Where's the LUV ??? SWA to eat Frontier ???

[A4sForever]

From the "I didn't see this one coming" department: Southwest Airlines Co. said Thursday, July 30, that it will bid $113.6 million to buy Frontier Airlines Holdings Inc., a low-cost, low-fare rival that is operating in bankruptcy. The 'official line' is that LUV will operate FRNT as a wholly owned subsidiary .... at least for a while.

Good news: the guys @ Frontier must be smiling, at least a little more today than during the past year ...

Bad news: I guess now even SWA will now have to put up w/ the Airbus ...

Southwest Airlines makes bid to buy Frontier

Reuters: Frontier deal could create risks for Southwest

Dallas Morning News Airline Blog: SWA Execs answer questions @ Frontier bid

 

[Jim123]

Bad news: I guess now even SWA will now have to put up w/ the Airbus ...

Maybe they could trade them to the Navy and Air Force as the soon-to-be-announced "P-9" and "KA320" programs and get some nice P-8s and C-40s in return... Cash for Clunkers for the airlines and everybody wins! :icon_smil

 

[Fog]

Bet you could buy some A318s real cheap if SWA buys Frontier

 

[scoolbubba]

I'd bet the A-Busses don't stick around long if the deal goes thru. Southwest's bread and butter is the 737.... thats an "if it ain't broke, don't fix it/dance with the one that brought ya" type deal

 

[FMRAM]

Doesn't 113.6 million seem a little on the light side? Wouldn't the value of the ~50 A/C be worth several times as much as that figure?

 

[A4sForever]

Doesn't 113.6 million seem a little on the light side? Wouldn't the value of the ~50 A/C be worth several times as much as that figure?

I suspect it's a 'tactical ploy' to bump the current Republic Holdings offer and allow time to get down to more substantive, detailed negotiations ... just a WAG.

 

[whitesoxnation]

Doesn't 113.6 million seem a little on the light side? Wouldn't the value of the ~50 A/C be worth several times as much as that figure?

No. In their last filing Frontier had $507mm of debt. They have negative equity ($94mm).

If Southwest buys Frontier, they inherit their debt too.

 

[Godspeed]

Doesn't 113.6 million seem a little on the light side? Wouldn't the value of the ~50 A/C be worth several times as much as that figure?

Most airlines don't actually own their airplanes, they lease them or have them financed for the long term.

 

[Frumby]

Frontier owns 15 of their Airbuses. As I understand, the debt will be paid off by "drum roll" selling off Airbuses or by allowing the leases to expire. As they sell off the Airbus, the employees affected will be allowed to interview at SWA. Traditionally, SWA has absorbed the employees at the bottom of the seniority list but they will maintain their current Frontier pay until their SWA pay supersedes it. Yes they will lose seniority but they will gain job security without losing any pay. The acquisition details have not been revealed, I'm merely speculating given SWA history.

 

[MasterBates]

In short, better to hire on directly with SWA than be absorbed?

 

[Frumby]

Yup!

 

[A4sForever]

I hate to quote myself ... it's kinda borderline schitzo-neurotic, if you ask me .... but, like I said a while back:

I suspect it's a 'tactical ploy' to bump the current Republic Holdings offer and allow time to get down to more substantive, detailed negotiations ... just a WAG.

Southwest bids $170 million for Frontier Airlines

Ahhhhhhhh ... sometimes I scare myself.