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Thu, Feb 09, 2012

Republic Calls Frontier Airlines A 'Good Investment'

Holding Company Looks To Burnish The Regional Carrier's Image ... Prior To Sale

Republic Airways Holdings is working to put a new gloss on its financially-struggling regional carrier Frontier Airlines, which it acquired in bankruptcy court just three years ago. Chairman and CEO Bryan Bedford said that it is close to naming a financial advisor which will assist in the sale of the airline.

The Wall Street Journal reports that the job of the financial advisor will be to bolster the bottom line to the greatest extent possible. New management at the Denver-based carrier has already found $120 million in annual expense reductions. Bedford said the airline will likely be spun off to Republic's shareholders, or sold to a private equity firm.

The holding company bought the airline for $1.1 billion in a diversification move, but high fuel prices and competition from airlines like Southwest pushed it to number 3 in Denver. It reportedly has lost some $16.5 million for RAH over the past three years.

Frontier is "aggressively" analyzing routes, according to the paper, to see which are the most profitable. It has sought new revenue streams, such as charter flights for a private vacation firm.

Republic is in the process of parking some of its smaller, 50-seat regional jets across its holdings, and it remains profitable. It is eyeing AMR Corp's restructuring, as the parent of American Airlines could be looking to entering more codeshare agreements with regional carriers, saving the mainline carriers money.

FMI: www.rjet.com

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