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Republic Airways Announced as Winning Bidder in Auction of Frontier Airlines

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Looks like they chose the immediate job security, rather than become southwest with some furloughs. Pilots will never learn. Oh well at least now we'll see Frontier colored E190s rather than puke colored ones.
 
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Here's the article from CNBC...

By Deepa Seetharaman NEW YORK/ATLANTA, Aug 13 (Reuters) - Republic Airways Holdings won its bid to buy bankrupt Frontier Airlines Holdings Inc for $108.75 million after a day-long auction in bankruptcy court late Thursday. Republic beat out heavy favorite Southwest Airlines Co who waded into the mix in late July and ultimately submitted a binding offer of $170 million. Labor issues between pilots' unions at Southwest and Frontier played a part in bogging down a deal. An agreement between the two parties was a necessary condition of the Southwest bid. "It was a long process that's not quite over but I'm happy with the outcome," said John Stemmler, president of the Frontier Airlines Pilots' Association, of Republic's win. "It happens to be aligned with keeping more jobs and we're very pleased with that." Republic improved upon its bid by agreeing to waive recovery rights on its $150 million general unsecured claim, a move expected to boost the distribution to Frontier's unsecured creditors by 94 percent, Frontier said in a release. Indianapolis-based Republic was Frontier's largest unsecured creditor. "Republic submitted the highest and best bid, which included substantial improvements from its original investment proposal," Frontier said in its statement. LABOR ISSUES; THE 'NEW REPUBLIC' Industry experts had by and large expected Southwest to win the auction, a move that would have grown its presence in Denver and allowed it to explore international routes. Southwest said a key reason its bid wasn't chosen was because it chose not to remove a requirement calling for pilot unions at its company and Frontier to reach agreement. Pilots for Southwest and Frontier were in talks until nearly midnight Wednesday, but seniority remained a major sticking point between the two groups. Stemmler said FAPA and Republic's pilots, who are Teamsters, have not yet discussed senority terms. Republic, which runs regional flights with large airline partners, first reached a deal to buy Frontier earlier this summer. Its plan provides for Frontier and its subsidiary Lynx Aviation to operate as subsidiaries of the overall company. "As the regional airline industry feels the pain of their network airline customers' challenges, many will watch the "New Republic" closely to see if this is the new model for the industry," said Oliver Wyman consultant Andrew Watterson. Frontier, which filed for Chapter 11 bankruptcy protection in April 2008, said it expected to emerge from Chapter 11 in the autumn. The case is In re: Frontier Airlines Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 08-11298. (Reporting by Karen Jacobs and Deepa Seetharaman; editing by Carol Bishopric) Keywords: FRONTIER/SOUTHWEST ([email protected]; +1 404 493-3656; Reuters Messaging: [email protected]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.
The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.


Trojan
 
heres another article from the chicago tribune

JOSHUA FREED AP Airlines Writer 8:42 p.m. CDT, August 13, 2009



Republic Airways Holdings won the bankruptcy court auction for Frontier Airlines on Thursday, buying the Denver-based carrier for almost $108.8 million after Southwest Airlines Co.'s rival bid was rejected.

Southwest said its $170 million bid was deemed unacceptable because the carrier would not back down from a requirement that its pilots and Frontier's work out their integration before the deal would close.

Frontier said Republic made several improvements to its original June bid and has already received federal antitrust approval for the deal. A bankruptcy judge had approved Republic's earlier bid but left open the door for another bidder.

Frontier said the plan calls for it and regional unit Lynx "to maintain normal operations" as a stand-alone Republic subsidiary. Because of that, Denver travelers may see little change. But the deal is huge for Republic.

Until now, Indianapolis-based Republic has strictly been an operator of regional jets for big airlines like Delta, United, and US Airways. Now, between Frontier and its recent purchase of Milwaukee-based Midwest Airlines, it's jumping into the business of competing for passengers and setting its own schedules and prices.

That may not be so bad, said Jesup & Lamont Securities Co. airline analyst Helane Becker.

Republic is well-run, she said, and anyway the old regional airline model is suffering as big carriers squeeze their regional partners and cut capacity, including regional flights.

"The major airlines can just crush these guys like a bug" in the regional business, she said.

Republic's bid has it buying all of Frontier Holdings when that company emerges from Chapter 11 protection, which is expected later this year. It also agreed to waive any recovery on its $150 million general unsecured claim. The plan calls for current Frontier shareholders to receive nothing.

"Frontier has made impressive strides in returning to sustained profitability in a challenging and uncertain economic environment," Republic Chairman, President and CEO Bryan Bedford said in a written statement.

Republic had loaned money to Frontier during its Chapter 11 reorganization, which began in April 2008. In June it offered to buy Frontier out of bankruptcy.

Southwest's surprise bid, which eventually reached $170 million including repayment of Republic's loan, looked likely to win. Southwest had enough cash to simply write a check for Frontier, and it had the motive. Southwest has turned Denver into one of its key airports, but it faced strong competition both from Frontier and UAL Corp.'s United, which has a hub there. Buying Frontier would have eliminated one of those competitors outright.

In a written statement, Southwest Chairman, President and CEO Gary Kelly called the potential Frontier deal "a great opportunity that required us to act fast. A lot of people worked very hard with every intention of making this work."

But in making its bid Southwest insisted that pilots agree first on how they would integrate their so-called seniority list, the ranking that determines pilot scheduling and layoff order.

The same issue delayed Delta Air Lines Inc.'s purchase of Northwest last year, and it has held up the integration of US Airways Group Inc., which was purchased out of bankruptcy protection in 2005 by America West but still doesn't have a merged pilot workforce.

Negotiations between Southwest and Frontier pilots took place by video-conference on Wednesday, according Carl Kuwitzky, president of the Southwest Airlines Pilots' Association. They broke off around midnight. Kuwitzky said the Southwest pilots wanted the Frontier aviators put at the bottom of the seniority list. For pilots in an airline merger, that's considered the worst possible outcome.

"Seniority is all-important. Seniority is life," Frontier Airline Pilots Association President John Stemmler said on Thursday night after Republic won the bidding.

"I'm pleased that the process worked the way it did. I think both of the options had their advantages for the pilot group," he said. "The Republic deal allows for our entire active pilot group to remain employed, and that's a good thing."
 
Whatever they do with them, Republic is just dragging them to the bottom. Sorry to hear for you Frontier guys.



The standard decision for anyone in this industry or any airline for that matter. To choose what's best for themselves/their airline(s) at this time.
 
MMMMM...I see alot of insults about RAH all over the forums. Have to admit, Bedford beat WN, he had the ace up his sleeve, $150 million loan, which is denied WN further access into DEN, allows a great airline and great group of employees to live on.

WN....when will you learn,, you went after US when it was struggling in PHL, and lost. And now DEN
 
No idea how things will end upfor Frontier guys and gals at Republic, but here are some parts of the plan as stated by Bedford upon his initial bid:

- He wants to operate F9 separate from RAH (the reality is F9 pilots will end up integrated after a hotly contested arbitration, but F9 pilots will likely get fences put around the Airbus, thus keeping some separation)

- He wants to extend the current F9 labor contract for three more years. (this means that F9 pilots will keep their pay for a while, by which time RAH should have a new contract that, with help from the F9 pilots and YX pilots, will help keep good pay for the Airbus, and get the 190 up to levels that are not insultingly low)

- He has no set plan for Lynx (probably business as usual for the Lynx guys, since those routes provide valuable feed to F9 and help distinguish F9 from SW and UA in Denver)

- He wants unlimited scope relief from the F9 pilots regarding the E190 (He wants to sell SOME of the Airbii, and replace thinner routes with the E190. Also, future expansion will come in the form of the 190, and be flown on the Republic certificate, not the F9 certificate. F9 pilots will be forced to transition over, based on the seniority integration, to other RAH aircraft as the sold Airbii go away)

I am sure the Midwest/Frontier codeshare will remain, as it is really just Bedford selling tickets on his own aircraft, regardless of which brand people buy. I do think that the long term plan is to put an end to the Midwest name, and assimilate Midwest operations into Frontier ops. This codeshare is just the first step, where Midwest passengers have the opportunity to become familiar with the frontier product if they connect onto Frontier. It will probably take a couple years to complete, but there are huge cost savings in only running one fare-charging airline compared to two.
 
When are the contracts w/ DL and UAL up for renewal? I can't imagine them being happy paying the competition especially in DEN.
 
The way I see it, the codeshare partners are happy because they have an ally blocking access and future large growth from SWA and doing further damage. I believe at this point, the airlines are playing a chess game to close out the LLCs from various markets. Who knows what these CEOs are doing. For all we know, they could be all sitting around at a country club smoking cigars and masterminding all this while we fight and bicker between ourselves.
 
The way I see it, the codeshare partners are happy because they have an ally blocking access and future large growth from SWA and doing further damage. I believe at this point, the airlines are playing a chess game to close out the LLCs from various markets. Who knows what these CEOs are doing. For all we know, they could be all sitting around at a country club smoking cigars and masterminding all this while we fight and bicker between ourselves.

Yes, a quote from Bedford " It's kinda fun to watch"
 
They are playing chess........We are playing checkers....
 

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