Discussion:
Republic Airways to buy out Frontier Airlines
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A Guy Called Tyketto
2009-06-23 06:22:09 UTC
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http://www.bizjournals.com/denver/stories/2009/06/22/daily13.html

We all knew that FFT was running all this time in Ch. 11, but I
surely wasn't expecting RAH to buy them out totally, especially after
FFT dropped the regional service contract with one of their airlines,
RPA. From the looks of it, it is just that: a simple buyout. routes
stay the same, employees stay the same, aircraft stay the same.

Interestingly enough, Republic is going to keep FFT's contract
with Lynx Aviation intact, and not dole that back out to Republic,
Chautauqua, or Shuttle America.

Going price was nearly $109 million USD, and they are giving a
month for anyone to outbid them. Is it just me, but does that seem
rather cheap for an airline?

BL.
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JF Mezei
2009-06-23 08:50:52 UTC
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Post by A Guy Called Tyketto
Going price was nearly $109 million USD, and they are giving a
month for anyone to outbid them. Is it just me, but does that seem
rather cheap for an airline?
Creditors are only getting 28.75 million.
40 million is going towards paying back those who lent money during
bankrupcy (debtor in posession).

If Frontier had few assets and all its aircraft were on leases, then it
wouldn't cost much to buy it, and if Republic needs to handle remaining
debts that have not been restructured/forgiven during chapter 11, then
it lowers the acquisition price.

To the Frontier creditors, having the debt transfered to a more solid
company is good news since it raises the quality of the debt and they
may end up getting much more then just pennies on the dollar if Republic
ends up paying back those debts under normal terms.
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John Mayson
2009-06-24 04:27:36 UTC
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Post by A Guy Called Tyketto
Going price was nearly $109 million USD, and they are giving a
month for anyone to outbid them. Is it just me, but does that seem
rather cheap for an airline?
Yeah, it seems a tad on the low side. I mean what's a plane cost these
days?

John

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John Mayson <***@mayson.us>
Austin, Texas, USA
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JF Mezei
2009-06-24 04:45:21 UTC
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Post by John Mayson
Yeah, it seems a tad on the low side. I mean what's a plane cost these
days?
After a chapter 11, it is likely that the whole fleet belongs to
lessors/creditors, so Republic wouldn't have had to buy any aircraft,
but it would have to assume the debt associated with lease obligations
for the Frontier fleet.
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A Guy Called Tyketto
2009-06-24 07:56:59 UTC
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Hot on the heels of the FFT purchase, RAH is also buying
Midwest.

http://www.bizjournals.com/denver/stories/2009/06/22/daily33.html

This one will involve a complete fleet renewal. The B717s are
going away, to be replaced by E-Jets (I like!). E190s to replace the
B717s, and E170s to replace the CRJs operated by Skywest. Looks like
the going price was $51 million, and that's arguable. That seems even
lower than the FFT deal, but they are buying at a price where some of
it can be converted into stock at $10/share. In short, RAH went
shopping, and came away with two really good deals.

BL.
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Brad Littlejohn | Email: ***@sbcglobal.net
Unix Systems Administrator, | ***@ozemail.com.au
Web + NewsMaster, BOFH.. Smeghead! :) | http://www.wizard.com/~tyketto
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Jeff Hacker
2009-06-24 15:16:38 UTC
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Post by A Guy Called Tyketto
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Post by A Guy Called Tyketto
Going price was nearly $109 million USD, and they are giving a
month for anyone to outbid them. Is it just me, but does that seem
rather cheap for an airline?
Yeah, it seems a tad on the low side. I mean what's a plane cost these
days?
John
The price is subject to Republic assuming leases on equipment. IIRC, all of
the Frontier fleet is leased.
Post by A Guy Called Tyketto
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