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Author: bigmommo Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 580  
Subject: Frontier can hold up through this Date: 9/17/2001 8:34 AM
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I have updated my forecast, and I still see a profitable airline for the next five years, even if things go negative during the next year. Here's why:

1) Frontier still has a stockpile of cash, unlike its peers (100million+), so they will not need to react so radically to shore up their financial position.

2) They have strong operating margins relative to peers.

3)Sam Addoms has indicated that they are going forward with Airbus purchases.

4) They are not saying they won't cut flights, but also are not taking any action right now to cut flights.

5) They are not impacted by a drop off in international travel

6) They are short haul, but not less than 500 miles for most destinations, which is the amount analysts have said people would be more likely to drive. (Lets face it, Denver is still a long way from any major city :-).

So, when I crunch the numbers, I get a long term (next 2-3 years) conservative target price of 15-18, so I think its a buy at anything less than 9 right now. This also assumes that passengers stay at this low level for a year, which might be pessimistic, and assumes that no United passengers switch to Frontier, which might also be pessimistic. Also, this does not include any assistance from the government.
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