Frontier on the block - RJET wants out
 

This has been known for some time and its not surprising they 'announce' it when the restructuring is basically done. I'm not sure how much a private equity firm would be interested in buying the majority of Frontier.

The only carrier I can see purchasing Frontier is Spirit. They are mostly private (not sure how much the public offering was for) but one that can expand pretty quickly with the purchase of Frontier. They seem to have financing available as well. It may seem out of left field but crazier things have happened. I don't know much about Spirit but it seems as though they are the only ones that are not intimidated by other carriers and can take on Denver.

AS might be an interesting partner.

Words like "Ultra LCC" have been mentioned as a goal for Frontier Airlines. That is a clue to me that Spirit might be interested in Frontier. In any case, MKE is toast when it comes to commitment from Frontier. Next year MCI will be a bigger station than MKE.

You know, after reading through the comments that were posted on that article it seems to indicate that the YX "loyalty" hasn't really transferred over to F9.

It won't be Alaska Airlines.

JetBlue or Virgin America most likely candidates on the Frontier route.

I was looking at a cheap fare myself that frontier had one time and the problem with Frontier was the size of the route network.

Virgin America or JetBlue will be the acquisition here. Spirit will be the least likely and I wish Spirit would sell out to someone else quite frankly who can install larger seating on those planes and run it better. I wouldn't fly Spirit.

Frontier has to differentiate itself in Denver more than it has already, or else it'll end up dead in the water unfortunately. It's fighting vs. United on the high end (with a much larger route network) and Southwest, who can throw planes at Frontier until they cry Uncle...the only reason Frontier has survived this long is they have the lowest cost structure of anyone at DEN.

JetBlue also has a lowish cost structure, and there's some fleet commonality there. JetBlue could integrate F9 relatively easily (F9 already has LiveTV, so JetBlue just has to take out some seats and repaint the planes, right? :p) and there is little to no route network overlap (MCI and DEN for F9 vs. BOS, JFK and LGB/LAX for JetBlue). As far as differentiation goes, JetBlue can do that, with free TV and generous seat pitch, though Frontier's locations near the middle of the continent mean that seat pitch won't garner as much of a premium versus, say, on transcons.

Virgin America would be a bit bigger shock, what with an F cabin and generally beefier hard product. Plus, they aren't making money...still. I doubt that would work, though VX would certainly be able to differentiate itself from the crowd (they're competing against United in Denver, not Delta, whose hard product is actually, you know, modern).

But if F9 is throwing around the ULCC moniker, which means they might do something drastic and sell out to Spirit. I personally wouldn't mind this, so long as a ticket with a carry-on ends up at the same price as F9 charges now for tickets (which would mean that a ticket with a checked bag would be slightly cheaper). Most people won't agree, but if that's what differentiates what-was-Frontier from its competitors, so be it. If people want freebies and legroom, they can fly Southwest until Spirit wakes up and realizes that their customer base has gone elsewhere. Then again, I've taken too many business trategy courses :p

Personally, Frontier is my favorite airline (of the ones I've tried, namely United/GoJet, AA, WN, US and F9) and I don't want their operations to get any thinner than they already are. But I'm not about to bail them out, so business is business...

Another hard hitting piece of journalism by the Milwaukee Journal Sentinel.

Jay Sorensen is a real piece of work. I remember him writing editorials in the newspaper about how Midwest failed Milwaukee in part because they never developed a true hub and an LCC like AirTran would do just that. Now he argues that the only reason Milwaukee had a hub was because Midwest decided to carve out a small niche and expand in Wisconsin. I guess his consulting contract with AirTran is over, lol.

Milwaukee is simply too small of a market to be anything other than a focus city for an airline in today's environment. The amount of capacity offered by Frontier, AirTran, and Southwest in recent years was simply unsustainable. The idea that Milwaukee could support a hub of 200 + flights per day (the AirTran proposal) is laughable. The traffic and yields just aren't there. It took a long time to get to this point but I'm glad the situation in Milwaukee is starting to finally get resolved.

I agree it won't be Alaska. Their CASM is actually a fair bit higher than Frontier's (though they make up for it). A purchase by Alaska would make Frontier even less profitable.

Virgin is out. They just don't have the cash (and they would be fools to go borrow it).

JetBlue ... meh. The CASM is about the same. Similar fleet (including IFE, which is a major expense to install), fills a large hole in their route network. The downside is JetBlue has never used regionals to feed their operations, and Frontier does, and that brings in a new level of complexity (that JB might not want. Why fix what isn't broken?). Then there is, of course SWA. Costs aren't Frontier's problem, yields are, so why would B6 want to toss a lot of money into a yield sinkhole? If F9 can't get better yields than SWA (when I believe F9 has the better product) in Denver, I doubt B6 can.

UA, DL, and AA are out. Already too big, already too big, and broke.

US ... another meh. More for the planes than anything else. Unless UA draws down DEN and US "replaces" them, since US can better compete with SWA on a strictly CASM basis (as they have in PHX for years, and recently "won" a rare victory in PHL against SWA).

Spirit? I could see it. While you may not fly Spirit (and I probably wouldn't either) many people do. $9 fares are hard to resist, even with all the add-ons.

Sorensen is off the mark when he suggests that the business community suck up to Southwest which has a terrible route network for business. Even Frontier itself is a better option. As for Milwaukee not embracing Frontier, remember Bedford hasn't exactly been helpful to either the community or his own cause with some remarks he made. Frontier could make it work. And don't think WN is low fare...hardly.

It's not a lack of commitment but rather economic reality.

Frontier is putting planes on routes that have the potential to make money. MKE has been a huge money pit for the airlines. Frontier has lost millions in Milwaukee over the past two years.

More right sizing of capacity is still needed in MKE.

This story is all over local and national media, including WSJ...http://online.wsj.com/article/SB1000...Tabs%3Darticle.

The reader comments are interesting.

I disagree on JetBlue and Virgin America. While I don't know Virgin America's cash on hand since it is a private company and won't IPO till later on, Virgin America and Jetblue both could use the Airbus NEO orders.

Regional routes are going to continued to be served by Republic Airlines which is a Regional carrier that big airlines use.

The only routes that is up for grabs now is the Frontier routes. Quite frankly some slots may be sold off to other airlines if they aren't needed. But Virgin America and JetBlue are both excellent candidates for taking over the fleet with both carriers getting part or one carrier getting a lot of the Frontier routes.

Virgin probably has a lot of cash on hand actually, more than you or I think. And for Virgin, this would allow them to expand on the cheap and just need to reconfigure the airplanes to meet their standards. JetBlue would also make sense and be an excellent fit here to expand.

So I can't say which of JetBlue or Virgin or some combination thereof fits best, but Spirit really doesn't fit here.

Either that or the slots go back to Southwest or other existing carriers and other airlines acquire the fleet of planes like Virgin or JetBlue for expansion since they both need the planes on order.

Frontier reaffirmed the order for 60 A320Neo and 20 A319Neo so it seems as though they likely have a suitor in mind for those planes if I had to guess.

Virgin could use those 20 A319Neo and Jetblue could use those A320Neo or some combination thereof. Frontiers problem is it needs to be part of a larger carrier like JetBlue or Virgin America for it to be more of a success as those carriers are profitable already and have more agreements in place with other carriers and the like.

Without Frontier, Republic can go at it alone or merge with other regional carriers.

And Frontier without regional can be made part of a larger group like JetBlue or Virgin America.

Airlines are going through consolidation right now. We already saw all the other airline mergers like AirTran with Southwest, AmericaWest with USAir, United with Continental, Delta with NorthWest and so on and so forth. So that seems to be the next step for Frontier as well.

When Southwest merged with AirTran it added more routes and expanded its hubs.

Same will happen with Frontier after it is all done. Both Southwest and AirTran were using Boeing while Frontier uses Airbus like JetBlue and Virgin America and yes Spirit however Spirit makes the least sense.

A potential suitor will probably emerge in 2012 sometime.

The Frontier route to Denver is very nice from LGA for instance.

Virgin America isn't profitable. 2010 FY operating loss. 1Q2011 operating loss. 2Q2011 operating loss announced <60 days ago. Virgin America hasn't demonstrated it knows how to run a profitable airline with ~40 aircraft, let alone 100.

Directly from the 2Q11 results press release: •Cash: The airline ended the quarter with $26 million in unrestricted cash and $53 million in total liquidity

Virgin is a unique situation because of the structure of the company.

I would not rule out Virgin just yet since even if it has finite cash on the books, it could easily get more for expansion plus Frontier likely has cash on hand as well. Virgin is privately owned and as such any publicly released figures are to be taken with a grain of salt.

Stay tuned. There is always activity in the markets today but airlines in general overall are much healthier today sans a few carriers.

I know USAirways also has Airbus A320 fleet. But I don't know if the Frontier matchup would work for them nor be possible nor plausible.

Possible contenders:

Spirit
USAirways
Virgin America
JetBlue

Don't know who else does the A320s. But it is unlikely Frontier can transistion without merging.

MKE's days as a hub were toast the day that Timmy ran to Minneapolis which led to the NW/TPG/Republic Frankenstein monster.

People have argued in the past that Midwest never had a real hub at MKE.

Jay Sorensen is planting the "JetBlue might be interested in Frontier" seed.

http://www.bizjournals.com/denver/ne...html?ana=yfcpc

This isn't 2007. High oil prices, excessive capacity, some of the worst yields in the nation, and a small local market effectively killed the MKE hub.

Certainly high oil is a factor in lack of profitability. Excessive capacity is just another way of saying excessive competition with inevitably poor yields. In the post Midwest environment of 3 LCC carriers, somebody had to flush out and it looks like it is Frontier.

Nobody ever said competition is pretty; I have to give Southwest credit. WN crushed Frontier in DEN and MKE like a bug.

As one in the Wisconsin hinterland who has been extremely adversely effected by the demise of Midwest and the Northwest/Delta merger I'd give you all at MKE sympathy, but I'll reserve that for my local community.

Enjoy your connections in ORD, DTW, DEN, ATL, wherever :p

A lot of moves in the airline industry underway. Frontier has very good assets, airline slots and a nice route map. The asset unlocked will unleash the true potential of the firm. It has modern jets, new orders, and combined with slot swaps and mergers and the like, it will take the firm to the next level.

Funny how history keeps repeating in Milwaukee.

Whatever.

Exactly what Bryan Bedford thinks of Milwaukee.

:rolleyes:. So what would you have Bedford do? Piss away millions of more dollars on an operation that has little, if any, hope of sustained profitability in the current climate?

Making a big push in MKE simply to recapture market share likely would have forced Frontier (and maybe Republic itself) into bankruptcy or worse. I know you don't like hearing this but a big pòrtion of the losses Frontier racked-up over the past two years was directly attributed to the horrible financial performance of MKE.

I'm sure other airline executives view Milwaukee the same way as Bedford does.

As a legacy RAH employee I can tell you most of us want BB to sell Frontier as fast as he can. When I first started in '06 I was amazed at how i felt coming to work. being happy to be going to here and there. Now its just ehh and Morale is very low. I remember getting a very nice Christmas bonus every year. Before we bought those airlines we got very nice sums based on longevity. Last year we got $500 and this year well we wont expect anything...

Bedford needs to go to Bedrock.

I'm tired of this MKE inferiority complex crap. This area can support a quality hub airline. I remember when NW tried to kill offYX...and failed. I'm not sure F9 was ever the best partner for YX but it is what it is and with some creativity they could still pull it off.

If MKE wanted to keep more F9 service they would have voted with their dollars. I wish they would have, but resentment towards YX, poor decisions, and basement fares on other airlines drove a lot of people away, meaning even more people are unfortunately losing their jobs.

I hope MKE can find a way back in the F9 system, but it won't happen until the passengers are willing to pay for it. See MCI. It has seen steady growth since the F9 transition, not every route has been outstanding, but solid growth.

In the current environment, no, MKE can't support a hub.

Southwest will extend their schedule through Summer 2012 early next week. Rumors are everywhere that it will contain significant route and network changes. This may give as an indication of what their plans are for MKE. If Southwest does some right-sizing, perhaps this will present some opportunities for Frontier. However, I wouldn't expect much back filling as there are not many routes that can sustain E190 or Airbus aircraft.

Let's see what news next week brings.

I bet those Frontier pilots are kicking themselves for voting down the WN acquisition deal about now

Trying to improve bottom line apparently means cutting more jobs in MKE.

http://www.jsonline.com/business/fro...133655853.html

I predict that WN/FL will keep most if not all of their current service at MKE when the schedule is extended.

Too many threads on here to keep track of and too many airlines.

Southwest is getting to be a much stronger player as it is merging and is also looking to expand even further. Southwest is a very competitive airline and one of those highly liked carriers for domestic USA travel.

After Frontier is sold off, Frontier will also be part of a much larger route structure and be part of one of those highly acclaimed airlines.

But mergers, slot swaps, divestitures, and acquisitions are all necessary in the marketplace and will continue to occur for the foreseeable future.

Article from WSJ has comments from industry analyst. At a time when RJET is trying to build up hub at DEN, it appears they are not having great success.

http://online.wsj.com/article/SB1000...ntier+airlines

You have to admit that Bryan made promises he could not keep. Plus, he stated that Midwest Airlines was operationally pulling in a profit. Once the Midwest name was wiped off the MKE map, any loyalty that was left disappeared with the brand. It did not carry over to Frontier.

I have a crazy idea here that probably will never ever happen... What Republic should do is keep Frontier as a token place holder at MKE and fly the most profitable routes until the C Series order starts coming in. Revive the Midwest name on an all new C Series fleet and replace Frontier in Milwaukee. The New Midwest can code share with Frontier if they want. I know... CRAZY idea, but it might work. I heard the C Series order probably will never happen for Republic.

From the Business Journal:

http://www.bizjournals.com/milwaukee...g-more-on.html

I'm not sure what profit you are referring to. TPC wouldn't have been so quick to sell if it were a profitable business. BB said he would try to restore the route map to its pre-2008 levels, and he tried and failed. Many new routes were tried and unfortunately F9 did not have the pockets to keep them going. I remain hopeful they can become sustainably profitable and grow MKE in the future, but they can't do that until they get more cashflow.

What was said was that there was not a revenue problem for Midwest, rather a cost problem which was true.

Frontier's assets are excellent to be pieced across multiple airlines perhaps.

They have a very modern fleet. Airlines like Delta have older planes and the acquisition of lets say A319 which they have acquired because of Northwest would make sense. They seem to be intent on acquiring MD90s because of the more modern engines. Perhaps acquiring A319s depending on the price could supplement that and phase out the MD88s.

Lots of senarios at play here. But Frontier seems to have a dream EQ base with very fuel efficient base when put on the right routes with a larger firm.

The A318's that frontier is getting rid of are very new. But smaller size.

Any ideas who these A318's will go to?

Bedford stated at the time of the Midwest acquisition that the airline was operationally profitable. Midwest wasn't generating huge profits but it was a big turnaround from the previous year.

As others had posted Midwest had a cost problem. That's why Republic moved so quickly to get rid of the 717s and put Airbus jets on the high volume leisure markets. This probably would have worked out well had Southwest and AirTran not dumped so much excess capacity in these markets.

I don't buy the fact that Bedford didn't deliver on his promises for Milwaukee because the facts tell a different story. Republic devoted significant resources in an attempt to build a more conventional hub in Milwaukee. They restored nearly every route Midwest cut and even added new ones like SAT, TUC, and SAN. It didn't work and it had little to do with the dumping of the Midwest name. To suggest that things would have turned out much differently had Republic kept the Midwest brand ignores the different economic and competitive dynamics at work in the market.

With one dominant airline, Milwaukee might be able to work as a small hub. It can't in a hyper-competitive market like we've seen the last few years.

Plus, having hub operations in medium sized cities doesn't work all that well anymore. Look at what has or is happening in places like PIT, MEM,CLE, or CVG.