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Thursday, July 30, 2009

UPDATED: Southwest to bid on acquiring Frontier

Southwest Airlines just announced that it's planning to bid on Frontier Airlines, the Denver-based carrier that's been operating under Chapter 11 bankruptcy protection. Republic Airways, a regional operator, has also submitted a bid for Frontier.

Southwest said it would make a minimum bid of $113.6 million. Republic's bid was for $108.8 million. Southwest indicated it was willing to raise the bid as part of the bankruptcy-court sale process in order to get Frontier's assets. Southwest would keep Frontier's 737 jets, since those are the only aircraft type Southwest now flies, and dispose of Frontier's fleet of Airbus jets.  

As mentioned here earlier, acquisition of Frontier would boost Southwest's operations in Denver, which already is one of its fastest-growing cities. That's one of the key points that Southwest executives made in a conference call with reporters this afternoon. If Southwest acquired Frontier, it would have about a third of the Denver market while United Airlines has about 50 percent, "This is going to be good for competition," said executive vice president Ron Ricks.

There would be little effect any time soon on Southwest's service at PHL or other East Coast airports if it's successful in its Frontier bid, the officials said. Both carriers now fly nonstop between PHL and Denver, as do US Airways and United, so we would probably see an increase in the number of daily depatures between the cities, over time. Ricks and Bob Jordan, Southwest's executive vice president, strategy and planning, said it could take up to two years to completely integrate the operations of the two carriers.

A decision by the U.S. Bankruptcy Court in New York, where the Frontier petition was filed, is expected after receiving binding bids that are due Aug. 10. So stand by for a resolution of this one fairly soon.

Here's one analyst's view of the deal.
Posted by Tom BELDEN @ 1:32 PM  Permalink | Post a comment
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About Tom Belden
Tom Belden has been reporting about Philadelphia International Airport and other air travel subjects for more than 20 years, writing columns for The Inquirer's Travel and Business sections. His reporting (with colleague Craig McCoy) on baggage handling problems in Philadelphia have been credited with helping to improve the system. His previous blog was called Road Warrior. He can reached at tbelden@phillynews.com.
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