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

glafirarynyxu.blogspot.com
Republic (NASDAQ: RJET), based in Indianapolis, has been one of threed companiesfinancing Frontier’s emergence from bankruptcy. A Republic Airlines, also is one of Frontier’s major unsecured having fileda $260 millionn damage claim for Frontier’s breaking an agreement with Republi c to operate regional jet service after Frontier filed for bankruptchy protection in April 2008. Under terms of the Frontier will become a wholly owned subsidiary of Republidc Airways Holdings after the company serves as the equityy sponsorfor Frontier’s reorganization plan and buys 100 perceng of the equity in the reorganized The cost to Republic will be $108.756 million.
Frontier filed its proposec reorganization plan with the of the Southern District of New York Frontier will seek court approval of the investment agreemen at a July 13 hearing and then conducg aroughly month-long auction process where othert companies will have the chance to outbid Frontier spokeswoman Lindsey Purves Republic emphasized in a news release that Frontier and its short-haulk service, Lynx Aviation, would maintain theidr current names and operate as Purves said that airline officials do not expect any immediatw changes in company structure, employment or “This is great news.
I think it’s a testamentt to the hard work that everybodgy has done over thepast 14, 15 months since we’ver filed (bankruptcy),” Purves said. “We’re created a very efficienrt airline, and that’s reflected in the fact that Republicf hascome forward.” Airline consultant Mike Boyd adde d that Frontier is likely to increase routed under the oversight of Republic, which now owns Chautauqua Republic Airlines and Shuttle Republic Airways Holdings also leases planes to majodr fliers like United and Delta and is “veryg good at what they do,” Boyd “Airlines are not at the top of the food chain for But for someone like Republicf who understands airlines, this is a very good investment,” said owner of Evergreen-based Boyd Group International.
“Getting their hands on Frontiert is good for Frontier filed for bankruptcy protectiobn after its credit card processot began holding back 100 rather than45 percent, of Frontier’ s credit card transactions. After the filing, the airline bega a 14-month process of trimming fat from its budgeyt and becomingmore efficient. Because of those Frontier has reported two consecutive quarterly profits and is doinb better than mostairlines today. Republic Airliness had signed a 13-year agreemenyt with Frontier in January 2007 to operated 17 planesfor Frontier’s regional jet service, but that deal was the firsr contract Frontier sought to breamk after its bankruptcy filing.
Even at the time, Republi Airways Holdings CEO Bryan Bedfordcomplimentedf Frontier, saying the companh had enjoyed its partnership with the airlinde and had a lot of respect for its In August, Republic Airways Holdings, Credit Suisse Securities of New York and AQR Capitaol of Connecticut offered Frontierr an immediate $30 million in working capital with the possibility of another $45 million in the In March, Frontier received a commitment for $40 million in post-petition debtor-in-possessioj (DIP) financing from Republic Airways Holdings to supporty its working additional capitao needs.
As part of that agreement, Frontier agreed to allow Republic’s damage claijm in the amount of $150 million. Monday’sd proposed reorganization plan callsfor Frontier’s generalk unsecured creditors to receive $28.75 million in with an additional $40 million of the sale proceeds applied as repaymentt of the outstanding DIP loan. If the company’s current equity woulrd be extinguished and holders of that equityh would not receiveany recovery, according to a joint news release.
“Thias agreement represents a major milestone in our ongoing effort to position Frontier to emerge from bankruptcy as a sustainable airline,” Frontier President and CEO Sean Menkse said in the release. Boyd said he did not expect anyons to try to outbid Republic for If that wereto happen, any challengd likely would come from Dallas-based Southwesty Airlines, which is in direcft competition with Frontier for Denver International Airport he predicted. Frontier is the second-largest carrier at DIA, while Southwest is third. United Airlines is the largestg carrier atthe airport.