S&p Begins Covering Frontier

[UnitedChicago]

Interesting.


Frontier Airlines initiated with "underweight"

Friday, October 03, 2003 1:27:57 PM ET
J.P. Morgan Securities

NEW YORK, October 3 (New Ratings) — Analysts at JP Morgan initiate coverage of Frontier Airlines, Inc (FRNT) with an "underweight" rating.

Shares of Frontier Airlines, a low-fare airline carrier company, are currently trading at $16.97.

According to JP Morgan’s research note published this afternoon, Frontier Airlines’ cost structure is relatively high, as compared to its peers in the low cost carrier sector. The analysts mention that the company’s fares are even higher than those of some of the network airline operators in the US. JP Morgan expects Frontier Airlines’ stock to continuously underperform the broader airlines sector trends over the next few years.

Frontier Airlines is significantly dependent on its lone Denver market, the analysts say. JP Morgan believes that United Airlines (UAL) is well positioned to gain the market share lost by Frontier Airlines at Denver, by the early next year.

The EPS estimates for FY04 and FY05 are $0.52 and $0.70, respectively.

JP Morgan initiates coverage of Frontier Airlines, Inc with an "underweight" rating.

 

[PD]

Whatever JP Morgan says do the opposite, just look at their track record. :unsure: If you had brought Frontier in March you would be one happy person.

 

[appnavapp]

Frontier Airlines is significantly dependent on its lone Denver market, the analysts say. JP Morgan believes that United Airlines (UAL) is well positioned to gain the market share lost by Frontier Airlines at Denver, by the early next year.

Losing Market Share? Wonder how this genius came up with that quote? Must be an ex Yonited employee.

 

[Busdrvr]

Actually, he's probably the most respected of all the analyst and hasn't pulled any punches when slamming UAL in the past for stupid decisions. It's his honest opinion, you may not like it, and it may not work out the way he thinks it will, but he's no idiot.

 

[appnavapp]

It's his honest opinion, you may not like it, and it may not work out the way he thinks it will, but he's no idiot.

Well, my honest opinion is that the guy is pulling things out of his ear. If any thing Frontier will gain market share in the coming year. When United starts their "low cost" carrier AGAIN, it will probably just push more people over to F9. I don't put much stock in what the so called professional analyst say anymore. I will get off my soapbox now.

 

[Busdrvr]

Actually, the last time UAL "went after" FRNT, it took the threat of lawsuits to stop FRNT from going BK. Back then FRNT paid more (salaries), UAL paid less, and UAL was paying full price for it's jet leases. It will indeed be an interesting year....

 

[enilria]

Actually 2000 was Frontier's best year ever and that is when Shuttle by UA was alive and kicking. Frontier's financial troubles are in the past when WestPac was dividing the LCC market in DEN/COS.

I think the S&P analyst is insane. Frontier is adding a boatload of planes next year and chances are they will all be in Denver. This has to cut into UA's market share.

What about Starfish you may ask? I must have missed the 40 aircraft UA ordered to start Starfish...oh, wait they didn't order any airplanes so they will have to pull down other markets to fund Starfish.

Well, I guess they will fly the planes more hours so that will allow growth...oh wait, they are going to be integrated into the hub and spoke structure. So I guess the utilization will be the same (see UA employee Q&A).

Well they are going to be in Frontier markets so if they pull down elsewhere its negative...oh, wait pull down O'Hare, no AA will pounce...pull down Dulles, they said they are committed to the Dulles hub and a new partner...pull down SFO, oh they already did that. I guess they will pull down Denver to markets Frontier doesn't fly. I'm sure Frontier with all these planes coming won't go into any of the pulled down markets!!!

Michael Boyd: "I'm sure Frontier is rolling on the floor with laughter over Starfish".

 

[Busdrvr]

Actually, utilization rates WILL be higher, and CAPACITY will increase. no longer will UAL compete with an A320 with the same number of seats FRNT shoehorns into a 319. They will add a net of 18 seats to each jet. that's an approx 15% increase in capacity (or 15% DECREASE in CASM) for each jet.

are you saying FRNT DOESN'T use a hub and spoke model? the diff for UAL will be all the pax who will be connecting from Cities FRNT DOESN'T serve, at higher prices/revenue. Again, it will be an INTERESTING year. BTW, what happened to Boyd's last airline?

"Frontier's financial troubles are in the past when WestPac was dividing the LCC market in DEN/COS."

Just like "starfish" will do. the "shuttle" of 2000 was NOT the shuttle originally envisioned and executed. It became nothing more than slightly higher density seating 737's. GT has learned a lot about hub dominance from the folks at NWA. It's a strategy that works, and he's not into playing nice for the pols in DEN like the last few idiots in charge.