Indigo Partners LLC, a prominent private equity firm specializing in the air transportation industry, has announced a strategic distribution of its Frontier Group Holdings, Inc. (Frontier Airlines) shares to its members. This significant move, disclosed on March 29, 2024, marks a pivotal transition for both Indigo Partners and Frontier Airlines as the investment firm concludes a decade-long investment fund.
The distribution involves 178,834,034 shares of Frontier common stock, which currently represents approximately 80% ownership by Indigo Partners. This pro-rata, in-kind distribution is a consequence of the planned dissolution of an investment fund established by Indigo Partners in 2013 to facilitate the acquisition of Frontier Airlines. A substantial portion, approximately 99.4 million shares (around 44% of outstanding shares), will be allocated to William A. Franke, the Chair of Frontier’s Board of Directors, or entities under his control. The remaining shares are intended for distribution to Indigo Partners’ investors, excluding Mr. Franke, on or around April 1, 2024.
This development signals the natural conclusion of Indigo Partners’ initial investment phase in Frontier Airlines. However, it’s crucial to note the continued strong support from key figures within Indigo Partners. William A. Franke, in a released statement, emphasized the progress made over the past decade in establishing Frontier as a leading ultra-low-cost carrier (ULCC). He reassured stakeholders of his ongoing commitment, stating, “While the Indigo limited partnership has come to its natural conclusion, I look forward to continuing to serve as Chair of the Frontier Board and participating in the upside of the Company’s bright future.”
Echoing this sentiment, George Roberts, an Indigo Partners investor, expressed satisfaction with the investment’s trajectory and confidence in Frontier’s future growth. David Bonderman, also an investor through an investment fund advised by Wildcat Capital Management, affirmed his long-standing support for Frontier and its competitive strategy.
The share distribution has implications for Frontier Airlines’ corporate governance. Upon completion, Frontier will transition from being a “controlled company” under Nasdaq rules. This change necessitates adjustments to corporate governance structures, including establishing a compensation committee and a director nominations process composed solely of independent directors. As a preliminary step, William A. Franke has stepped down from the Company’s Nominating and Corporate Governance Committee, while remaining Chairman of the Board.
About Indigo Partners: A Legacy in Aviation Investment
Indigo Partners, founded in 2003 by W. A. Franke, is a private equity firm with a distinguished history of investments in the air transportation sector. Beyond Frontier Airlines, Indigo’s portfolio includes significant stakes in other successful ULCCs worldwide. These include Wizz Air Holdings, Plc (Europe), Volaris Airlines (Mexico), Cebu Pacific (Philippines), and JetSMART (Chile), demonstrating Indigo’s global reach and expertise in the low-cost airline model. Headquartered in Phoenix, Arizona, Indigo Partners continues to shape the landscape of budget air travel through strategic investments and operational expertise.
Forward-Looking Statements and Industry Outlook
It’s important to note that statements regarding future performance and expectations are forward-looking and subject to various risks and uncertainties as detailed in the original press release’s cautionary statement. However, the continued involvement of experienced leaders like Franke, Roberts, and Bonderman suggests a stable outlook for Frontier Airlines as it navigates its next phase of growth and competition in the dynamic airline industry. The strategic distribution by Indigo Partners appears to be a calculated move concluding a successful investment cycle while ensuring ongoing support and leadership for Frontier Airlines.
