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Old 08-01-2009, 12:18 AM   #1  
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Default 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".
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Old 08-01-2009, 03:12 AM   #2  
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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
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Old 08-01-2009, 03:20 AM   #3  
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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.
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Old 08-01-2009, 03:29 AM   #4  
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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
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.
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Old 08-01-2009, 05:27 AM   #5  
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Cool We're Nothing Like Bedford

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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.
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.
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Old 08-01-2009, 08:33 AM   #6  
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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.
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Old 08-02-2009, 04:29 AM   #7  
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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.
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Old 08-02-2009, 06:38 AM   #8  
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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?
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Old 08-02-2009, 06:57 AM   #9  
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Originally Posted by wags3539 View Post
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


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.
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Old 08-02-2009, 07:37 AM   #10  
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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.
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.
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