Addoms: 'My five years is up'

Chris Walsh, Rocky Mountain News

Friday, September 7, 2007

It's a rare occurrence when suit-clad executives tear up at an annual shareholder meeting. But that's exactly what happened Thursday as Frontier said goodbye to its revered co-founder, Sam Addoms, who officially stepped down as chairman of the airline he helped build into a $1 billion company.

Several executives, including Addoms himself, choked up at the meeting, which ran nearly 90 minutes.

It was an unusual day in another way, as well. The meeting brought together Frontier's past, present and future in the form of Addoms, departing CEO Jeff Potter and new chief Sean Menke.

Colleagues recognized Potter for his handling of numerous challenges and the airline's rapid growth during his tenure as CEO, while Menke talked about where he wants to take the company.

But much of the meeting was devoted to Addoms.

"The values, the vision of the company is really about Sam," Menke said during an emotional speech to about 120 stockholders, employees and company executives. "Sam has been and will continue to be one of the individuals I most admire."

Addoms spoke with the Rocky Mountain News on Thursday about Frontier's early days, his assessment of the company now and his plans for retirement.

What led to your decision to step down as chairman?

A former CEO is better off going away than sticking around. Jeff and I have a very unique relationship and we thought we could sustain that through the process of my remaining on the board. I agreed at the time I did this to stay on for five years. My five years is up.

What made you think in the 1990s you could start a successful airline in Denver, especially after the demise of the first Frontier Airlines?

We really had in mind that we would replace Continental Airlines in a number of markets that they had withdrawn from. As it turned out, those markets did not become profitable.

A year later we brought Jeff in and we remodeled the strategy to go to large cities and charge low fares. It worked.

Did you ever think Frontier would grow to be this big?

When you start something you hope you're going to get to critical mass. Our goal was 14 airplanes. To contemplate a 5,600-person staff, 60-plus aircraft and a lot of complications that are associated with that, no, I didn't expect this.

You helped groom Potter for the CEO position. How would you assess his tenure at the helm?

The difficulties he faced were as great or greater than any I faced, whether it was the Iraq war or fuel prices or Southwest. I think he's done a phenomenal job in a very difficult environment. To me the company has more momentum going for it right now than any time it has in the last five years.

Frontier has been the subject of takeover speculation in recent years. Do you think the company can remain independent?

I think it's completely feasible on a go-forward basis. Whether that's the final outcome is anybody's guess. But if the community is willing to support it, the company can be independent as long as it wishes.

What will you do next?

Hopefully nothing that requires any leadership. I'm done leading.

Meeting highlights

• Frontier said international markets will account for up to 25 percent of its capacity by the end of next year. It's taking a close look at adding Belize and other destinations in Central America.

• New CEO Sean Menke said he doesn't expect to make a final decision on the location of Frontier's new heavy maintenance hangar for at least a month.

• Menke said he will look closely at opportunties to boost ancillary revenue, perhaps adopting an a la carte pricing structure that would allow passengers to pay more for additional services and amenities.

• Frontier continues to see solid demand in September after reporting a 24 percent spike in passenger revenue miles in August.

• The carrier said initial bookings on its new turboprop routes - which will be operated on regional jets until Frontier recieves federal certification - are "on target" with projections.

• Frontier says returning to New Orleans is a good possibility in the long run but probably not within the next year.

• D. Dale Browning was appointed chariman of the board.

Shareholders optimistic

Frontier's stock has taken a dive in recent years, yet shareholders at Thursday's meeting seemed pleased with the company's direction. Many lauded Jeff Potter, who stepped down as CEO Thursday, saying he responded well to Frontier's challenges. Most said they are in a wait-and-see mode with new CEO Sean Menke but expressed optimism about his potential. What they said:

"They have good local support, and people seem to like flying them. It'll be interesting to see what happens with the new CEO."

Gerry Wilson, who has owned Frontier shares for a decade

"Fluctuations in the stock price do not concern me. Jeff Potter did a wonderful job, and I think the company will succeed."

Ray Ehrenstein, shareholder for nearly a decade

"The stock price is really something they're not in control of. I think they're doing pretty well, really. Their problems are only small problems, although I think they could be doing better in terms of customer service."

Timothy Pelham, shareholder for a decade

"I'm sorry I didn't know Jeff Potter sooner. He and Sam Addoms are what made this airline a success."

Bruce Cochran, a shareholder for six years