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Southwest bid for Frontier tops $170 million

10th August 2009 - 19:57 GMT | by The Shephard News Team


Southwest Airlines has submitted its binding cash offer of more than $170 million to acquire Frontier Airlines, which will be sold at auction as part of Frontier's bankruptcy case.

The bid was submitted to Frontier in accordance with the procedures established in the US Bankruptcy Court for the Southern District of New York. Over the next week, Southwest will discuss its offer with the various interested parties.

The auction is expected to begin on Thursday 13 August. Once the auction is concluded, the bankruptcy court must still approve the selection of the winning bidder. From there, the bid will undergo review by the United States Department of Justice, which is normal and customary when one airline is purchasing another.

Southwest says it is premature to release the complete details of its offer, which may change during the auction process before a winning bid is approved by the bankruptcy court. The offer contemplates that Southwest acquire approximately 80% of Frontier's existing Airbus fleet, which translates into about 40 aircraft, plus all of Lynx.

Initially, Frontier would operate its Airbus aircraft as it does today, with a planned retirement of the Airbus fleet and transition to Southwest's Boeing 737s over a period of approximately 24 months. Despite the initial reduction in the fleet, Southwest says it intends to maintain all existing markets, as well as add new nonstop routes from Denver that are not served by either Southwest or Frontier today.

"We believe our bid ultimately should be seen as the strongest offer by all interested parties, including Frontier, its creditors, employees, and customers," said Gary Kelly, Southwest's chairman of the board, president, and CEO. "Southwest is a financially stable company, and through this acquisition, will continue to provide Denver its historically low fares into the future. Frontier is up for sale. The bankruptcy process will lead to change at Frontier in any scenario. Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest, and the travelling public. A successful acquisition of Frontier Airlines by Southwest will expand a network of legendary low fares to additional cities, add jobs into Southwest through growth, and strengthen low-fare competitive pressure in Denver and other cities."

The last officially announced competing bid is of $108 million by Republic Airways Holdings.

The Shephard News Team


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