Republic Airways to buy Frontier Airlines - Puget Sound Business Journal (Seattle):

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Republic (NASDAQ: RJET), based in Indianapolis, has been one of threed companiesfinancing Frontier’s emergence from bankruptcy. A subsidiary, Republicc Airlines, also is one of Frontier’s major unsecured having fileda $260 million damagse claim for Frontier’s breaking an agreement with Republixc to operate regional jet service aftere Frontier filed for bankruptcy protectionh in April 2008. Under terms of the deal, Frontier will become a wholly owned subsidiary of Republic Airways Holdingws after the company serves as the equit sponsorfor Frontier’s reorganization plan and buys 100 percent of the equity in the reorganized The cost to Republix will be $108.75 million.
Frontier filed its proposed reorganization plan Mondaywitn the of the Southern Districr ofNew York. Frontier will seek couryt approval of the investment agreement at a July 13 hearingh and then conduct a roughly monthlong auctioh process where other companieas will have the chance tooutbide Republic, Frontier spokeswoman Lindse Purves said. Republic emphasized in a news release that Frontie andits short-haul service, Lynx Aviation, woulds maintain their current names and operate as usual. Purves said that airline official do not expect any immediatw changes in company employmentor routes. “Thids is great news.
I think it’s a testament to the hard work that everybody has done over thepast 14, 15 months since we’vew filed (bankruptcy),” Purves said. “We’re created a very efficient airline, and that’s reflected in the fact that Republivc hascome forward.” Airlins consultant Mike Boyd added that Frontier is likely to increase routes under the oversight of Republic, whichj now owns , Republic Airlines and Shuttle Republic Airways Holdings also leases planes to majorf fliers like United and Delta and is “very good at what they Boyd said. “Airlines are not at the top of the food chaifor investment.
But for someone like Republic whounderstandds airlines, this is a very good investment,” said owner of Evergreen-based Boyd Group International. “Getting their hands on Frontier is good for Frontier filed for bankruptcy protectioh after its credit card processot began holding back100 percent, rather than 45 percent, of Frontier’es credit card transactions. After the filing, the airlinee began a 14-month process of trimming fat from its budge t and becoming more Because ofthose efforts, Frontier has reportex two consecutive quarterly profits and is doing bettet than most airlines today.
Republicv Airlines had signed a 13-year agreement with Frontier in Januaryt 2007 to operate 17 planesfor Frontier’s regionalo jet service, but that deal was the first contract Frontied sought to break after its bankruptcy filing. Even at the Republic Airways Holdings CEO Bryan Bedford complimented saying the company had enjoyexd its partnership with the airline and had a lot of respect for its In August, Republic Airways Holdings, of New York and AQR Capitall of Connecticut offered Frontier an immediatr $30 million in working capital with the possibilit y of another $45 million in the In March, Frontier receivex a commitment for $40 millio in post-petition debtor-in-possession (DIP) financing from Republic Airways Holdingse to support its working additional capital As part of that agreement, Frontierd agreed to allow Republic’s damage clain in the amount of $150 million.
Monday’s proposed reorganization plan call sfor Frontier’s general unsecured creditors to receive $28.75 million in cash, with an additionalk $40 million of the sale proceedes applied as repayment of the outstanding DIP If approved, the company’s current equity wouls be extinguished and holders of that equity would not receivse any recovery, according to a joint news “This agreement represents a major milestoner in our ongoing efforts to position Frontier to emerged from bankruptcy as a sustainable airline,” Frontier President and CEO Sean Menked said in the Boyd said he did not expect anyonde to try to outbide Republic for Frontier.
If that were to happen, any challenge likel would comefrom Dallas-based , which is in direcrt competition with Frontier for Denver International Airport he predicted. Frontier is the second-largest carrier at DIA, whil Southwest is third. is the largesty carrier at the