Wed, Aug 12, 2009
$61 Million Above Republic Bid
Southwest Airlines
says it will pony up $170M to rescue struggling Frontier Airlines
from bankruptcy, a figure far above the nearly $109 million
Republic Airways Holdings said it was willing to pay. Southwest
competes with Frontier from their mutual hub in Denver.
Buying Frontier would add several cities to Southwest's
routes,and eliminate that level of competition. The Associated
Press reports that an analysis by airline analyst Darryl Jenkins of
The Airline Zone shows the move would give Southwest 36 percent of
Denver passengers, compared to United's 37 percent.
Southwest said it would keep all of Frontier's current markets,
including Atlanta, if it is the successful bidder. It would also
gradually replace Frontier's Airbus fleet in favor of the Boeing
737's flown by Southwest. The bid includes Frontier's Lynx regional
carrier.
While Republic appears
to be well outbid, a company spokesman says the two offers are not
as far apart as it seems on the surface. Aircraft lease rejections
and other expenses make the bids actually far more competitive than
the raw numbers would indicate. But another industry analyst,
Helane Becker, of Jesup & Lamont Securities Co., told AP that
Republic has less than $100 million in cash, and that Southwest was
prepared to write a check for Frontier.
AP reports that a bankruptcy judge has already approved
Republic's bid for Frontier, and that Southwest could run into
ant-trust issues because of the competitive situation in Denver.
Southwest had made a much lower "placeholder" bid last month, but
came back with the higher figure after it had a chance to look at
Frontier's financial situation.
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