Republic Airways Selling Frontier Airlines

After declaring two weeks ago it had extended the deadline to make a deal, Indianapolis-based Republic Airwaysannounced today it sold Frontier Airlines to Indigo Partners in a transaction which valued the airline at $145 million. However, only $36 million of that will be payable to Republic Airways; the remainder is debt that will be retained by Frontier.

Republic Airways President and CEO Bryan Bedford said in a press release he was "confident that Frontier will enjoy future growth as Indigo continues the process to position the airline as a leading ultra-low-cost carrier in the United States." At the time of writing, Republic Airways stock was up 5.5% on the news.

Indigo Partners, a private equity firm, was established by William Franke in 2003 to invest in air travel and related industries. It has invested in Singapore's Tiger Airways and Florida-based Spirit Airlines. Franke formerly served on the board of Spirit Airlines.

Regarding the intention behind the transaction, Franke said in the release that "as airline fares continue to move up, passengers need affordable travel alternatives. Our goal will be to meet that need in more markets as we invest in the airline to grow its footprint, while maintaining a commitment to quality service, customer choice and satisfaction and continued employment opportunities for the Frontier team."

The transaction must be approved by Oct. 31 by the Association of Flight Attendants and FAPA Invest, which represents the pilots of Frontier Airlines.

Republic purchased Frontier Airlines in August 2009 for $109 million follow its emergence from bankruptcy. Following the transaction, Republic will have operations as Chautauqua Airlines, Republic Airlines, and Shuttle America.


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