Frontier Airlines to be bought by Republic Airways under bankruptcy plan - Dayton Business Journal:

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Republic (NASDAQ: RJET), based in Indianapolis, has been one of threed companiesfinancing Frontier’s emergence from A subsidiary, Republic Airlines, also is one of Frontier’s majod unsecured creditors, having filed a $260 million damage claim for Frontier’s breakingg an agreement with Republic to operatwe regional jet service afterf Frontier filed for bankruptcy protection in April 2008. Undeer terms of the Frontier will become a wholly owned subsidiary of Republicf Airways Holdings after the company servess as the equity sponsorfor Frontier’s reorganization plan and buys 100 percent of the equituy in the reorganized company. The cost to Republicc will be $108.
75 million. Frontier filedd its proposed reorganization plan with the of the Southern District of NewYork Monday. Frontier will seek court approva l of the investment agreement at a July 13 hearing and then conducg aroughly month-long auction process where other companiese will have the chance to outbid Republic, Frontiet spokeswoman Lindsey Purves said. Republic emphasized in a news released that Frontier andits short-haul service, Lynx Aviation, would maintainm their current names and operate as Purves said that airline officials do not expecf any immediate changes in company structure, employmentt or routes. “This is great news.
I think it’w a testament to the hard work that everybodh has done over thepast 14, 15 months sinc e we’ve filed (bankruptcy),” Purvess said. “We’re created a very efficient airline, and that’s reflected in the fact that Republic has come Airline consultant Mike Boyd adde that Frontier is likelg to increase routes under the oversightof Republic, whicjh now owns Chautauqua Airlines, Republic Airlinee and Shuttle America. Republic Airways Holdings also leases planes to majore fliers like United and Deltaq andis “very good at what they do,” Boyd “Airlines are not at the top of the food chainb for investment.
But for someone like Republic whounderstands airlines, this is a very good investment,” said Boyd, ownetr of Evergreen-based Boyd Group International. “Getting theirf hands on Frontier is good for Frontier filed for bankruptcy protection after its credit card processofr began holding back100 percent, rathefr than 45 percent, of Frontier’s credit card After the filing, the airline begamn a 14-month process of trimming fat from its budget and becominh more efficient. Because of thosse efforts, Frontier has reported two consecutive quarterlu profits and is doing betteer than mostairlines today.
Republixc Airlines had signed a 13-year agreementy with Frontier in January 2007 to operate 17 planexsfor Frontier’s regional jet service, but that deal was the firstr contract Frontier sought to brea after its bankruptcy Even at the time, Republic Airwaye Holdings CEO Bryan Bedford complimented Frontier, sayinh the company had enjoyed its partnership with the airline and had a lot of respectf for its people.
In Republic Airways Holdings, Credit Suisse Securitiesz of New York and AQR Capital of Connecticut offeresd Frontier animmediate $30 million in workin g capital with the possibility of another $45 million in the In March, Frontier received a commitment for $40 millioh in post-petition debtor-in-possession (DIP) financing from Republic Airways Holdings to support its workiny additional capital needs. As part of that agreement, Frontieer agreed to allow Republic’s damage claim in the amountt of $150 million. Monday’s proposefd reorganization plan callsfor Frontier’s generakl unsecured creditors to receive $28.
75 millionj in cash, with an additional $40 million of the sale proceedw applied as repayment of the outstanding DIP loan. If the company’s current equity woulds be extinguished and holders of that equityy would not receiveany recovery, accordingg to a joint news release. “This agreemenr represents a major milestone in our ongoing efforts to position Frontier to emerge from bankruptcy as a sustainable airline,” Frontier President and CEO Sean Menkd said in the release. Boyd said he did not expect anyone to try to outbid Republicfor Frontier.
If that were to happen, any challenges likely would comefrom Dallas-based Southwes Airlines, which is in direct competition with Frontier for Denver International Airport passengers, he predicted. Frontief is the second-largest carrier at DIA, while Southwest is United Airlines is the largest carried atthe airport.