By Deepa Seetharaman
NEW YORK, July 30 (Reuters) - Low-cost carrier Southwest Airlines said on Thursday it is preparing a bid to acquire bankrupt Frontier Airlines for a minimum of $113.6 million.
Dallas-based Southwest's bid will exceed the $108.75 million bid from Republic Airways Holdings.
Southwest said it would study Frontier's books to prepare to submit a binding proposal due on Aug. 10. It declined to say how much higher it was prepared to bid but said it had the 'staying power' to prevail.
'We're in it to win and we have the resources, we think, to be successful,' Ron Ricks, Southwest executive vice president of corporate services, said during a conference call with reporters.
Southwest said the acquisition would help expand its network and boost competition in Denver, where Frontier is based, and suggested it could also help it begin service to international markets.
'It allows us potentially in a very quick way to do some new things that we haven't been able to do up until now, such as the near-international service,' Ricks said.
Frontier flies to a handful of international destinations including Cancun, Mexico and San Jose, Costa Rica.
Carlo Bertolini, a spokesman for Republic, said his company would study Southwest's bid before offering a response.
Frontier said in June that it had reached a deal to sell itself to Republic so that it can exit bankruptcy protection in the autumn as a Republic subsidiary.
That deal provides for an 'auction period' during which Frontier can seek other bids and terminate its agreement with Republic should a better offer surface.
Denver-based Frontier will be sold at an auction in bankruptcy court on Aug. 11 and expects to emerge from Chapter 11 bankruptcy protection in the fall.
Should there be multiple bids, Frontier would conduct an auction on Aug. 11 with its unsecured creditors committee, Frontier spokesman Steve Snyder said.
LOOKING FOR PROFIT IN DENVER
Executives said Southwest had been studying Frontier 'well ahead' of Republic's bid for the company. During the call, the company said Southwest would be able to challenge the dominance in Denver of UAL Corp's United better than Republic.
'Southwest Airlines just has more resources to bring to bear in that competitive marketplace,' Ricks said.
Southwest estimated that it and Frontier shared a third of the market in Denver, with United's market share at about 50 percent.
A Frontier acquisition would add about 10 percent to Southwest's capacity, executives said.
Morningstar analyst Basili Alukos said acquiring Frontier could improve Southwest's competitive position against United in Denver.
Southwest 'is trying to reshuffle capacity to try to take advantage of the weaker legacy carriers,' Alukos said. 'United is definitely in a tougher position considering that they have a larger exposure to premium-paying passengers.'
Southwest shares closed up six cents to $7.73 on the New York Stock Exchange. Republic stock closed down three cents to $5.19.
Frontier shares added nearly 6 cents to 11.5 cents.
(Reporting by Deepa Seetharaman in New York and Karen Jacobs in Atlanta; Editing Bernard Orr and Carol Bishopric)
((deepa.seetharaman@thomsonreuters.com; +1 646 223-6125; Reuters Messaging: deepa.seetharaman.reuters.com@reuters.net) Keywords: SOUTHWEST/FRONTIER
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, July 30 (Reuters) - Low-cost carrier Southwest Airlines said on Thursday it is preparing a bid to acquire bankrupt Frontier Airlines for a minimum of $113.6 million.
Dallas-based Southwest's bid will exceed the $108.75 million bid from Republic Airways Holdings.
Southwest said it would study Frontier's books to prepare to submit a binding proposal due on Aug. 10. It declined to say how much higher it was prepared to bid but said it had the 'staying power' to prevail.
'We're in it to win and we have the resources, we think, to be successful,' Ron Ricks, Southwest executive vice president of corporate services, said during a conference call with reporters.
Southwest said the acquisition would help expand its network and boost competition in Denver, where Frontier is based, and suggested it could also help it begin service to international markets.
'It allows us potentially in a very quick way to do some new things that we haven't been able to do up until now, such as the near-international service,' Ricks said.
Frontier flies to a handful of international destinations including Cancun, Mexico and San Jose, Costa Rica.
Carlo Bertolini, a spokesman for Republic, said his company would study Southwest's bid before offering a response.
Frontier said in June that it had reached a deal to sell itself to Republic so that it can exit bankruptcy protection in the autumn as a Republic subsidiary.
That deal provides for an 'auction period' during which Frontier can seek other bids and terminate its agreement with Republic should a better offer surface.
Denver-based Frontier will be sold at an auction in bankruptcy court on Aug. 11 and expects to emerge from Chapter 11 bankruptcy protection in the fall.
Should there be multiple bids, Frontier would conduct an auction on Aug. 11 with its unsecured creditors committee, Frontier spokesman Steve Snyder said.
LOOKING FOR PROFIT IN DENVER
Executives said Southwest had been studying Frontier 'well ahead' of Republic's bid for the company. During the call, the company said Southwest would be able to challenge the dominance in Denver of UAL Corp's United better than Republic.
'Southwest Airlines just has more resources to bring to bear in that competitive marketplace,' Ricks said.
Southwest estimated that it and Frontier shared a third of the market in Denver, with United's market share at about 50 percent.
A Frontier acquisition would add about 10 percent to Southwest's capacity, executives said.
Morningstar analyst Basili Alukos said acquiring Frontier could improve Southwest's competitive position against United in Denver.
Southwest 'is trying to reshuffle capacity to try to take advantage of the weaker legacy carriers,' Alukos said. 'United is definitely in a tougher position considering that they have a larger exposure to premium-paying passengers.'
Southwest shares closed up six cents to $7.73 on the New York Stock Exchange. Republic stock closed down three cents to $5.19.
Frontier shares added nearly 6 cents to 11.5 cents.
(Reporting by Deepa Seetharaman in New York and Karen Jacobs in Atlanta; Editing Bernard Orr and Carol Bishopric)
((deepa.seetharaman@thomsonreuters.com; +1 646 223-6125; Reuters Messaging: deepa.seetharaman.reuters.com@reuters.net) Keywords: SOUTHWEST/FRONTIER
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.