Frontier Confirms That Southwest Airlines Developing a Bid for the Airline-effects UA
Frontier Airlines Holdings, Inc. (OTCBB: FRNTQ) today announced that Southwest Airlines Co. (NYSE: LUV) has submitted an initial non-binding proposal to acquire Frontier under the auction procedures established in Frontier’s Chapter 11 bankruptcy cases and approved by the U.S. Bankruptcy Court.
As previously announced, on July 13 the judge presiding over Frontier’s Chapter 11 bankruptcy cases in the U.S. Bankruptcy Court for the Southern District of New York approved a proposed investment agreement between Frontier and Republic Airways Holdings, Inc. (NASDAQ: RJET). Pursuant to the investment agreement, Republic agreed to purchase 100% of the stock of Frontier Holdings upon its emergence from bankruptcy for $108.75 million, so long as certain conditions are met. Frontier Airlines Holdings would become a wholly-owned subsidiary of Republic, an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America.
The Republic investment agreement provides for an auction period, during which Frontier may seek higher or otherwise better competing bids. If Frontier identifies such a bid, it can terminate the Republic investment agreement and accept the other offer. Under the auction procedures approved by the Court, interested bidders must submit an initial proposal by Aug. 3, 2009, and a final proposal by Aug. 10, 2009. Frontier and its advisors, in consultation with the Unsecured Creditors’ Committee appointed in Frontier’s Chapter 11 cases, will conduct an auction, if necessary, on Aug. 11, 2009, to consider all qualified proposals and determine the highest or otherwise best proposal.
Frontier currently expects to emerge from Chapter 11 this autumn.
Last edited by lehms; Jul 30, 09 at 12:24 pm.
Reason: more descriptive
This would have some effect for UA at DEN especially, where Frontier was based and where WN has been building up a presence now for a couple years at least.
A WN cash infusion would be great for UA. No reason to expect WN to turn UA into a super-size WN; instead, turn UA into a competitive international carrier that WN could feed. WN win.
What I find interesting is IIRC when Frontier was essentially forced into Ch11 by their CC processor they claimed they were AOK and but not for the CC processor wouldn't need BK at all and only opted for Ch11 due to the CC holdbacks, it would seem that since then things have changed for them and not for the better.
__________________
"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money"
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?
Programs: NWA Million Air & Platinum; DL Platinum Medallion; Hyatt Platinum; National Executive Elite
Posts: 424
Each and every Frontier employee should feel some pride in that their main competitor can't beat them - so they're going to try and buy them and force them out of business. Despite what all those supposed know-it-all analysts say, Frontier is hurting Southwest in Denver. If that wasn't the case, why would Southwest we bidding for an airline it has nothing in common with?
And as for the press release saying better competition...please. What airline merger has resulted in that? United has a lot to gain if this goes through. UA would just compete with WN and the local favorite airline, Frontier, would be gone.
And as for the press release saying better competition...please. What airline merger has resulted in that? United has a lot to gain if this goes through. UA would just compete with WN and the local favorite airline, Frontier, would be gone.
Agree, DEN is big enough for two hub carriers (and different business models at that), but not three. WN is bleeding badly in DEN, but they have the financial flexibility to buy out their main competitor. If the merger succeeds both WN and UA win.
Programs: NWA Million Air & Platinum; DL Platinum Medallion; Hyatt Platinum; National Executive Elite
Posts: 424
Quote:
Originally Posted by PATRLR
Is their "main competitor " also in Bankruptcy? No, they aren't.
Not only CAN their main competitor beat them, but they are.
Got proof?
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.
Check the financials and analyst reports the past 8 months. Frontier is profitable; Southwest is likely losing money on its Denver routes.
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.
Is their "main competitor " also in Bankruptcy? No, they aren't. 
