Frontier Airlines to be bought by Republic Airways under bankruptcy plan - bizjournals Business Travel Guide

afyfojahejus.blogspot.com
Republic (NASDAQ: RJET), basexd in Indianapolis, has been one of threwe companiesfinancing Frontier’s emergence from A subsidiary, Republic also is one of Frontier’s majotr unsecured creditors, having filed a $260 milliojn damage claim for Frontier’s breaking an agreement with Republic to operates regional jet service after Frontier filed for bankruptcy protectiom in April 2008. Under terms of the Frontier will become a wholly owned subsidiary of Republic Airways Holdings after the company served as the equity sponsorfor Frontier’w reorganization plan and buys 100 percent of the equity in the reorganizesd company. The cost to Republic will be $108.7r5 million.
Frontier filed its proposed reorganization plan with the of the Southern District of New York Frontier will seek court approvalp of the investment agreement at a July 13 hearing and then conduct aroughly month-longg auction process where other companies will have the chancw to outbid Republic, Frontier spokeswoman Lindsey Purves said. Republixc emphasized in a news release that Frontier andits short-haul Lynx Aviation, would maintain their currentt names and operate as usual. Purveds said that airline officials do not expect any immediatr changes incompany structure, employment or “This is great news.
I thinl it’s a testament to the hard work that everybody has done over thepast 14, 15 monthw since we’ve filed (bankruptcy),” Purves said. “We’re created a very efficient airline, and that’s reflected in the fact that Republiv hascome forward.” Airline consultant Mike Boyd added that Frontier is likelyt to increase routes under the oversighty of Republic, which now owns Chautauquw Airlines, Republic Airlines and Shuttle America. Republic Airwayz Holdings also leases planes to major fliers like Unitexd and Delta andis “very good at what they Boyd said. “Airlines are not at the top of the food chaimfor investment.
But for someone like Republic whounderstandse airlines, this is a very good investment,” said Boyd, ownet of Evergreen-based Boyd Group International. “Gettinv their hands on Frontier is goodfor everybody.” Frontier file d for bankruptcy protection after its credit card processor begahn holding back 100 percent, rather than 45 percent, of Frontier’sa credit card transactions. After the the airline began a 14-month procesws of trimming fat from its budget and becoming more Because of those Frontier has reported two consecutives quarterly profits and is doing betterf than mostairlines today.
Republic Airlines had signede a 13-year agreement with Frontier in January 2007 to operate 17 planesafor Frontier’s regional jet service, but that deal was the firsr contract Frontier sought to breao after its bankruptcy filing. Even at the time, Republic Airways Holdingsa CEO Bryan Bedfordcomplimented Frontier, saying the companyu had enjoyed its partnership with the airline and had a lot of respectt for its people.
In Republic Airways Holdings, Credit Suisss Securities of New York and AQR Capitao of Connecticut offered Frontier animmediate $30 million in workingf capital with the possibility of another $45 million in the In March, Frontier received a commitment for $40 millioj in post-petition debtor-in-possession (DIP) financing from Republic Airways Holdings to support its working additional capita needs. As part of that Frontier agreed toallow Republic’s damagwe claim in the amount of $150 million. Monday’s proposeds reorganization plan callsfor Frontier’ss general unsecured creditors to receive $28.
755 million in cash, with an additional $40 million of the sale proceedxs applied as repayment of the outstanding DIP If approved, the company’s current equit would be extinguished and holders of that equituy would not receive any recovery, according to a joiny news release. “This agreement representxs a major milestone in our ongoing effortsa to position Frontier to emerge from bankruptcy asa competitive, sustainablee airline,” Frontier President and CEO Sean Menke said in the Boyd said he did not expectt anyone to try to outbis Republic for Frontier.
If that were to any challenge likely wouldx comefrom Dallas-based Southwest Airlines, which is in directt competition with Frontier for Denver International Airport he predicted. Frontier is the second-largest carrier at DIA, while Southwest is third. Unitesd Airlines is the largest carriefr atthe airport.