Bedford assesses Southwest's bid for Frontier
 

Republic Airways Holdings appears poised to compete with Southwest Airlines for the purchase of Frontier Airlines after the Dallas-based carrier on 30 July unveiled plans to submit at $113 million bid for its rival in Denver.


On 22 June Republic, which has supplied Frontier with $40 million in debtor-in-possession financing, revealed its decision to purchase Frontier for $108 million upon its exit from bankruptcy. Republic on 31 July finalised its purchase of Midwest Airlines.


During an interview with ATI the day the Midwest deal closed, Republic CEO Bryan Bedford did not directly state any plans to counter the Southwest bid, but did note: "I'm not going to tell you we put our best offer on the table first. We joke that if nobody put in a competing bid than we paid too much. There's a little validation here."
Bedford is not surprised "to see another strategic buyer step up and want to buy this business [Frontier], because it is a fundamentally sound operating company. I am a little surprised it was Southwest".
Now that it is clear Frontier is going to emerge from Chapter 11 as a viable competitor Bedford notes that Southwest "very astutely says 'what's the cost of competing with the new guy for the next three years?'
Bedford explains Southwest could be asking itself "is the better option, the more economic option for us just to buy it [Frontier]".
"In their calculus," Bedford reasons, "the value that they can obtain from eliminating the competition in the Denver market is more valuable than what we can do with it."


While Bedford does realise Southwest's ability to develop and finance a "dramatically higher offer or valuation for Frontier than we can, it will be up to the board of Frontier and the creditors to decide if the vision Southwest has for Frontier is better than vision we have".
Bidding procedures established in Republic's investment agreement with Frontier were approved by the court overseeing Frontier's reorganisation on 13 July. Characterising it as a "quick tempo" Bedford says the deadline for interested bidders is 3 August, with a deadline for best and final bids of 10 August. The bankruptcy court and unsecured creditors then have seven days to scrutinise the bids.
"I think it will be interesting to see how transparent Southwest will be with their bid economics on Monday", Bedford says. "You can look at the investment agreement and think that is says one thing. You can interpret it however you want. It will be up to the court to decide if they're following the procedures."


Bedford also defines the current process for Republic's proposed acquisition of Frontier as "a fun thing to be involved in".

I think I just threw up in my mouth a little bit. I can just see Bedford sitting there... "Thousands of peoples jobs on the line and my hand on the button...man I love the smell of layoffs in the morning"

But hey I'm glad at least he's having fun

I thought the same thing.

While yes he's a very savvy businesses man, he wreeks of Mesa's J.O.

It's like he's playing the game Airline Tycoon or something.

Old J.O. had a pretty good run for a little while, but we see where that went, I imagine Bedford's empire will eventually head the same direction.

Not defending the guy or anything but... do you think about the people in the back of the airplane when you are landing in the weather.. at night... with one on fire? It's not really all that different when you think about it.

We're Nothing Like Bedford
 

I did think about it, and there is a world of difference.

Sure: if I was flying at night in the weather, with one on fire, my survival instinct would be as strong when flying a hundred boxes as a hundred people. It would be poor professional judgment for me to think about passengers (or boxes) in this case anyway, and I would focus on the landing. HOWEVER, as soon as I got the thing on the ground, I would certainly be 100% focused on making sure everyone walks away, passengers, crew, and me.

Wouldn't you?

There are other difference between us and Bedford... We wouldn't say that watching another crew landing at night in the weather with one on fire is "fun". If they failed, we would't go to the crash site and take the wallets off the victims, or pilfer the cargo.

Yes, the difference is your life is on the line and your survival instinct better kick in. He on the other hand has to deal with a bruised ego, and maybe a profit loss. He still gets to walk away with his life no matter how bad he screws up.

That my friends is a huge difference in what he does and what we do.

Regardless of Southwest's bid, I really doubt the government would allow the aquistition to occur. I think there will be too many anti-competition claims made by UAL and others. In short, my money is still on Republic.

Southwest has all of those Texas politicians bought and paid for. You don't think they have their ducks and pols line up for this? You see how well they "grease" ATC? You don't think the DEN constituents WANT SWA increased service out of there?

if swa is allowed to purchase F9 there will be a TON of jobs lost, reservations/ticketing, back office, etc. its very short sighted to just think of this from the pilot/flight attendant point of view. not to mention the entire F9 brand will dissapear.

if rah is allowed to purchase F9 the brand and most of those jobs will be intact, including the pilots/flight attendants.

Yet CO and UA just got antitrust immunity. I don't think they'd have much of a case considering that F9 and WN overlap on a lot of routes out of Denver. What WN will most likely do is scale some of that flying back where it makes sense. If they were taking over an airline that covered all the routes they didn't, then I could see it being a monopoly issue.

Republic never planned to hold onto Frontier. They were just scooping up an undervalued company. They are going to be sold to someone, SWA or not.

Not to my understanding. FWIW I was told that Republic wanted to link Midwest, Frontier, and their Hawaiian operation. I am guessing that it would be named one airline in the future with alot of hiring to come. From what I have seen Bedford grows everything he touches. He reminds me of a Richard Branson type of thinker. I wish all of you the best however it turns out.

It's not a state issue. It's federal.

It's hard to say if route overlap is as important as some may think. It's more of an anti-competitition issue than route structure. Personally, I'm all for captialism and don't understand many of the federal court's decisions and reasoning.

OK... let me make it a bit less extreme. Do you EVER think about the people in the back when you are landing an airplane on a calm VMC day? I don't. Oh maybe in a fleeting thought, but not really all that much. I'm busy doing what I am being paid to do. As far as him pilfering wallets and the such.. and I am not defending him per se.. but he is in management. His responsibility is to the investors. Not to you. You are in seat 36B.. This is where I feel that our unions.. not just ALPA.. have failed us so miserably. It's just business. We need to be properly compensated for the job we do, and we aren't.

I think that is inaccurate.

Ok here's a new way of looking at this. There is blood in the water. Midwest has been bleeding for sometime now and everyone is now itching to get what little market they had left in mke. Airtran, soutwest, delta all have ramped up service in mke. So now republic owns Midwest and is putting down money on frontier. So southwest sees an opportunity to hammer on them some more. Get republic to bid higher on frontier so now they don't have that money to build Midwest. Possible?
Either way let republic burn!!!

Aren't you being paid to take care of people? I am. It's the top 2 priorities in our FOM.
When you deviate to avoid a TS at altitude it's not because the airplane can't take the turbulence, it's because the people can't.

Also, I understand the anti-competition argument, but haven't seen many deals quashed for this reason. From Exxon-Mobil to any huge airline merger, to Telcos, it just doesn't happen these days.

It's like a witch hunt with some of you people. Thanks for the support...

Whatever ends up happening, I don't blame Bedford for our lack of pay. I hate to break it to all you self centered pilots out there but people aren't just gonna give you something unless you demand it. You can say that Bedford is evil but why is he gonna pay our pilot group more than we are demanding? It isn't "evil" management, they are gonna do what ever they can to save a couple bucks, last I checked thats what they do. Its up to us to force them to pay us a respected wage and we realize that isn't happening right now and I don't think its just at RAH where management is "winning" this battle.

Its also kinda ironic that a couple decades ago SWA was the "bottom feeder" of the industry and those pilots joined together to create one of the best places to work. Now RAH is in a similar situation and everyone wants to point fingers and blame RAH pilots. Who knows if this will all work for RAH, the chances are pretty slim, but if it does maybe someday RAH will be one of the "great" places to work. Im sure none of the old school legacy guys every thought SWA would turn out to be anything either. Everyone needs to realize that we at RAH know that our contract/pay sucks, but you can't just fix it over night. Everyone I have talked to here realizes that what has happened over the last few months changes everything. Don't hate the player, hate the game.

Good luck to everyone involved... Unlike some of the other wise minds of APC I don't want to see anyone else lose their jobs.

He sure seems to be growing Midwest. :rolleyes:

You obviously do not understand how our government works. Those state FEDERAL politicians (congressman and senators) call in favors to the DoJ and poof, its approved.

indeed.... MKE-LAX for starters. What an astute observation you made.

"Now RAH is in a similar situation and everyone wants to point fingers and blame RAH pilots. Who knows if this will all work for RAH, the chances are pretty slim, but if it does maybe someday RAH will be one of the "great" places to work"

Not a good comparison, RAH flies regional jets, SWA flew and still flies narrow-body mainline jets.

Thats funny, MKE-LAX was the first route I flew for MEH over 10 years ago.
Whats the crew cost on that 190 again? Pitiful.
Just curious SIZZLER, what routes were you flying in the late 90's?

Don't worry, I came through the C concourse yesterday afternoon. It looked just like D from several years ago. The damage is done. Southwests arrival is the final nail.

Good Luck

I sincerely appreciate your civics lesson, but call me less than sold when you choose to use "poof" as a part of your debate. I'm obviously not as well rounded in the structure of the government as you, and I appoligise.

What would you call the EMB190? You are right on one thing though it is not a good comparison. At RAH you don't have to buy the 170/175/190 type rating to work there.

True, you just pay for it on the installment plan with reduced compensation.

You have one 190, I wouldn't get to far ahead of myself in thinking you are sitting on a gold mine.

I think you are kidding, a rational person wouldn't make that kind of comparison. Right? :D

either way you look at it, you F9 drivers need someone to get u out of bankruptcy. But, u better hope its RAH cause you'll atleast keep your jobs. With SWA your Gone! your kidding yourselves if you think they are going to operate you seperate or even keep the pilots around. Even with the ****ty rates you still would have a job.

SWAPA fought to keep the Morris guys, as the right thing to do. They will do it again for the F9 guys. If SWA wins the August 10th auction, F9 will most likely operate for a couple years as they are now. We (SWA) are in the middle of our RNP transition (the final stage which will take a lot of seat / sim time in the big-D), once that is complete (Q4 '10 ish), and once the economy turns around :confused: we'll see WN take off again with regards to growth.

Once that happens, we'll have an asset of 700 plus "Southwest" pilots to draw into the fold. I figure once the integration starts, it'll probably happen rapidly. Dunno on Lynx nor the SWA poolies. This is all JMHO.

If F9 guys would rather accept the RAH bid, just let your Union Prez know.

I am gonna sit and wait, there is little I can do, but vote my conscience.

Like they did for the ATA guys?

SWA never owned ATA, and SWAPA was never entitled to represent ATA pilots.

Not true, you owned 40%.

You interviewed and hired less than 1%.

To all of the ATA guys/gals that wish to blame SWA and SWAPA for your companies fate - I feel bad when anyone loses their job. That being said please realize that some of us thought your company should have been absorbed into ours initially. It was NEVER set up that way during the initial transaction and as time went on it did not look like a good idea or investment. Did we get assets and make some money with the codeshare agreement - yes. Ultimately you did not have a product that GK was interested in. Even the government canceled contracts that eventually led to your collapse. You can blame someone else all you want and claim our "mole" did you in, but your performance during your last couple of years was the reason. The complaints I heard from customers, family, and fellow employees about ATA were too numerous to count. While I am sure you will take this as personal I don't mean to state anything but the facts as I see them.

If this deal with F9 goes through it will be done just as GK has said. No huge promises like many of the RAH folks on here claim, but what he has stated about how the deal will go down. If SWA commits in some way to look after the Frontiers folks they will follow through. FAPA and SWAPA have a big say in this deal and they are in discussions right now. Promises by pilots are worthless (i.e. RAH pilots or SWA pilots on APC) until they have something in writing that is agreeable and signed.

Oscar

BTW This deal could proceed or fall through at any moment. So don't invest so much or your time a effort on what might not come about.

Great points but didn't SWA management say that they intend to purchase F9 and run them as a seperate entity while slowly selling off their Airbii and "hire" the F9 guys/gals? Then didn't he go on to say that if they couldn't get the labor relations they wanted that the deal would fall through? I remember reading this the day that the announcement was made. I also remember reading that Bedford intends to continue to grow/expand the company.

Either way I want as few people to come out of this jobless and hope the whatever happens, happens for the greater good of the pilot groups.

Straight from the horses mouth:
Southwest Airlines - Press Releases

Hey Trojan- The pilots of F9 make up only a fraction of all Frontier employees (I believe less than %20). The press release was a blanket statement talking about all the Frontier employees. There are a lot of pilots that interpreted this statement the same way you did. I did too initially. How could we not? We are pilots and the world revolves around us right?

If SWA gets F9 then the F9 pilots are screwed. If Republic get F9, then the YX pilots are screwed. It's a losing proposition for all involved. Just remember. What goes around, comes around.

Here is an interesting read on the RAH/F9/LUV

Swelblog / Swelbar on Airlines - Articles - Pondering Southwest?s Potential Play onFrontier


Sorry if somebody already posted this.

Why? They have their own frames.

Yeah I thought about that as well after I posted that. I guess the only thing we can do is wait and see what Mr. Kelly and SWAPA have in mind. Good luck to the F9/SWA/RAH guys.