Thursday, July 30, 2009

Southwest and Frontier?

Until recently, it looked like Frontier would emerge from bankruptcy as a wholly-owned subsidiary of otherwise-regional Republic Airlines.

The Frontier-Republic deal had already been approved but was contingent on an auction period during which time other companies would be allowed to submit offers for Frontier's assets.

And that's the twist.

According to Business Wire, "Southwest Airlines Co. has submitted an initial non-binding proposal to acquire Frontier under the auction procedures established in Frontier’s Chapter 11 bankruptcy cases and approved by the U.S. Bankruptcy Court."

Having posted a profit for Q2, Southwest has ample cash and credit to pull off an aquisition of Frontier. That would in turn eliminate Frontier from the market, depriving AirTran of its partner and strengthening America's largest low-cost carrier.

It'd make sense. Will it happen? We'll see.

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