I don't know if there is any meat to this rumor, but it is interesting...

I guess that would be one way to open new routes . What kind of aircraft do Frontier fly? What routes do they serve?

They fly A320s/319s (maybe a 318 or two?). I mentioned in an earlier thread that they would make a good fit for VX. Their hub is Denver. They have a lot of good stations (including FLL).

From the article:

It's true that right now, US operators are at a severe disadvantage because of the declining US dollar. Foreign currency *can* act as a hedge against rising oil prices. But economists seem to think that the other currencies will soon follow suit...

I would be skeptical about Virgin America buying an airline that isn't making a profit as it's operating today, that has a fleet THREE TIMES the size of VX's current fleet (F9= 62 planes, VX=21). It screams "operational headache" while you try and integrate work forces/adjust routes/corporate culture, plus realistically, if they can't get ONE dark plane out of their fleet fast enough, can you imagine how long it's going to take to get 62 of them fitted out with Red?

Seriously, why not just hand customers hundred dollar bills as they get on the plane? That would be another way to to burn through a lot more cash than they are already, while trying to get to profitability with $130/bbl oil, and it would probably do a lot more for customer satisfaction than trying to merge with a competitor that can't make their current business model work.

Now, if Frontier goes fully belly up and there are useful assets you can nab from the fire sale that make financial sense, that's another story, but I think until VX gets to their 5 year expansion goal of 100 planes, they should strictly worry about their expansion plans and building up their corporate DNA, and leave the M&A game to legacy airlines, like AA/TWA and HP/UA (which haven't exactly done wonders for the surviving partners).

Yeah, I didn't think it had a lot of credibility when I posted it, but thought it was an interesting headline/article.

If only VX could slowly buy part of their planes and airport slots/routes. And choose which routes they want to take over (with their own Red-fitted planes).

... hang on - you're right - If VX wait for Frontier to go belly up, there will be cheap/liquidated Airbuses available and airport slots freed up (should be plenty of Denver space to expand to).

Well, DEN is supposedly high on the VX list of target markets, so yeah, planes and gate space would be nice, and maybe you'd want some F9 employees as you expand, but a merger with F9 is just adding additional ways to bleed Sir Richard's venture capital at a faster rate, on top of too-expensive oil. Part of making something work with finite VC resources is being really, REALLY good at saying "no" to bad ideas (and saying "yes" to the right ideas).

I'm also not so sure they'd take FLL over MIA as their first Florida market. Doesn't VS fly to MIA? Isn't part of the idea behind VX to be able to feed into the other Virgin airlines?

The problem is that if they wait for them to go "belly up", it will take years to buy the planes. There will be a long line of creditors...Same reason they can't get the Skybus planes now (other than the two they own).

I think that's a secondary factor. There are a number of reasons why FLL is appealing over MIA that would probably offset the benefit of having VS there, and currently there are no feeder agreements. Plus, it's a half hour bus ride---Better than Continental's Newark Airlink ;-)

Well, true, it has to go through the BK proceedings- though judges have amazing powers of going "no, we're going to do this, so that the senior creditors get their cash" if someone presents a good plan in court. But yeah, when the lawyers are involved the wheels of justice DO grind slow but fine...

I would think that honestly, the gates would be more useful right up front- especially since anything Virgin America buys to fly in their fleet has to have Red installed in it anyway, or we get repeats of the fiasco with the dark A319, and that's not exactly an instantaneous process.

True, there isn't a feeder agreement NOW, but I would think they'll want that up and running once the VX route system is fleshed out a bit more. I know I'd be awfully tempted to fly SEA-SFO/LAX-LHR on Virgin given my VX experience if the price was competitive.

Why merge when you can just buy the best assets at a discount during the increasingly more likely fire sale?

The most obvious pairing to me is JetBlue and Frontier. Compatible fleets, very similar IFE, and the labor integration wouldn't be too messy, since neither carrier has much seniority and at least b6 is non-union (don't know about F9). The only thing is that B6 would probably want to deemphasize SLC if such a pairing occurred.

I agree that that makes more sense, especially since there isn't quite the fleet size disparity you'd have with VX and F9- Frontier would be easier to swallow- plus you probably wouldn't have to retrofit the F9 fleet so much.

This, of course, doesn't solve the problem of how to make F9's routes profitable. I'm still sort of skeptical that in today's airline market that it's a wise idea to merge with competitors who are on the verge of going out of business. Strapping two leaky lifeboats together isn't always the best way to make it to shore.

B6 and F9 have the same IFE installed by Live TV which is owned by B6. Except on B6, IFE is free while on F9 it is not. B6 runs SLC not as a hub, but point to point, so there is no reason to deemphasize SLC.

I think it would be a terrible idea for VX to buy F9, the A318's have little resale vaule and are high CASM, and it would be too many planes to absorb at once. Unless someone (Branson?) sets up a holding company that buys F9 and VX and transfers planes from F9 to VX as needed and as Red can be installed. Although Lynx would be good for VX to set up as a California Horizon Air type airline to feed SFO and LAX from smaller cities like FAT, BFL, CLD, PSP, FLG, EUG, MFR, ACV, RNO, RDM, GEG, BOI, BLI, and other Western towns.

Yeah, that's true. I was thinking more along the lines of making DEN an east-west connector hub, but on second thoughts, the traffic at SLC is pretty much all point-to-point anyway, since B6 already flies non-stop to JFK from the destinations it flies to on the west coast from SLC.

B6 might be able to make the F9 routes work simply through achieving better economies of scale than F9 can currently achieve on its own. But, they'd probably dump the A318s for sure---no reason to keep those with the E-190s.

I agree with the posts above that a VX buyout of F9 would be horrible, but for different reasons. I suspect F9 must have been next to Skid Row in their financials during the early 07 winter season when DIA completely shutdown due to snow storms. Given F9s one major hub and corporate base is in DEN, given that DIA has no back up customer facilities in case of snowstorms (the closest hotel is 10 miles away from DIA with roads blocked during snowstorms), it's no wonder F9 was still alive at the end of last year. Moreover, F9's international route system, if they still have one, is a complete mismatch to the domestic system. So as previous posts indicate, a VX/F9 buyout given these points is definitely a recipe for another disaster.