$61 Million Above Republic Bid

Southwest Airlines says it will pony up $170M to rescue struggling Frontier Airlines from bankruptcy, a figure far above the nearly $109 million Republic Airways Holdings said it was willing to pay. Southwest competes with Frontier from their mutual hub in Denver.

Buying Frontier would add several cities to Southwest's routes,and eliminate that level of competition. The Associated Press reports that an analysis by airline analyst Darryl Jenkins of The Airline Zone shows the move would give Southwest 36 percent of Denver passengers, compared to United's 37 percent.

Southwest said it would keep all of Frontier's current markets, including Atlanta, if it is the successful bidder. It would also gradually replace Frontier's Airbus fleet in favor of the Boeing 737's flown by Southwest. The bid includes Frontier's Lynx regional carrier.

While Republic appears to be well outbid, a company spokesman says the two offers are not as far apart as it seems on the surface. Aircraft lease rejections and other expenses make the bids actually far more competitive than the raw numbers would indicate. But another industry analyst, Helane Becker, of Jesup & Lamont Securities Co., told AP that Republic has less than $100 million in cash, and that Southwest was prepared to write a check for Frontier.

AP reports that a bankruptcy judge has already approved Republic's bid for Frontier, and that Southwest could run into ant-trust issues because of the competitive situation in Denver. Southwest had made a much lower "placeholder" bid last month, but came back with the higher figure after it had a chance to look at Frontier's financial situation.

FMI: www.southwest.com, www.frontier.com