(RJET) Republic Airways Holdings Buys Frontier Airlines

October 6th, 2009

Republic Airways Holdings (RJET) has announced completion of acquisition of Frontier Airlines Holdings Inc. This was pursuant to the latter’s bankruptcy reorganization plan.

According to the investment agreement, Republic has purchased 100% of the stock of Frontier Holdings for $108.75 million. With this acquisition, Frontier has become a wholly owned subsidiary of Republic Airways, which intends to operate Frontier as a stand-alone airline under its own name.

Republic is looking for moving Frontier’s operations out of Denver where it faces competition from United Airlines (UAUA) as well as discounter Southwest Airlines (LUV).

Frontier Airlines had filed for bankruptcy protection in April 2008. The Denver-based airline went into trouble due to a cash squeeze caused by its credit card processing company, First Data Corp, which has decided to keep a larger chunk of the airline’s ticket revenue. However, Frontier maintained its profitability by shedding jets and cutting costs and jobs. The air carrier has a fleet of 51 airplanes and services routes primarily in the Western states.

Republic, which also owns regional Chautauqua, Midwest and Republic airlines as well as Shuttle America, hopes to enter into the low-fare national carrier business with its purchase of Frontier.

Southwest Airlines was also a bidder to acquire Frontier airlines. Though Southwest had offered a much higher bid, its pilots couldn’t come to a labor agreement with the Frontier pilots.

Republic Airways operates as Midwest Airlines and Mokulele airlines, as well as a whole list of feeder airlines like Delta Connection and United Express. The airline currently operates 228 airplanes and flies 1,400 flights daily.

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Read more on Republic Airways Holdings, Frontier Airlines Holdings, Airlines at Wikinvest

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