USA TODAY: Southwest Beating Republic to Frontier

[buscap]

In a press release just out from Southwest Airlines, the carrier says:
"Southwest Airlines confirmed today that the carrier is preparing a bid to acquire Denver-based Frontier Airlines, which will be sold at auction in bankruptcy court next month. The carrier has submitted a nonbinding proposal in accordance with the bidding procedures established in the U.S. Bankruptcy Court for the Southern District of New York. The bid is worth a minimum of $113.6 million, which is in excess of the bid currently filed by Republic Airways. Submission of a nonbinding proposal gives Southwest an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal to be submitted by the court’s Aug. 10, 2009, deadline."
In the release, Southwest CEO Gary Kelly says: "We are excited about the opportunity to submit a bid. We see a strong fit between our Company cultures, a mutual commitment to high quality Customer Service, and similar entrepreneurial roots."
The Southwest press release adds that "a successful acquisition of Frontier Airlines will allow Southwest to expand its network with its legendary low fares, add jobs into Southwest, and boost competition in Denver and other cities. Southwest is a qualified investor and is still preparing its proposal; therefore, it is premature to comment on the specifics at this point."
Southwest has a Q&A on the subject posted on its corporate blog. The Q&A is with Ron Ricks, Executive Vice President Corporate Services and Corporate Secretary.
In that Q&A, Ricks says: "Frontier has been in bankruptcy since April 2008, and we’ve been considering a bid for some time, independent of any action Republic took with its bid proposal. In the past month, we began an intensive study of the airline and expressed that interest to Frontier."
More details later today.


Sounds like the republic pilots better get back those corvette down payments.!!!

 

[rf285]

For the sake of Frontier, I hope that SWA wins the bid.

 

[WSurf]

For the sake of Frontier, I hope that SWA wins the bid.

Didn't Southwest buy up ATA? What happened there...

 

[TOOL CRIB]

darn SWA trying to undercut Republic!

 

[donkeykong]

Sounds like the republic pilots better get back those corvette down payments.!!!

you mean the remote control ones, right?

 

[Anonymous2]

In the interest of the great employees of Frontier Airlines, which carrier (between SW & RAH) gives them a better chance of job stability??

 

[buscap]

Southwest is just trying to prevent a viable competitor from developing.

The Airtran guys most likely think this is cool. They would love to get bought by Southwest. Even the senior guys would love it.

 

[inflightboi175]

Dont forget Frontier Airlines has a codeshare agreement with Midwest Airlines now. i wonder how this will effect the agreement with midwest/republic?

 

[samballs]

darn SWA trying to undercut Republic!

Actually overcut. They would have to offer more. Republic only undercuts

 

[Speedtape]

In the interest of the great employees of Frontier Airlines, which carrier (between SW & RAH) gives them a better chance of job stability??

'

Southwest is simply buying out their competition in Denver. The following numbers reflect current traffic pct. of total Denver traffic:

Southwest 13.7% plus Frontier 21.2% for a total of 34.9%.

United carried 34.2%.

Should Southwest succeed, they will immediately control Denver traffic with Frontier's Gates. This would not be good news in Denver for UAL, as Southwest could control pricing and greatly impact UAL.

One only has to look at Southwest's acquisitions in the past to predict what will happen with Frontier. In the past, they bought out Muse Air, MD-80 operator which competed with them in Dallas. They eliminated the aircraft to stay with one type, acquired some of the employees, and reduced their competition. In the purchase of Morse Air, they gained gates in SLC, eliminated 737-200's, acquired some of the employees as new hires, and reduced their competition. The whole investment in ATA, was to eventually gain valuable gate space in Midway, preventing Air Tran from growing that market. They hired no one from ATA.

According other news sources, CEO Kelley states if the acquisition is successful, for a time, Southwest will operate each company separately. As Southwest grows, they may hire Frontier employees to support the growth. This is an indication that Southwest will slowly grow their operation while shrinking Frontier. Based on past practice, they will eliminate the incompatible Airbus, hire some employees as new hires, and effectively gain market share by eliminating a competitor. Over time, Southwest will grow internally, by initially growing externally.

Frontier employees will be eliminated under this plan, but some will be hired as new hires at Southwest. However, UAL will feel the competitive effect, as soon as the acquisition is approved, because Southwest, by gaining an equal market share with prime gates, will quickly erode UAL's market share through aggressive pricing. Southwest will win and air travellers in Denver as well as air travellers across the country will benefit from lower fares. "Ding-Ding, You can now get up and move around the country!"

In summary, Frontier employees, including pilots will not fare well under this acquisition. Some will be offered jobs as new hires. That follows past practice.

 

[Speedtape]

For the sake of Frontier, I hope that SWA wins the bid.

Read my post, please. You may change your position.

 

[Speedtape]

Southwest is just trying to prevent a viable competitor from developing.

The Airtran guys most likely think this is cool. They would love to get bought by Southwest. Even the senior guys would love it.

I would respectfully disagree. History would not support a good outcome for Airtran pilots. I think an acquisition would follow the past practice. In addition, the Air Tran pilots are now ALPA, and Southwest would be forced to follow past practice to eliminate the threat of ALPA.

Although, Airtran operates 737's, they also operate a large number of 717's. Southwest would have no interest in keeping the 717, and it would be eliminated.

Sometimes, you have to be careful what you for what you wish!

 

[atr42flyer]

if SWA gets the bid its the end of frontier. i RAH wins, at least those pilots would have a chance at a fair integration. and we could all work together and collectively raise the bar.

 

[sshrae]

if SWA gets the bid its the end of frontier. i RAH wins, at least those pilots would have a chance at a fair integration. and we could all work together and collectively raise the bar.

I would have to disagree with you there. SWA's intentions are unclear at this point so I think it is a little early to say it would be bad for F9. If they do integrate, its my understanding that the law states there has to be relative seniority integration. After the American TWA debacle that law was passed. If SWA wins this auction its RAH and UA that will lose in this deal for sure. All BB will have is a regional and Midwest, his idea of a big LCC will be lost.

 

[Speedtape]

I would have to disagree with you there. SWA's intentions are unclear at this point so I think it is a little early to say it would be bad for F9. If they do integrate, its my understanding that the law states there has to be relative seniority integration. After the American TWA debacle that law was passed. If SWA wins this auction its RAH and UA that will lose in this deal for sure. All BB will have is a regional and Midwest, his idea of a big LCC will be lost.

Southwest will not be outbid, because they have the most to gain, and the most to lose. There will be no seniority integration. Frontier flies an incompatible aircraft to the Southwest fleet. The only things they bring to the table are gates and market share. There are no laws that apply to integration in this matter between 2 non union carriers. Frontier pilots will get a chance to interview, and if successful, will be newhires at the bottom. Not all Morse Air pilots were hired, and the ones that were went to the bottom as new hires--Morse Air flew 737's but they were 200's, which Southwest did not want because they were retiring the ones that they had.

 

[JumpersAway]

I would hope that the pilots would follow suit and end up at Southwest, but that didn't happen with Morris Air.

 

[Indy319FA]

All BB will have is a regional and Midwest, his idea of a big LCC will be lost.

Bedford also will have a bunch of cash when SWA repays the loans made to Frontier by Republic. Bedford has set this up as a win win situation for himself. He wins if Republic has the best bid, or he wins when the winner has to cut him a check which he can use to invest in Midwest.

 

[dcfu69]

First of all SWA did not buy MORSE AIR. Its MORRIS AIR ( Founded by June Morris and David Neelman in 92). Get your facts straight. And Morris Air had 737-300's. My father was a pilot with Morris Air during the SWA buyout. And I'm sure Citrus guys would love a buyout from SWA.....My old man is now a very senior Capt. with SWA.

 

[dcfu69]

EDIT- SPEEDTAPE.... your right. Actually, it would not be that good for Citrus.

 

[sshrae]

Southwest will not be outbid, because they have the most to gain, and the most to lose. There will be no seniority integration. Frontier flies an incompatible aircraft to the Southwest fleet. The only things they bring to the table are gates and market share. There are no laws that apply to integration in this matter between 2 non union carriers. Frontier pilots will get a chance to interview, and if successful, will be newhires at the bottom. Not all Morse Air pilots were hired, and the ones that were went to the bottom as new hires--Morse Air flew 737's but they were 200's, which Southwest did not want because they were retiring the ones that they had.

You seem pretty sure of yourself. Do you know something GK doesn't know? I don't know what you mean by 2 non-union carriers, they both have unions. The law was not an ALPA law if that is what you mean. It is possible if GK decides to keep them permanently separate that there will be no integration but as far as I know he has not said anything like that publicly, maybe he only told you. He has said that he will phase out the airbus, that is obvious but that does not mean he will phase out the crews.