Southwest Preparing a Bid for Frontier Airlines

[Matt Molnar]

Southwest Airlines Developing Bid Proposal in Frontier Airlines Bankruptcy Court Proceeding

Low-Fare Carrier Seeks to Acquire Frontier Airlines

DALLAS, July 30 /PRNewswire-FirstCall/ -- Southwest Airlines (NYSE: LUV) confirmed today that the carrier is preparing a bid to acquire Denver-based Frontier Airlines, which will be sold at auction in bankruptcy court next month. The carrier has submitted a nonbinding proposal in accordance with the bidding procedures established in the U.S. Bankruptcy Court for the Southern District of New York. The bid is worth a minimum of $113.6 million, which is in excess of the bid currently filed by Republic Airways.

Submission of a nonbinding proposal gives Southwest an opportunity to engage with Frontier in the due diligence required to determine the scope of a binding proposal to be submitted by the court's Aug. 10, 2009, deadline.

"We are excited about the opportunity to submit a bid," said Gary Kelly, Southwest's Chairman of the Board, President, and CEO. "We see a strong fit between our Company cultures, a mutual commitment to high quality Customer Service, and similar entrepreneurial roots."

A successful acquisition of Frontier Airlines will allow Southwest to expand its network with its legendary low fares, add jobs into Southwest, and boost competition in Denver and other cities. Southwest is a qualified investor and is still preparing its proposal; therefore, it is premature to comment on the specifics at this point.

To view a Q&A with a Southwest Airlines Executive Vice President Corporate Services and Corporate Secretary Ron Ricks, please visit: http://www.blogsouthwest.com/blog/south ... r-airlines (http://www.blogsouthwest.com/blog/southwest-bids-frontier-airlines).

Frontier filed for bankruptcy court protection in April 2008. On June 22, 2009, Republic Airways submitted a bid to purchase Frontier for $108.8 million.

After 38 years of service, Southwest Airlines offers a reliable product with exemplary Customer Service. Southwest Airlines is the most productive airline in the sky and offers Customers a comfortable traveling experience with all premium leather seats and plenty of legroom. Southwest recently updated its gate areas and improved its boarding procedure to make flying Southwest Airlines even more convenient and simple. Southwest Airlines currently serves 66 cities in 33 states, and announced service to Boston Logan, which begins Aug. 16, 2009, and to Milwaukee, which begins Nov. 1, 2009. Southwest currently operates more than 3,300 flights a day and has more than 35,000 Employees systemwide.

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements relate to the Company's interest in acquiring Frontier Airlines. These forward-looking statements are based on the Company's current information, intent, expectations, and projections and are not guarantees of future actions or performance. These statements involve risks, uncertainties, assumptions, and other factors that are difficult to predict and that could cause actual results to vary materially from those expressed in or indicated by them. Factors include, among others, (i) the Company's ability to receive all necessary approvals, including any necessary governmental or regulatory approvals and the approval of the Company's Board of Directors; (ii) results of the Company's due diligence; (iii) changes to the Company's business plan and strategies; (iv) the Company's being named the winning bidder in the auction process in Frontier's bankruptcy proceeding and the Company's ability to obtain all necessary approvals for the acquisition in Frontier's bankruptcy proceeding, including approval by Frontier's creditors and the bankruptcy court of Frontier's plan of reorganization, (v) the Company's ability to timely and effectively prioritize its revenue and cost reduction initiatives; and (vi) other factors, as described in the Company's filings with the Securities and Exchange Commission, including the detailed factors discussed under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Therefore, the Company can give no assurance that any bid it submits to acquire Frontier will be successful or that any subsequent acquisition will be completed.

[T-Bird76]

All this is, is WN's attempt at removing a competitor in Denver. How they come out and say it will increase competition is beyond me. WN knows Republic has the foundation to build a strong airline out of Frontier and that will be a threat to WN at Denver. WN did the same thing with ATA, they out bid Airtran and look at where ATA is today?

[Matt Molnar]

They'd also get 4 extra slots at LGA. W00t.

[PhilDernerJr]

What did WN do to ATA? I didn't think ATA's demise had anything to do with Southwest.

[cancidas]

They'd also get 4 extra slots at LGA. W00t.
i'd definately rather see bright blue boeings than whimpy white 'busses.

[PhilDernerJr]

The animal tails are cool, but I definitely would rather see WN birds at LGA and their special schemes.

[LGA777]

The animal tails are cool, but I definitely would rather see WN birds at LGA and their special schemes.

Phil, F9 has two flights a day at LGA, and I see the two animal tails almost everyday.

WN has 8 flights a day, I usually see at least 5 of them 5 or 6 days a week. You know what I have seen so far, Shamu once and today for the first time a gold classic scheme. That's it. Very dissapointed.

If WN succeeds they will not want a fleet of A-318/319/320's. They I believe only want to remove a competitor and withone year of their takeover if successful all you will see is a much larger WN operation at DEN, and hopefully some former F9 folks employed with WN and keeping their F9 senority. Nothing more.

Regards

LGA777

[T-Bird76]

What did WN do to ATA? I didn't think ATA's demise had anything to do with Southwest.

Phil when ATA when into Chap 11 AirTran and ATA came to an agreement on AirTran buying out ATA in total. This would have given AirTran all the gates ATA had at MDW allowing them to create the Midwest hub they desired to have. WN stepped in outbid ATA, got ATA's gate ensuring AirTran could not expand. ATA was then sold to your company allowing ATA to pay back WN. In one fell swoop WN secured all of ATA's gates at MDW and let a compeititor run themselves out of biz. ATA's business plan would have never worked and with rising fuel prices and dwindling demand they went under. However if AirTran took them over the operations would have been moved into AirTran. The result would have been far less jobs being lost and some being added.

[PhilDernerJr]

ATA actually was not sold to my company. They bought us and World.

But you're referring to 2004, and what I understand of that is more of an AirTran vs. Southwest dispute rather than a negative effect on ATA. It sounds as though you're blaming something on Southwest, but I think AirTran would have done the same thing, as they wanted to keep Southwest out of the mix. Both airlines had the same motivations for MDW.

ATA was a charter airline that ran some scheduled ops for diversity. They failed because they ran poor numbers on their military charters and was yanked from the program. They still stand as my favorite airline of all time, but their demise was their own fault. Other "rescue" airlines would have chopped them up or made them something they didn't want to be.

[T-Bird76]

ATA actually was not sold to my company. They bought us and World.

But you're referring to 2004, and what I understand of that is more of an AirTran vs. Southwest dispute rather than a negative effect on ATA. It sounds as though you're blaming something on Southwest, but I think AirTran would have done the same thing, as they wanted to keep Southwest out of the mix. Both airlines had the same motivations for MDW.

ATA was a charter airline that ran some scheduled ops for diversity. They failed because they ran poor numbers on their military charters and was yanked from the program. They still stand as my favorite airline of all time, but their demise was their own fault. Other "rescue" airlines would have chopped them up or made them something they didn't want to be.

Phil the situation is the same...WN doesn't want Republic coming in and buying Frontier much like WN didn't want AirTran buying ATA. Yes ATA still would have gone by the way side but jobs would have been saved and added since AirTran would have expanded MDW. Much like they would have done in MKE with Midwest, now look at Midwest. WN gave ATA a life line that was tied around their necks from day one, ATA's business plan was doomed from the start. WN wasn't looking out for the best interests of employees, customer's or regions it served, it was the starting point of why ATA failed after Chapter 11.

[T-Bird76]

lets look at some points from WN's blog...if you can't read between the lines with their language then you need to go back to school. These statements WREAK of falsehood...OH btw remember WN's other merger back in the 80s? Muse Air? What's left of them now?


We believe our bid proposal will allow Frontier to emerge from bankruptcy. Frontier would continue to operate independently and separately for a period of time with its Airbus aircraft and personnel.

Meaning WN will dump the Airbus fleet in time.


Over time, Frontier Employees would be hired into Southwest as needed to support our fleet growth and expanded operations.

They won't be guaranteed a job and will have to apply just like the guy off the street, and if you’re not needed you’re going to lose your job.


We believe the acquisition will boost low-fare competition across the country and certainly in the Denver market. And, again, we believes our bid will be seen as the strongest bid by all interested parties, including Frontier Employees, management, and its creditors.

Basic math tells us this...right now DEN has three major carriers that have a hub or focus on DEN, UAL, Frontier and Southwest...take away Frontier and replace it with an expanded Southwest seems to me we now only have two carriers with a large presence at DEN, not sure how anyone can call that more competition.


A. As part of our overall due diligence, Southwest Airlines will study Lynx. Until a bid is finalized, it’s too early to say.

Much like the Airbuses Lynx will go away as well...along with service to cities that will never see the light of day from WN.

If anyone believes a word of what WN is saying there's a bridge I can sell you in Brooklyn.

WN had no intent of looking at Frontier until Republic decided to bid on them, they want Frontier gone plain and simple.

[Alex T]

WN had absolutely nothing to do with ATA's demise.

WN did not own any employees, aircrafts, assets or anything. ATA was its own airline at the time of the shut down simply having a codeshare operation with WN.

As for everything else, yep that is true. What is left of Morris air is quite a few employees, and SEA, GEG, PDX, BOI couple of northwest pacific stations.

WN is a vicious airline, and will do what they can to win and grow big. I do think F9 employees should be given the chance to work with WN but alas, I can't have a say in it.

This is very exciting and interesting to see as an airline employee, as I went through this as a fan of TWA too.

Alex

[crj200dispatcher]

AA/TWA all over again. F9 employees are screwed

[T-Bird76]

AA/TWA all over again. F9 employees are screwed

As much as I disliked that AA drew down most of what they purchased from TWA the alternative would have been worse. TWA was out of money plain and simple...they weren't able to make their next payroll and if it wasn't for AA buying them they would have went under all together. This is a different situation, WN is aggressively going after Frontier to shut down a competitor.

[PhilDernerJr]

This is a different situation, WN is aggressively going after Frontier to shut down a competitor.

I'm not saying it's a GOOD thing, because I'm not happy to see anyone lose their jobs, but this is the nature of the airline industry, more so than other industries. It's capitalism, and Frontier has been struggling as it is for a bit now.

[crj200dispatcher]

F9 has been posting a profit, not struggling. Oh that is right, WN cannot stand healthy competitors, they go after the small or the weak.

WN just wants the assets, and they clearly state will hire F9 has needed, which might be never. The F9 employees do not deserve too loose their jobs, because they have busted their butts to return the company to profitiability.

And do not forget if WN get this, they still have to pay Republic Airways Holdings $150 million for monies lent to F9, which has to be a burr up their butt also.


Funny speaking to alot of F9 employees and reading alot of post on a pilot forum, the F9 pilots do not want the WN deal to go through, they see the writing on the wall

T-Bird, I am aware of the AA/TWA I was there, I am talking about how AA did not take alot of the TWA employees or they were placed at the bottom of the seniority list, that is all I meant of AA/TWA.

[PhilDernerJr]

Of course, no one deserves to lose their jobs, but it's the airline industry. It happens more where we are than any other industry. I don't know anyone that's worked in this industry for a while that has never been furloughed or laid off. It's just how capitalism works.

[T-Bird76]

Of course, no one deserves to lose their jobs, but it's the airline industry. It happens more where we are than any other industry. I don't know anyone that's worked in this industry for a while that has never been furloughed or laid off. It's just how capitalism works.

Phil really has nothing to do with the airline industry, it happens everyday in far more industries then the airline industry. You just hear about it more since the airline industry is so public. Just to give you an example of how often it happens, my company has bought out 5 competitors in the last year, that's far more buyouts then what goes on in the airline industry and that's just my company.

What ticks me off with WN's bid is their blog statements...they should just come out and say they are securing their market in Denver by removing Frontier. Instead they are trying to sugar coat it.

[jetblue187]

I dont think taking over Frontier Airlines is a good thing, because you would ruin all those beautiful tails from Frontier. I do not want to see that happening,unless SWA keeps the tails the way they are..

[crj200dispatcher]

This has nothing to do with capitalism, WN just cannot stand competition.

You know WN claims they are such a airline dedicated to their employees happiness, and great work environment, but buy another airline a screw those employees...BS!!!!! Simple. You want F9, keep the employees, merge them into WN seniority.

I would much rather see F9 flying the WN anyday, the F9 name has a great history in commercial aviation, and was ressurected for this F9, because that was the niche market.

DO YOU REALLY THINK WN WILL KEEP DEN-Jackson Hole, DEN-CAK/DEN-DAY...taking service away from cities that really need air service

[hiss srq]

CRJ, I am right here with you on this one. The vultures from LUV are going to pretty much chew up and spit out F9 and all of its employees. I am with RPA on this one. :borat:

[AnBok]

CRJ, I am right here with you on this one. The vultures from LUV are going to pretty much chew up and spit out F9 and all of its employees. I am with RPA on this one. :borat:

I guess we'll see what happens, but I expect to see F9 operated a separate ticket at least for a while. Then, of course, will come the integration of the pilot lists. I'm sure there are relatively junior F9 F/Os that are praying that this deal will go through, however there have got to be tons of senior F9 F/Os and Captains that do not want to be put on the bottom of the WN seniority list like what happened when WN took over Muse Air.

Not sure what will happen this time and not trying to be naive or anything, but WN is pretty well know for it's great treatment of its own employees. I'm sure there are going to be people cut which sucks (I believe the corporate types refer to that as "synergies") but overall this has got to be a better deal than being taken over by RAH.. I mean, if a takeover is unavoidable (which it looks to be), would you rather find yourself in a (relatively) well-paid right seat at a profitable 737 operator with a long history of strong labor relations (although some folks at SWAPA may disagree) or the right seat of a JungleJet at a MESA-clone bottomfeeder? I guess to each its own

[PhilDernerJr]

This has nothing to do with capitalism, WN just cannot stand competition.

Isn't that the definition of capitalism?

If this was an American vs. Southwest topic, I think people would side with WN as if they were the little guy.

I look at how some people take sides and it looks like a sports rivalry. To me, it's just business and that's how the industry goes. I see nothing wrong with what they are doing.

[hiss srq]

CRJ, I am right here with you on this one. The vultures from LUV are going to pretty much chew up and spit out F9 and all of its employees. I am with RPA on this one. :borat:

I guess we'll see what happens, but I expect to see F9 operated a separate ticket at least for a while. Then, of course, will come the integration of the pilot lists. I'm sure there are relatively junior F9 F/Os that are praying that this deal will go through, however there have got to be tons of senior F9 F/Os and Captains that do not want to be put on the bottom of the WN seniority list like what happened when WN took over Muse Air.

Not sure what will happen this time and not trying to be naive or anything, but WN is pretty well know for it's great treatment of its own employees. I'm sure there are going to be people cut which sucks (I believe the corporate types refer to that as "synergies") but overall this has got to be a better deal than being taken over by RAH.. I mean, if a takeover is unavoidable (which it looks to be), would you rather find yourself in a (relatively) well-paid right seat at a profitable 737 operator with a long history of strong labor relations (although some folks at SWAPA may disagree) or the right seat of a JungleJet at a MESA-clone bottomfeeder? I guess to each its own

WN is known for treatment of their own employees hired by their own department. WN is a vulture just like AA is. The employees of F9 will get screwed and spun on this deal and it will happen strictly to give them a leg against UA at DEN. It is the nature of Southwest. Pilots etc will have to interview to keep their jobs when an intergration takes place and WN will only do this if they are actyually expanding etc. I think they just want to kill a competitor.

[PhilDernerJr]

If you guys owned a business that was hurting in a cut-throat industry in a down economy...you wouldn't try to eliminate competitors?

[AnBok]

WN is known for treatment of their own employees hired by their own department. WN is a vulture just like AA is. The employees of F9 will get screwed and spun on this deal and it will happen strictly to give them a leg against UA at DEN. It is the nature of Southwest. Pilots etc will have to interview to keep their jobs when an intergration takes place and WN will only do this if they are actyually expanding etc. I think they just want to kill a competitor.


Still a better deal than being swallowed up by RAH

[AnBok]

If you guys owned a business that was hurting in a cut-throat industry in a down economy...you wouldn't try to eliminate competitors?

Yep. Sounds like it's going to be a bit of the pain loading off those 'Buses. Heard that Skywest is supposedly interested in Lynx's Q400 operation

[hiss srq]

WN is known for treatment of their own employees hired by their own department. WN is a vulture just like AA is. The employees of F9 will get screwed and spun on this deal and it will happen strictly to give them a leg against UA at DEN. It is the nature of Southwest. Pilots etc will have to interview to keep their jobs when an intergration takes place and WN will only do this if they are actyually expanding etc. I think they just want to kill a competitor.


Still a better deal than being swallowed up by RAH
Not at all bvecause RAH in this case would actually be maintaining the airline and operation in its current form while WN would simply just be killing F9 for their own profitability while displaciing more of america's work force.

[moose135]

A snag in WN's plans?

http://www.dallasnews.com/sharedcontent ... bbefb.html (http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/0814dnbussouthwest.d75bbefb.html)


Southwest Airlines' bid for Frontier runs into trouble
09:49 AM CDT on Thursday, August 13, 2009
By ERIC TORBENSON / The Dallas Morning News


Southwest Airlines' bid for Frontier Airlines may be in trouble.

According to an e-mail purportedly sent from Southwest’s pilot union to its members, the union failed to reach a deal with Frontier’s pilots union last night over integration terms. Getting that deal is a condition of Southwest’s bid. The e-mail from the union says Southwest will ask for an extension on its $170 million bid for Frontier’s assets, as the auction was set to take place on Thursday.

Southwest Airlines Pilots Association spokesman Neal Hanks said in an e-mail that the union would not comment until events had played out in court. A message to Southwest wasn’t immediately returned Thursday morning.

Southwest CEO Gary Kelly said Wednesday after a transportation conference in Irving that the lack of agreements between labor unions could scuttle Southwest’s bid.

Southwest is bidding against Republic Airways Group Inc., which bid $108.75 million for Frontier and intends to let the carrier operate on its own. Southwest would absorb Frontier into its system over the course of two years.

[Midnight Mike]

F9 has been posting a profit, not struggling. Oh that is right, WN cannot stand healthy competitors, they go after the small or the weak.

WN just wants the assets, and they clearly state will hire F9 has needed, which might be never. The F9 employees do not deserve too loose their jobs, because they have busted their butts to return the company to profitiability.

And do not forget if WN get this, they still have to pay Republic Airways Holdings $150 million for monies lent to F9, which has to be a burr up their butt also.


Funny speaking to alot of F9 employees and reading alot of post on a pilot forum, the F9 pilots do not want the WN deal to go through, they see the writing on the wall

T-Bird, I am aware of the AA/TWA I was there, I am talking about how AA did not take alot of the TWA employees or they were placed at the bottom of the seniority list, that is all I meant of AA/TWA.

Frontier is in bankruptcy and not paying bills, so, the profit could be short lived the minute they emerge from bankruptcy protection

As for any monies owed to Republic, that would not be the responsibility of Southwest. Republic would have to wait in line like everybody else....

[Midnight Mike]

A snag in WN's plans?

http://www.dallasnews.com/sharedcontent ... bbefb.html (http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/0814dnbussouthwest.d75bbefb.html)


Southwest Airlines' bid for Frontier runs into trouble
09:49 AM CDT on Thursday, August 13, 2009
By ERIC TORBENSON / The Dallas Morning News




Imagine that, pilot unions could not agree on something :lol:

[Matt Molnar]

I don't understand what incentive Southwest pilots would have to agree to this.

[moose135]

Not so surprising given the WN news...


Republic Airways Wins Auction to Buy Frontier Air
By Tiffany Kary and Mary Schlangenstein

Aug. 13 (Bloomberg) -- Republic Airways Holdings Inc. won a bankruptcy court auction to buy Frontier Airlines Holdings Inc., bidding $108.8 million to beat Southwest Airlines Co.

Republic also agreed to waive distributions on its $150 million pre-petition unsecured claim, Frontier said today in a separate statement. U.S. Bankruptcy Judge Robert Drain in New York and regulators have yet to review the sale. Southwest bid $170 million Aug. 10, before the auction officially began.

“I look forward to welcoming Frontier to our Republic family,” Bryan Bedford, Republic’s chief executive officer, said today in that airline’s statement.

Indianapolis-based Republic was the 11th-largest U.S. carrier last year based on passenger traffic, while Denver-based Frontier was 13th and Dallas-based Southwest was fifth, according to data compiled by Bloomberg.

Full Story (http://www.bloomberg.com/apps/news?pid=20601087&sid=a74C6aCSa0Qc)

[T-Bird76]

This is HUGE defeat for WN and bad news for them at DEN. I'm sure the the folks at Frontier are happy with this news. I guess you can say win one for the small guy.