Thursday, August 13, 2009

Republic Airways Holdings to be the new owner of Frontier Airlines

by B .N. Sullivan

The news broke just a little while ago: Republic Airways Holdings, Inc. has won in its bid to acquire Frontier Airlines, beating out competitor Southwest Airlines.

"I look forward to welcoming Frontier to our Republic family,” said Bryan Bedford, Chairman, President and CEO of Republic.

Republic Airways"Frontier has made impressive strides in returning to sustained profitability in a challenging and uncertain economic environment. We congratulate the employees of Frontier. Their commitment and perseverance during the bankruptcy process has allowed the Frontier brand to survive and thrive. Now, we have to turn our attention to the important work of integrating two great brands: Frontier and Midwest Airlines, which enjoy strong loyalty in Denver and Milwaukee.”

"We are pleased to have Republic as a plan sponsor,” said Sean Menke, Frontier President and Chief Executive Officer. "Today’s announcement is the beginning of a wonderful new chapter for this proud organization.”

According to a press statement issued by Southwest Airlines, a major stumbling block to their acquiring Frontier was the failure of the pilots' unions of the two carriers to resolve issues related to merging their seniority lists. The Southwest press release said, in part:
One of the contingencies in Southwest's proposal was that labor groups from the two airlines would need to reach an agreement on how the two Pilot Unions (SWAPA and FAPA) would work together. Despite a good faith and diligent effort by all involved, including the top leadership of the Southwest Airlines Pilots Association (SWAPA) and the Frontier Airlines Pilots Association (FAPA), who labored long into the night, the two unions were not able to come to an agreement before the auction deadline. As a result, Southwest’s bid was deemed unacceptable.
Southwest actually bid substantially more money for Frontier than Republic had offered, however the Southwest bid was contingent on settlement of the labor issues. In the end, Republic prevailed.

A Reuters article about the deal quoted John Stemmler, president of the Frontier Airlines Pilots' Association, who said, "It was a long process that's not quite over but I'm happy with the outcome. It happens to be aligned with keeping more jobs and we're very pleased with that."

Upon Frontier's emergence from bankruptcy, 100% of the stock will be purchased by Republic for $108.75 million.