Indigo to Acquire Frontier Airlines

mikecweb

Well-Known Member
http://on.wsj.com/1bodMlb
The man who turned Spirit Airlines Inc. SAVE -0.38% into one of the industry's stingiest but most profitable carriers agreed in principle to buy Denver-based Frontier Airlines, a transaction that likely signals the expansion of the ultralow-cost sector of the U.S. airline industry, according to a person familiar with the deal.

Indigo Partners LLC, the investment firm of Bill Franke, agreed late Monday to purchase Frontier from Republic Airways Holdings Inc. RJET -5.37% in a deal largely based on the assumption of debt, the person said. The agreement was being reviewed by lawyers overnight and was expected to be announced early Tuesday, the person said. The exact terms were unclear.

The sale appeared in jeopardy in recent days because of slow negotiations with Frontier's pilots and flight attendants. But hours before the expiration of Indigo's period of exclusive negotiations to buy Frontier, the two sides agreed to a deal in principle that is subject to a number of conditions, including a labor agreement with the pilots, the person said.

The groups representing the attendants and pilots in those negotiations with Indigo didn't respond to requests for comment.

Allegiant Travel Co. ALGT -0.68% have used the ultralow-cost model to become two of the fastest-growing and highest-margin carriers in the industry.

Frontier, the 10th-largest airline in the U.S. by seats, is roughly the size of Spirit. Each has just more than 50 aircraft and about 1 million seats for sale in October, or approximately 1.5% of the U.S. domestic market, according to Innovata LLC, an airline data provider.

United Continental Holdings Inc.UAL -0.65% and Southwest Airlines Co. LUV -0.55%

Savanthi Syth, an airline analyst for Raymond James Financial Inc., RJF -0.69% said the new Frontier would likely turn its focus away from Denver. "I don't think he'll be able to do it as hub and spoke out of Denver," she said. "So that'll be positive for United and Southwest."

The advent of a third ultralow-cost carrier in the U.S. signals the further segmentation of the U.S. airline industry into three tiers, she said. Full-service carriers like United and Delta Air Lines Inc. DAL +0.08% cater to business travelers and frequent fliers. Discounters like Southwest and JetBlue Airways Corp. offer a quality product for a reasonable price. And Spirit and Allegiant look to stimulate traffic with bare-bones service and the lowest fares.

"These are people who don't need the frills and don't mind flying at odd times of the day," she said. "And there appears to be a significant enough market that Spirit and Frontier can share."
 
the general feel over here at RAH is that this is a good thing...

but the possibility of reducing/closing Denver? whoa
 
WOW! Close DEN as a hub?

I get the feeling they want to ditch the hub and spoke thing entirely, not just ditch DEN. They'll probably end up like Allegiant, expanding on exisiting leisure routes like the Mexican destinations from PHL, STL, ect and adding routes to new markets. Hopefully this saves Frontier.

Seeing as there is still at least one RAH E-190 flying around in Midwest colors, I wonder how many years until the Frontier branded jets get re-painted.
 
Me wonders if they will go to one of the recently abandoned airports that have no service like PIT, CVG, MEM, Etc. I'd welcome MSP, more home basing options!
With that said I hope they don't leave DEN and make everyone commute.
 
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Me wonders if they will go to one of the recently abandoned airports that have no service like PIT, CVG, MEM, Etc. I'd welcome MSP, more home basing options!
With that said I hope they don't leave DEN and make everyone commute.
I wouldn't be surprised to see the new Frontier do some leisure routes from MSP alongside Delta and Sun Country. Especially since Sun Country only serves most of its destinations seasonally and weekly or bi-weekly at that. PIT and CVG could be good candidates for the leisure model too with few carriers to go up against, and a decent "snow bird" demand. Not sure about MEM.
 
I would love to see the contracting of ground services go a way with this. The Swissport/frontier guys at OMA don't get any benefits at all.. Atleast at Delta Global we atleast get crap flight benefits. Oh how I wish this wasn't the way of the future.
 
I would love to see the contracting of ground services go a way with this. The Swissport/frontier guys at OMA don't get any benefits at all.. Atleast at Delta Global we atleast get crap flight benefits. Oh how I wish this wasn't the way of the future.
Didn't F9 outsource everything except DEN for ground handling?
 
I really hope that they don't turn F9 into a ULCC. I think F9's brand is better than that.

Wish them luck.

F9Dxer (ex)
 
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