Republic Reaches Deal To Acquire Frontier
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Andrew Compart andrew_compart@aviationweek.com
Republic Airways Holdings could acquire Denver-based low-cost carrier Frontier for $108.75 million and clear the way for Frontier to emerge from Chapter 11 bankruptcy protection later this year, under an investment agreement reached by the carriers.
Part of that $108.75 million would go to pay off a $40 million debtor-in-possession loan provided by Republic, and Frontier's general unsecured creditors would receive $28.75 million in cash, the airlines disclosed in a press release and court filings late June 22. Frontier would become a wholly owned subsidiary of Republic.
The bankruptcy court still must approve the deal, and Republic still could be outbid: Frontier will leave the door open for higher and better proposals under a court-supervised auction. Frontier said it will seek court approval of the Republic investment agreement and proposed auction procedures at a court hearing July 13.
Either way, Frontier, which has been in Chapter 11 since April 2008, said it expects to conclude the court-supervised auction and emerge from bankruptcy by this autumn.
If the Republic deal goes through, it would move Indianapolis-based Republic Airways Holdings into a new realm. Currently, it provides regional airline services, provided by subsidiaries Republic, Chautauqua and Shuttle America.
Republic recently acquired a 50% stake in and taken control of Hawaiian carrier Mokulele. But that doesn't compare to taking over a carrier the size and nature of Frontier, which offers a majority of its service with mainline aircraft, although it also has a regional subsidiary, Lynx Aviation.
Upon emergence from bankruptcy, Frontier and Lynx would maintain their names and continue to operate as usual, the carriers said. In bankruptcy court filings about the plan, Frontier said its post-emergence strategy would be to continue to position Frontier as one of the industry's lowest unit-cost operators, and that it would continue its plans to transition from Airbus A318 aircraft to A320 aircraft.
Frontier said its goal would be to maintain its unit-cost advantage over primary competitors United and Southwest in Denver, and to capture the largest market share there.
Photo credit: Airbus
