Southwest's New Frontier?
And now looking to the friendly skies, Southwest Airlines last week confirmed its plan to submit a bid for the bankrupt Frontier Airlines. By getting the nonbinding proposal off the ground, in line with the bankruptcy court's requirement, Southwest can now officially check-in with Frontier to request information and documents as part of its due diligence efforts to research the company.
Southwest may be number one in daily domestic flight operations, but it came in second in making a move for Frontier. Indiana's Republic Airways submitted its $108.8 million bid earlier last month. The bid was provisionally agreed to by the judge, so long as no better offer came along before August 10th 2009.
And then Southwest flashed its boarding pass to the bankruptcy show.
The $113.6 million bid gives Southwest just enough peanuts and leg room to pull it ahead of Republic Airway's bid. And if Southwest is not flying solo as the only qualified bidder for Frontier come August 10th, then the potential buyers will duke it out in a bankruptcy auction beginning the next day.
And would the potential deal ding Southwest for violating any labor union agreements it has signed on to? Southwest assures its frequent fliers that mergers and acquisitions of other air carriers are a-okay with its collective bargaining fine print.
The jury is still out on what the deal will mean for Southwest. Some business analysts anticipate that it could give Southwest a favorable foothold amongst Denver fliers---a market that Frontier has been successful in capturing. However, others see potential turbulence, especially in the arena of how Southwest will merge the staffs and operations of Frontier with its own. With the airliners using different equipment and technologies, Southwest would have to bridge the difference to build efficiencies.
Is Luv in the air for Southwest and Frontier...we'll find out next week.
- Southwest Bids for Frontier Airlines (Southwest Airlines)
- Frontier Airlines Continuing Normal Operations Following Chapter 11 Filing (Frontier Airlines)
- Southwest Airlines Developing Bid Proposal in Frontier Airlines Bankruptcy Court Proceeding (PR Newswire)
- Southwest Airlines' bid for Frontier may help it grow in Denver (Dallas Morning News)
- Frontier deal could create risks for Southwest (Reuters)