11:00 PST
Frontier Airlines filed for Chapter 11 bankruptcy on April 10, 2008 (chapter 11 bankruptcy allows a company to reorganize without necessarily ceasing operations). The bankruptcy arose because Frontier's credit card company, First Data Corp, required Frontier to hold more cash in order to ensure that Frontier would have sufficient cash to pay for the flights that customers had paid for; if Frontier did not fly, then First Data would be responsible for repaying the customers who had already bought tickets.
The U.S. Bankruptcy court selected Republic as the winning bidder over Southwest Airlines. Republic's bid was $108.75 million. Southwest was prepared to bid $113.6 million, but ultimately offered $170 million. Although Southwest's bid was significantly higher, it was contingent on their pilot's association reaching an agreement with Republic's pilots; Southwest dropped its bid when that agreement could not be reached.
Republic also acquired Midwest Airlines earlier this year.
The fact that two companies were bidding for Froniter Airlines is seen a possible sign that the economy is improving.
My take: it looks to me like interest in this topic is up because of an increase of roughly 10% in the Republic Airways Holding stock price. The transfer of ownership affects the Frontier employees primarily because Frontier will continue operating independently rather than being assimilated by Southwest, the Wal-Mart of the airline industry. I haven't been on an airplane for more than a year and I don't own any RJET stock, and don't work for any of the airlines involved, so the impact of this story on my daily life is pretty much zilch.
No comments:
Post a Comment