Republic buys Frontier and Midwest

I can't think of a time when an airline company has purchased two airlines in as many days, but that's what has happened, now that Republic Airways Holdings has agreed to not only purchase Denver-based Frontier Airlines, but also long-struggling Midwest Airlines. If it wants to pull off the hat trick, then all it needs to do is purchase one more airline.

You might not have heard of Republic before - and that's not surprising, since the airline doesn't fly under that name but under three brands: Chautauqua Airlines, Shuttle America, and Republic Airlines. Still haven't heard of any of those? That's because they're the ones who do some of the flying for the regional airline brands, like United Express, Delta Connection, US Airways Express, AmericanConnection, and Continental Express. Republic Airways has been pretty successful, because of the increase in regional airline flying and the fact that their labor costs are relatively low (flight crews aren't as senior, meaning they aren't paid as much).

Under the terms of the first deal, Frontier, which has been stuck in Chapter 11 bankruptcy for more than a year, would walk out of bankruptcy court as a fully-owned subsidiary of Republic, but keep flying under its own name. Of course, the deal's not final yet - if another company places a higher bid for Frontier next month at a bankruptcy auction, or if the bankruptcy court turns the deal down, then the takeover wouldn't be completed.

Why did Republic go after Frontier? One scenario claims that Republic, which does some flying under the United Express banner, could turn around and sell Frontier's assets to United Airlines, which competes head-on with Frontier at Denver.

As for Midwest - well, let's just say that the writing's been on the wall for quite some time now. The airline is a sad shell of its former self - remember when they had all of those DC-9s and MD-80s and the nice seats and good food? Last year, Republic loaned Midwest $25 million - a lifeline that helped it stay out of bankruptcy, but one that by no means helped the overall financial situation. The airline fought off a takeover attempt by AirTran last year, but times have since gotten a lot more tough.

The airline was recently sued after falling behind on aircraft payments, and it would have had to have faced the prospect of going up against not only AirTran but now Southwest at its Milwaukee hub, so it's got to be pretty good for Midwest that Republic stepped in. The current plan is to have Midwest continue under its own brand name, just like Frontier, but the 717s will be ditched in favor of Embraer 190s.

photo by E-Mans from Flickr, licensed under the Creative Commons


Anonymous said...

why is the world would frontier airlines want to be purchased by republic? in all the local newspapers, the print says frontier is doing better and better;but exactly what kind of a deal is republic giving the higher-ups at frontier so it will abandon its current place in the denver airlines situation---it just does not figure to be sensible in the eye of the consumer not the eye of the investor.