Republic says potential buyers have surfaced for Frontier Air

Back to TopCommentsE-mailPrintBookmark and Share

Republic Airways Holdings Inc. has heard from potential buyers for Frontier Airlines and is close to naming an adviser on whether the unit will be sold or spun off to shareholders, CEO Bryan Bedford said.

The company will select Evercore Partners Inc., Barclays Plc or Seabury Group LLC for the advisory role, Bedford said in an interview Monday. Republic said in November that it would divest Frontier, two years after buying the Denver-based carrier out of bankruptcy.

Separating Frontier will let Republic return to its traditional role of providing regional flights for carriers such as Delta Air Lines Inc. A $120 million restructuring of Frontier that included job cuts and cost reductions has returned the unit to profit, allowing Republic to move ahead with the separation.

“We’ve had a number of calls from potential interested parties, saying ‘When you’re ready to talk we want to talk with you,’” Bedford said. “We haven’t been ready to talk yet.”

Republic shares have more than doubled since Nov. 7, the day before the Indianapolis-based company said it would separate Frontier. They fell 1.4 percent Monday to close at $6.17 each.

The probability is “fairly low” for a sale of Frontier to a competing “ultra low-cost carrier” such as Allegiant Travel Co., Spirit Airlines Inc. or JetBlue Airways Corp., the CEO said. Bedford declined to say if any of those competitors had expressed an interest in Frontier.

The company doesn’t have “a predisposition on what the right divestiture strategy is,” he said. “With the business producing profits and positive cash flow, we can be deliberate and make sure we’re getting the highest and best outcome, as opposed to feeling the need to rush into something.”

Republic is willing to be a “co-investor” in Frontier with a private equity group or to do just a partial spinoff to shareholders if needed, Bedford said.

Republic said last month that Frontier may be operating as a separate company in six to 12 months. David Siegel, a Republic director and former US Airways Group Inc. CEO, was named chief executive of Frontier last month. The carrier plans to continue paring costs, and Bedford said he couldn’t rule out additional job cuts “on the edges.” The company in November said it would trim 220 positions in Denver and Milwaukee.

Frontier will take delivery of 80 Airbus SAS neo aircraft that were ordered last year and will be delivered in 2016 through 2020, Bedford said. Republic’s separate order for 40 Bombardier Inc. CSeries aircraft remains intact, even as the airline is worried about the lack of sales for the jet, he said.

Republic is waiting to see whether the CSeries “is ultimately going to be built and delivered, which we believe it will be,” Bedford said. “What’s distressing is that it hasn’t been a particularly strong seller. We have concern about the viability of the project.”

Bombardier has 138 firm orders, 124 options, 10 purchase rights and 45 letters of intent for CSeries planes and has “seen significant progress” in development of the aircraft program, said Marc Duchesne, a spokesman for the Montreal-based company. The plane’s first flight is set for the end of this year, with initial deliveries by the end of 2013, he said.


Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...