FlyinPiker
Incon-fricking-spicuous
- Joined
- Sep 6, 2005
- Posts
- 348
Yeah FAPA acted like scumbags over the last few days, but does anyone care about the fact that Southwest actually got out-bid in all of this?
Republic Tops Southwest's Bid
Republic Airways Holdings Inc. is set to acquire Denver-based discount carrier Frontier Airlines Holdings Inc. after Republic's bid was selected over Southwest Airlines Co. at a bankruptcy-court auction Thursday.
The result represents a victory of David and Goliath proportions for Indianapolis-based Republic, a holding company for regional airlines that is about a 10th the size of Dallas-based Southwest, the country's dominant low-fare carrier measured by revenue.
The win comes after Republic agreed to sweeten its offer for Frontier and Southwest was unable to secure quick union approval from pilots for the proposed tie-up.
Southwest appeared to have the inside track for Frontier after submitting a $170 million bid on Monday. That bid topped an earlier offer of $108.75 million by Republic, which is Frontier's largest unsecured creditor.
But Frontier said late Thursday that Republic ultimately offered "the highest and best bid" after waiving distributions on its original $150 million unsecured claim.
Republic said in a separate statement that it agreed to acquire 100% of Frontier's stock upon its emergence from bankruptcy for $108.75 million, in addition to waiving recovery rights. It plans to run Frontier as a separate subsidiary and maintain Frontier's brand.
Frontier, which entered bankruptcy protection in April 2008, has a fleet of 51 airplanes and flies to 59 destinations in the U.S., Mexico and Costa Rica. Despite its debt woes, the carrier has posted operating profits in each of the last eight months and is the No. 2 carrier in Denver measured by passenger traffic.
Republic operates 228 airplanes and offers flights to 98 destinations through service agreements with several larger airlines. It posted $320 million in revenue in the second quarter and eked out a small profit, unlike many big carriers.
It sees the acquisition as helping it diversify beyond its current business model as a subcontractor to big airlines. Profits have shrunk as major airlines cut their rates and reduce the number of regional airplanes they want in their service.
Last month, Republic acquired ailing Midwest Air Group Inc., a small Milwaukee carrier, from private equity group TPG for $31 million. It also has bought a small airline that plies inter-island routes in Hawaii.
Frontier said it had $379.3 million in secured debt and $92 million in unsecured debt at the end of March.
Southwest is eager to secure new sources of growth amid a stiff recession. After nearly four decades of rapid expansion, its revenue shrank 7.9% to $4.97 billion in the first half of 2009 from the year before.
Acquiring Frontier would have allowed Southwest to more than double its share of passengers at Denver International Airport to nearly 40%, behind only UAL Corp.'s United Airlines. Southwest also would have secured its first international routes, taking over Frontier flights to Mexico and Costa Rica.
But Southwest's bid fell apart after its pilots failed to reach a quick agreement with counterparts at Frontier over seniority, which affects pay and job protections. Southwest had said Monday that any takeover was contingent on such a pact.
"We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected," Gary Kelly, Southwest's chief executive, said in a statement Thursday.
Southwest's bid also would have been contingent on approval from antitrust regulators in an uncertain process that management has acknowledged could have taken months. Republic already has received antitrust clearance.
Southwest has taken other measures in recent months to boost revenue. It recently began flying to Minneapolis/St. Paul and New York's LaGuardia Airport, adding to the more than 60 U.S. cities it serves.
It will begin service to Boston's Logan Airport on Sunday and start flying to Milwaukee in November.
In May, Southwest also began allowing passengers to bring pets aboard for a fee, introduced a charge for unaccompanied minors and doubled the fee for checking in a third or overweight bag.
Management has signaled it might start charging passengers to check in their first and second bags.
Republic Tops Southwest's Bid
Republic Airways Holdings Inc. is set to acquire Denver-based discount carrier Frontier Airlines Holdings Inc. after Republic's bid was selected over Southwest Airlines Co. at a bankruptcy-court auction Thursday.
The result represents a victory of David and Goliath proportions for Indianapolis-based Republic, a holding company for regional airlines that is about a 10th the size of Dallas-based Southwest, the country's dominant low-fare carrier measured by revenue.
The win comes after Republic agreed to sweeten its offer for Frontier and Southwest was unable to secure quick union approval from pilots for the proposed tie-up.
Southwest appeared to have the inside track for Frontier after submitting a $170 million bid on Monday. That bid topped an earlier offer of $108.75 million by Republic, which is Frontier's largest unsecured creditor.
But Frontier said late Thursday that Republic ultimately offered "the highest and best bid" after waiving distributions on its original $150 million unsecured claim.
Republic said in a separate statement that it agreed to acquire 100% of Frontier's stock upon its emergence from bankruptcy for $108.75 million, in addition to waiving recovery rights. It plans to run Frontier as a separate subsidiary and maintain Frontier's brand.
Frontier, which entered bankruptcy protection in April 2008, has a fleet of 51 airplanes and flies to 59 destinations in the U.S., Mexico and Costa Rica. Despite its debt woes, the carrier has posted operating profits in each of the last eight months and is the No. 2 carrier in Denver measured by passenger traffic.
Republic operates 228 airplanes and offers flights to 98 destinations through service agreements with several larger airlines. It posted $320 million in revenue in the second quarter and eked out a small profit, unlike many big carriers.
It sees the acquisition as helping it diversify beyond its current business model as a subcontractor to big airlines. Profits have shrunk as major airlines cut their rates and reduce the number of regional airplanes they want in their service.
Last month, Republic acquired ailing Midwest Air Group Inc., a small Milwaukee carrier, from private equity group TPG for $31 million. It also has bought a small airline that plies inter-island routes in Hawaii.
Frontier said it had $379.3 million in secured debt and $92 million in unsecured debt at the end of March.
Southwest is eager to secure new sources of growth amid a stiff recession. After nearly four decades of rapid expansion, its revenue shrank 7.9% to $4.97 billion in the first half of 2009 from the year before.
Acquiring Frontier would have allowed Southwest to more than double its share of passengers at Denver International Airport to nearly 40%, behind only UAL Corp.'s United Airlines. Southwest also would have secured its first international routes, taking over Frontier flights to Mexico and Costa Rica.
But Southwest's bid fell apart after its pilots failed to reach a quick agreement with counterparts at Frontier over seniority, which affects pay and job protections. Southwest had said Monday that any takeover was contingent on such a pact.
"We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected," Gary Kelly, Southwest's chief executive, said in a statement Thursday.
Southwest's bid also would have been contingent on approval from antitrust regulators in an uncertain process that management has acknowledged could have taken months. Republic already has received antitrust clearance.
Southwest has taken other measures in recent months to boost revenue. It recently began flying to Minneapolis/St. Paul and New York's LaGuardia Airport, adding to the more than 60 U.S. cities it serves.
It will begin service to Boston's Logan Airport on Sunday and start flying to Milwaukee in November.
In May, Southwest also began allowing passengers to bring pets aboard for a fee, introduced a charge for unaccompanied minors and doubled the fee for checking in a third or overweight bag.
Management has signaled it might start charging passengers to check in their first and second bags.
