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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowIndianapolis-based Republic Airways Holdings Inc. has hired a CEO for its Frontier Airlines unit, another step in Republic’s plan to sell or spin off the scheduled-service airline.
The new CEO, David Siegel, is a former CEO of US Airways Group Inc. and Avis Budget Group, He has been serving as Republic Airways' lead director but will give up that role while remaining on the board.
"Dave is an incredible talent with the skills to lead Frontier during its separation process from Republic and continue its transformation into a profitable ultra-low-cost-carrier," Republic CEO Bryan Bedford said in a prepared statement.
Siegel will be based in Denver, where Frontier was headquartered before Republic bought it out of bankruptcy in 2009. High fuel prices and other challenges caused steep losses at the unit, and Republic last year announced it planned to reverse course and shed the business.
Republic said Frontier Airlines may begin operating as a separate company in six to 12 months, without specifying whether that would happen through a sale or a spinoff.
Frontier will be an “ultra-low cost” carrier and its headquarters will return to Denver, Republic said in a U.S. regulatory filing.
Republic veered away from its traditional role of providing regional flights for larger carriers when it acquired Frontier and began competing on main jet routes. Republic said in November it would sell or spin off Frontier to shareholders in an effort to restore profits.
“We believe we have a good story to tell investors about Frontier’s future,” the company said in the filing. “None of this guarantees we’ll find investors, but we are optimistic about our chances.”
Republic share rose 3.4 percent Friday morning, to $5.51 each. Earlier in the day, the shares reached $5.71, the highest price since April 13. The shares were down 16 percent in the 12 months prior to Friday.
Republic also said it expects Frontier to be profitable for all of 2012. Republic should have a fourth-quarter 2011 profit of 31 cents to 36 cents, excluding one-time items, because of record full planes and higher revenue from each seat flown a mile at Frontier, the company said. At that time, the average profit forecast was 9 cents.
None of the steps under consideration now to boost profits at Frontier involves asking employees for additional pay cuts, Republic said. Frontier earlier this year secured concessions from employees, vendors and aircraft lessors.
Siegel previously was CEO of Xojet Inc., a private jet charter service. He also was an executive at Continental Airlines Inc. and Northwest Airlines Inc. in the 1990s.
“One of Dave Siegel’s key strengths is great experience working with the types of investors who participate in transactions such as the split we’re looking at here,” Republic said in the filing. “Dave brings great credibility to this process.”
Bedford will remain chairman of Frontier, the company said. Robert Ashcroft, who previously oversaw network planning, scheduling and pricing at Allegiant Travel Co., was named senior vice president for finance at Frontier.
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