Republic Airways Holdings has been declared the winning bidder in the auction to acquire Frontier Airlines and its sister regional airline Lynx Aviation, beating off a late but stiff challenge from Southwest Airlines.
Indianapolis-based Republic has agreed to purchase 100 per cent of the stock of Frontier Airlines’ parent Frontier Holdings upon its emergence from bankruptcy for $108.75 million. After Southwest submitted a cash bid for more than $170 million for Frontier, easily topping Republic’s initial bid, Republic additionally agreed to waive any right to recovery on its $150 million general unsecured claim against Frontier.
It was this move that made Republic’s bid a better bet financially for Frontier’s other creditors than Southwest’s bid, though Southwest’s bid also foundered because the Dallas airline was unwilling to remove from its bid the condition that it would only proceed in buying Frontier if its own pilot labor union and Frontier’s pilot union reached agreement on post-takeover seniority rankings. The two unions did not reach agreement before the auction took place and the New York bankruptcy court where the auction took place accordingly deemed Southwest’s bid unacceptable.
“We said all along that we would only move forward on this deal if it proved to be the right decision for our employees and financially prudent for our company,” says Gary Kelly, Southwest’s chairman, president, and CEO. “We have a mission to preserve and protect our culture and the best interests of our employees, customers, and shareholders.”
Kelly adds: “This was a great opportunity that required us to act fast. A lot of people worked very hard with every intention of making this work. We were fortunate to be in a position to examine the acquisition to see if it was the right decision for Southwest Airlines. We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected. Our congratulations to Republic Airways and Frontier Airlines.”
Including Republic’s now-waived claim, Frontier Holdings reportedly has owed its creditors some $350 million.
Republic Airways Holdings is an airline holding company that owns the regional carriers Chautauqua Airlines, Midwest Airlines, Mokulele Airlines, Republic Airlines and Shuttle America. These airlines offer scheduled passenger service on approximately 1,400 flights daily to 98 cities in 39 states, Canada, Mexico and Jamaica under branded operations at Midwest Airlines and Hawaii’s Mokulele Airlines, and through fixed-fee, airline-service agreements with five major U.S. airlines.
The fixed-fee flights are operated under airline-partner brands, including AmericanConnection, Continental Express, Delta Connection, United Express, and US Airways Express. Republic’s airlines currently employ more than 6,000 people and operate 228 aircraft, most of them Embraer regional jets of various models but also Bombardier regional jets.