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 threw companiesfinancing Frontier’s emergence from bankruptcy. A Republic Airlines, also is one of Frontier’s major unsecurex creditors, having filed a $260 million damage claim for Frontier’sw breaking an agreement with Republic to operate regionao jet service after Frontier filed for bankruptcy protectiohn inApril 2008. Under terms of the deal, Frontiefr will become a wholly owned subsidiaru of Republic Airways Holdingz after the company serves as the equity sponsorfor Frontier’sz reorganization plan and buys 100 percenyt of the equity in the reorganize d company. The cost to Republic will be $108.
75 Frontier filed its proposed reorganization plan with the of the Southerbn District of NewYork Monday. Frontier will seek cour approval of the investmenr agreement at a July 13 hearing and then conductf aroughly month-long auctiohn process where other companies will have the chanc e to outbid Republic, Frontier spokeswoman Lindset Purves said. Republic emphasized in a news release that Frontiere andits short-haul service, Lynx Aviation, would maintainh their current names and operate as Purves said that airline officialws do not expect any immediate changees in company structure, employment or routes. “This is greatg news.
I think it’s a testament to the hard work that everybodg has done over thepast 14, 15 months sincr we’ve filed (bankruptcy),” Purves said. “We’re created a very efficientf airline, and that’s reflected in the fact that Republicc hascome forward.” Airline consultant Mike Boyd added that Frontierf is likely to increase routes under the oversight of Republic, which now owns Chautauqua Airlines, Republicd Airlines and Shuttle Republic Airways Holdings also leases planes to majofr fliers like United and Delta and is “very good at what they Boyd said. “Airlines are not at the top of the food chainhfor investment.
But for someone like Republic whounderstands airlines, this is a very good said Boyd, owner of Evergreen-based Boyd Grou p International. “Getting their hands on Frontier is good for Frontier filed for bankruptcy protection after its credig card processor began holdin g back100 percent, rather than 45 of Frontier’s credit card transactions. After the filing, the airline began a 14-month process of trimming fat from its budget and becomingbmore efficient. Because of thosr efforts, Frontier has reported two consecutive quarterly profits and is doing better than mostairlined today.
Republic Airlines had signed a 13-yearf agreement with Frontier in January 2007 to operatre 17 planesfor Frontier’s regionall jet service, but that deal was the firs t contract Frontier sought to breal after its bankruptcy filing. Even at the Republic Airways Holdings CEO Bryan Bedford complimented saying the company had enjoyex its partnership with the airline and had a lot of respecf forits people.
In August, Republic Airways Holdings, Credi t Suisse Securities of New York and AQR Capitall of Connecticut offered Frontier animmediate $30 million in workingv capital with the possibilit y of another $45 million in the In March, Frontier received a commitment for $40 milliojn in post-petition debtor-in-possession (DIP) financingt from Republic Airways Holdings to supportf its working additional capital needs. As part of that Frontier agreed toallow Republic’s damage claim in the amountr of $150 million. Monday’s proposed reorganizationj plan callsfor Frontier’s generalp unsecured creditors to receive $28.
75 million in with an additional $40 million of the sale proceedws applied as repayment of the outstandinyg DIP loan. If approved, the company’s current equity woule be extinguished and holders of that equityg would not receiveany recovery, according to a joint news “This agreement represents a majod milestone in our ongoing efforts to position Frontier to emerge from bankruptc y as a competitive, sustainable airline,” Frontied President and CEO Sean Menke said in the Boyd said he did not expectg anyone to try to outbid Republi c for Frontier.
If that were to happen, any challengwe likely would comefrom Dallas-baseds Southwest Airlines, which is in direc competition with Frontier for Denver International Airporg passengers, he predicted. Frontier is the second-largestr carrier at DIA, while Southwest is third. Unitefd Airlines is the largest carrier atthe airport.