I think that would be found in the market share data, where UA dominates.
Quote:
Chapter 11 is a boon for Southwest because they can swoop in, unwelcome, and buy out their biggest competitor. If bankruptcy has anything to do with this, that's it.
I agree to the extent that they would buy out F9 with the express intention of killing it. WN runs an all Boeing fleet; F9 runs an all Airbus fleet. Just from that consideration there will be no merger, as WN is fanatical about keeping maintenance costs low.
Quote:
Check the financials and analyst reports the past 8 months. Frontier is profitable; Southwest is likely losing money on its Denver routes.
I'm going to guess that's it's easier to "make money" when you're protected by bankruptcy court.
Quote:
And if you still stubbornly don't agree with me - ask yourself why then is Southwest buying an airline it has nothing in common with? Yeah, it's because Frontier is a thorn in Southwest's side.
Perhaps not so much a thorn as an interesting opportunity. Given the auction rules, it probably made sense to WN to try to buy and kill F9 right now, when they're down.
__________________
Brian/\/\ You really should not come to Denver. Cold here. And snowy. And cold. Really, just stay away.
I hope people here remember how it worked out for ATA when Southwest came in with a clever bid to beat out AirTran in MDW. IF Southwest wins the bid you can bet that it will mark the beginning of the end for Frontier. They will suffer the same fate ATA did. And as planned Southwest will get all those DEN gates from the airline and their toughest competitor will be gone. They will without a doubt break out the ATA/MDW playbook.
If you believe otherwise you are likely operating under the influence of wishful thinking :-)
If you believe Southwest will keep the airline around ask yourself this question... why?
I think this analysis is spot on.
__________________
Brian/\/\ You really should not come to Denver. Cold here. And snowy. And cold. Really, just stay away.
TalkBoard Member/Moderator: Southwest and JetBlue forums
Join Date: Sep 1999
Location: California
Programs: WN CP & A-list, Interstate BBQ at MEM B17, CO Lifetime Presidents Club
Posts: 9,245
Quote:
Originally Posted by Indy
I hope people here remember how it worked out for ATA when Southwest came in with a clever bid to beat out AirTran in MDW. IF Southwest wins the bid you can bet that it will mark the beginning of the end for Frontier. They will suffer the same fate ATA did. And as planned Southwest will get all those DEN gates from the airline and their toughest competitor will be gone. They will without a doubt break out the ATA/MDW playbook.
If you believe otherwise you are likely operating under the influence of wishful thinking :-)
If you believe Southwest will keep the airline around ask yourself this question... why?
Southwest has already said they intend to phase out the Frontier brand. Here's what I posted on the Southwest forum:
Quote:
Originally Posted by nsx
I'm thinking that Frontier flights would need to be relabeled Southwest sooner rather than later. Very few customers will pay market price for tickets on an airline that is known to be slowly shutting down? Why would people risk having their flights dropped from the schedule?
Southwest, as the new owner, will quickly realize that yields are unacceptably low on Frontier-branded flights. The answer will be to accelerate the switch to Southwest branding, one way or another.
For the conspiracy-minded, it is possible that Southwest sees another outcome here. Failure of negotiations with the employees (on either side, BTW) could set up a situation in which Frontier is forced to abruptly shut down and liquidate. That outcome might be more favorable to Southwest than the planned temporary continuation of Frontier operations. If so, Southwest really has nothing to worry about in the employee negotiations.
I will miss F9 after WN buys them. I liked F9 a lot better because of assigned seats, routes to Mexico and their TV program. Frequent flyer program is not really worth anything though.
I for one think WN will shut them down as fast as feasible and take over some routes or re brand those to WN. I don't know how profitable the Mexico routes are but it could be an interesting expansion for WN.
I also think though if Republic wins the bid they would eventually end up liquidating. They don't have any experience running a full fledge airline and they would compete against their largest customers. A couple years ago I saw Independence run themselves into the ground real quick.
Southwest has already said they intend to phase out the Frontier brand. Here's what I posted on the Southwest forum:
It really is a shame but that is business. My opinion is that DEN could not support UA, WN and F9 especially with the state of the economy. Something has to give. I consider myself fortunate to have taken an F9 flight 3 months ago. Great airline. Great service. They they do get phased out they will be missed.
F9 is undoubtedly my #2 preferred carrier behind WN. This is what I see happening:
-Southwest submits a winning bid and acquires Frontier
-As soon as administratively possible, DEN capacity is reduced on both airlines, which will lead to higher fares (that will still be competitive with UA)
-An end to AirFairs, as well as elimination of checked baggage fees, allowing 2 free (except overweight/size bags).
-Elimination of change fees
-An interim codeshare agreement which will allow allow cross selling on both websites for previously unserved connecting routes (i.e. BUR-SJD, ATL-MAF)
-Accelerated delivery schedule for B737s from Boeing, with possible delayed retirement/sale of existing B733s.
-Sale/Lease end on existing Airbus aircraft, replaced with B737
-Lynx Aviation sold, with a codeshare agreement as part of the deal
-EarlyReturns members awarded 1.0 Rapid Rewards credits for every 1,500 banked miles
-Rapid Rewards A-List Membership to Ascent/Summit members
-Companion Pass issued to those Customers who have accrued 100k miles in the past yr.
-End the existing relationship with points.com and LiveTV
-End the existing operation at DFW and DCA (due to IAD and BWI proximity) and lease the DCA slots/gates to another carrier
-Possibly end ticket sales distribution to aggregator websites, but leave ticket inventory available on Sabre and GDS
-Offer severance packages to employees who are not hired by WN
-Cross train all employees (esp flight crews) on Int'l ops/procedures
-Keep existing near-Int'l routes on F9's current route map, shift new traffic for non-served Mexico cities over to Volaris codeshare
-Begin codeshare with WestJet to Canada, using DEN as a Int'l focus city (possible shift of some F9 talent to Westjet)
-Once under one operating certificate, the combined WN operation would soon begin codeshare agreement to generate traffic from TATL codeshares
I don't intend to start the debate here which raged for months on the DL/NW boards, but I also see a shift from Pepsi to Coke.
I received this in my weekly e-mail from SKYGUIDE E-ALERT:
When Denver-based Frontier Airlines agreed in June to be acquired by Republic Airways Holdings as part of Frontier's plan for Chapter 11 reorganization, the deal was subject to possible bids for Frontier coming into the bankruptcy court from other interested parties. And one interested party has now emerged: Southwest Airlines. Southwest said it plans to submit a non-binding offer of at least $113.6 million by August 3 - higher than Republic's existing bid of $109 million. "Submission of a non-binding proposal gives Southwest an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal, to be submitted by the court's Aug. 10, 2009 deadline," Southwest said. Republic Airways Holdings -- the parent company of regional carriers Chautauqua Airlines, Republic Airlines and Shuttle America - also has a deal in place to acquire Milwaukee-based Midwest Airlines, which it plans to link with Frontier through code-sharing.
Since Southwest started operations at Denver International Airport a few years ago, it has grown into one of the airport's largest carriers, providing formidable competition for both Frontier and United at DEN. Southwest executive vice president-corporate services Ron Ricks said on a company blog that Southwest has been "considering a bid (on Frontier) for some time, independent of any action Republic took with its bid proposal." Ricks said that in spite of the economic downturn, Southwest considers the availability of Frontier a strategic option that's too good to pass up. "We have the cash, access to capital, and collateral that allows us to take advantage of this existing opportunity and synergies between Southwest and Frontier," Ricks said. If Southwest's bid is successful, it should allow Frontier to emerge from bankruptcy. Following an acquisition, Ricks said, Southwest will "operate Frontier as a wholly-owned subsidiary, independently and separately from Southwest Airlines, for a period of time until the carrier could be combined into Southwest."
He noted that Southwest's collective bargaining agreements with its employees "have provisions for the acquisition of or merger with another carrier." If Frontier is acquired and merged into Southwest, executives will have to figure out how to combine Frontier's Airbus fleet with Southwest's all-737 operation. Also up in the air is the fate of Lynx Aviation, a Frontier subsidiary that operates a fleet of Q400 turboprops from Denver to smaller markets in the west and Midwest. "As a part of our overall due diligence, Southwest Airlines will study Lynx," Ricks said. "Until a bid is finalized, it's too early to say" if that bid would include Lynx.
Really?.. Because I don't remember it playing out that way at all. In fact I seem to remember Southwest acquiring ATA's assets only after ATA had run itself into the ground and ceasing operation.
I also remember well before any of that Southwest injecting ATA with a $100,000,000 cash loan to keep it operating and code sharing with them.
__________________
Views or opinions expressed above are not that of Southwest Airlines.
Really?.. Because I don't remember it playing out that way at all. In fact I seem to remember Southwest acquiring ATA's assets only after ATA had run itself into the ground and ceasing operation.
I also remember well before any of that Southwest injecting ATA with a $100,000,000 cash loan to keep it operating and code sharing with them.
So are you saying WN plans to keep F9 as a going concern for years or decades? What exactly do you think WN's intentions are?
__________________
Brian/\/\ You really should not come to Denver. Cold here. And snowy. And cold. Really, just stay away.
No, I was merely remarking on the inaccuracy or the previous statement.
I'm pretty sure Southwest makes no secret about it's intentions with Frontier.
Frontier is a bankrupt airline. They are completely responsible for their own fate for putting themselves in the position that they are currently in.
This whole charade of villainizing Southwest is ignorant and immature.
Actually, F9's credit card processing company is responsible for their fate because it was their arbitrary upping of the reserve in spring 2008 during the credit crunch that caused F9's C11 filing.
As for the other, I don't think the statement was inaccurate - larger companies have always used M&A as a mechanism for growth, and it often seems cold and callous. Evil? No. Businesses really can't be evil per se, although humans in charge of businesses can.
I can easily see how some people would put a black hat on WN for swooping in after Republic had already set up a way for F9 to continue as a going concern. But...that's life in the business world.
__________________
Brian/\/\ You really should not come to Denver. Cold here. And snowy. And cold. Really, just stay away.
