks in June are going to be, I don’t know what the second half of August is going to look like, I don’t know what September is going to look like.

Q. Frontier has an unusually high amount of short-selling, given the number of shares out there. Why is that? (Short sellers borrow shares and sell them while planning to replace the borrowed shares at a lower price. They lose money if they must replace shares at a higher price.)

A. I’m not an expert on it. I don’t run a hedge fund. It is very high, and we are sitting around watching it, kind of scratching our head. Not sure I get it, and it seems very dangerous because if you’re short-selling our stock and the days to cover (replace the borrowed shares) become a problem, that’s what started the whole GameStop craze, right? I’m personally confused at why they think this is a good idea.

Q. It’s been about two months since Frontier and Spirit announced plans to merge. Any news about the name of the new airline, the headquarters location and the management team?

A. No, we’re not planning to announce any of that before July. It’s going to take some time to look through these things and come to the right conclusion.

Q. Are your people talking to antitrust regulators?

A. We have started the process and it’s a very normal process so far. This is going to take to the end of the year to complete. They have questions, and we will deal with them in due course.

Q. Do you have any reason to think they will challenge the merger or require divestitures?

A. We haven’t heard anything like that. Neither one of us have dominant positions in LaGuardia or Reagan (airports). We just don’t have the things that you want to give up because it creates a monopoly.

Q. Senators Elizabeth Warren and Bernie Sanders and other members of Congress asked the administration to examine the deal closely. Does that worry you?

A. They didn’t come out opposing it. They are asking the administration to look into if this is going to raise fares to consumers. I understand their concern … many of the mergers that have created the big four in the United States (American, Delta, United and Southwest) caused some challenges for people. I think as they see the facts, they are going to see that (the Frontier-Spirit deal) is good for consumers.

Q. Let’s say the deal gets approved. What is this new, combined airline going to look like in five or 10 years?

A. In a few years, I think we’ll have nationwide notoriety as the place to go for low fares and best value.

Q. What does that mean to shareholders?

A. There is $500 million in (EBITDA, or gross earnings) just in synergies from a combined company. Over a five-year period, both airlines were going to roughly double in size as well … It’s good for the economy, it’s good for the shareholders, and hopefully — back to your short-seller question — we have proven all those people wrong.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Israeli Embassy...

Associated Press

US airman dies after setting himself ablaze outside Israeli Embassy in Israel-Hamas war protest

An active-duty member of the U.S. Air Force has died after he set himself ablaze outside the Israeli Embassy in Washington, D.C.

2 days ago

Biden and Trump to visit Mexico border Thursday immigration...

Associated Press

Biden and Trump both plan trips to the Mexico border Thursday, dueling for advantage on immigration

President Joe Biden and former President Donald Trump will make dueling trips to the U.S-Mexico border on Thursday.

2 days ago

Arizona and New York attorneys feud over extraditing suspect...

Associated Press

Why Alvin Bragg and Rachel Mitchell are fighting over extraditing suspect in New York hotel killing

Maricopa County Attorney Rachel Mitchell says she isn't into extraditing a suspect due to her lack of faith in Manhattan’s top prosecutor.

6 days ago

A Gila monster is displayed at the Woodland Park Zoo in Seattle, Dec. 14, 2018. A 34-year-old Color...

Associated Press

Colorado man dies after being bitten by pet Gila monster

A Colorado man has died after being bitten by his pet Gila monster in what would be a rare death by one of the desert lizards if the creature's venom turns out to have been the cause.

7 days ago

Police clear the area following a shooting at the Kansas City Chiefs NFL football Super Bowl celebr...

Associated Press

1 dead, many wounded after shooting at Kansas City Chiefs’ Super Bowl victory parade

One person died after 22 people were hit by gunfire in a shooting at the end of the Kansas Chiefs' Super Bowl victory celebration Wednesday.

14 days ago

This image from House Television shows House Speaker Mike Johnson of La., banging the gavel after h...

Associated Press

GOP-led House impeaches Homeland Security Secretary Mayorkas — by one vote — over border management

Having failed to impeach Homeland Security Secretary Alejandro Mayorkas the first time, House Republicans are determined to try again Tuesday.

15 days ago

Sponsored Articles

...

Day & Night Air Conditioning, Heating and Plumbing

Day & Night is looking for the oldest AC in the Valley

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.

...

Sanderson Ford

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

...

Canvas Annuity

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

Frontier CEO talks about airline merger, travel outlook