Republic Provides DIP Financing to Frontier
 

Frontier Airlines Receives Alternative Commitment for Debtor in Possession Financing: Financial News - Yahoo! Finance

Looks like some of those furloughs will be canceled. I am sure Republic will resume flying for F9

You are getting way ahead of yourself, there. I don't see any Frontier flying being added anytime soon. The 170's were not working out, and the business model has not changed yet. Oil is still expensive, and Frontier still does not have money to pay Republic for continued services. Any benefit realized will likely come at least a year down the road, and most likely in the form of cash or assets that don't translate well to jobs. That said, I do hope we come up with a way to keep everyone on property.

Risky investment. If i worked for Republic i would not want them investing the companies money like this. Southwest is out for blood and Frontier is not looking like a safe bet in the future. With Lynx doing the q400 flying and the 17 175's parked I really dont think giving them this loan to hopefully get 17 aircraft back is a wise move.

Jesus, at least get your facts straight. It was 11 or 12 170's.... the other aircraft were coming off the DAL contract and they would have been 170's as well. When the contract was nixed there the last 5 aircraft had not even come over from the DAL contract.

Pretty sure the initial post was sarcastic... hold the reflex responses guys.

;)

You got me. Although if you look at what ZW did for US while they were in Chapter 11 one could see the parellel between the two. Republic provides cash, get to do most of the regional flying and eventually F9 pays them back (in a perfect world it works out). Best of luck to all of you at Republic.

Eastshore Aviation, LLC provided US Airways $125M in exit financing for their emergence from bankruptcy, in exchange for a 10 year, 70 airplane contract for Air Wisconsin and the $125M in stock when LCC had their IPO.

The Amigos (the guys behind Eastshore and AWAC's owners) turned their $125M into somewhere near $400M. I'd say that's a pretty smart investment, no?

Additionally, when US was trying to emerge from BK Republic purchased the assets of MidAtlantic in exchange for a long-term contract and more 170/175s. The concept was basically the same: invest into US Airways now to make a lot more total money over the life of the contract.

Bedford and Heller aren't idiots, they're going to find a way to make money on ANY deal they sign.

Good thing you don't work here then because you're completely missing the boat on why BB is doing this. BB isn't buying stock in the company. He's loaning them money. If they pay then great we'll see benefits out of it. If they can't pay then guess who gets first call on the assets at rock bottom prices? Last time this happened with US airways BB got 170s and their gates which he now leases back to them and makes a nice chunk of change off. He's stated several times he has interest in assets at other companies. We'll just have to see which way he decides to play it. Frontier is still a great company that has potential. SWA isn't bullet proof and is a little worried itself on where it's money is going to come from. There's a reason they don't go into ATL.

Well considering that most if not all of Frontier's aircraft are leased, I'm failing to see how RAH would benefit from this transaction. The gates might be of some value as SWA is planning on doubling their presence here, but I have to agree with the previous poster...I don't see the long term value of the transaction, poor guys at F9 are as good as gone...all the best to them.

Very few things in the world of aviation are nearly certain, but BB making money is one of them. He does not get into a deal unless it is a nearly sure bet. BB lost on Frontier, but this is going to make it all right. No one could see Frontier's Credit Card issue coming and that is what forced them into Bankruptcy. They have fixed that, will have more days of cash on hand than most airlines, be able to dump their worst routes, agreements, and leases (through BK). BB still has 12 170's sitting in PIT. If Frontier does not take them and they go under, BB picks up the gates and offers them (and of course the 170's) to another code share at a great price. Take it to the bank and draw interest on it. Our beloved Reverend will come out on top of this deal no matter how it shakes out.

is there a reason for the hostility?

Your right i don't work at republic and am happy where i am but i merely mentioned that if i did work for republic i would not be very comfortable with my company being a financial backer to F9. No one said Republic was becoming a shareholder and i am pretty sure everyone understands what this means. Last time BB did this was with USAirways which had a lot better brand recognition, market share, and better outlook. F9 is in a very difficult position with lots of competition, does not own its aircraft, and has a list of new creditors lining up. If BB is expecting to get assets during a liquidation he will be receiving pennies on the dollar for what might be worthless assets down the road. Past performance is no indicator of future success when it comes to investments. Don't kid yourselves into thinking everything he touches is gold... money can be lost. This is money that could be keeping your job secure down the road if this roll of the dice doesn't pan out. good luck

You can't expect to understand everything about the business deal before it's released to public. There are a lot of ways this could go. What's a Q400 regional go for these days?

Wow thats nice.

Let me say it again. With credit card money flowing in, and the cash coming in from the financing F9 is going to be in better shape than most of the airlines. Most of their other financial ratios are very solid. Don't put a tombstone on them. They could be here long after XJet, Mesa, and few others that whose stock is selling at a similar point and would not have the near the recovery potential if they went into BK. Those poor guys at F9 are likely going to be flying long after some of those who have counted them out.

And which carriers are looking to pick up feed right now or in the near future?

Just a correction, Frontier still owns a good portion of their aircraft and more importantly, they have a very good assets to liabilities ratio (which I can't remember right now, sorry), which is also something many airlines can't say right now.

All they have is a fighting chance, but they definitely shouldn't be counted out yet!

A lot of people. They're just shopping around. It's not just about planes though Q400s are nice. We're talking about assets in general. Anything that can be flipped and used again for a long while. I'm putting the gates F9 has at the top of the list. Those things are worth their weight in gold. I hope f9 renegotiates under BK and comes out smelling like a rose like DAL and NWA did. If not then RAH will still get it's money and then some in any assets it's able to claim.

Looking only at the near future catches you with your pants down. Have to plan for the long haul. I think this is a great move on RAH's part.

Lets not forget that RAH needs some place to hide those profits before those darn pilots start thinking they can justify a pay raise in the new contract.

also not to forget that rah is in on this deal with two other companies, not just themselves.

Kind of like the CRJ deal with CAL, huh?:rolleyes:

I don't understand what you're trying to say. You know that the CRJs were a complete success right? Not only did they let BB get his foot in the door with CAL he managed to negotiate them for pennies on the dollar on their lease. RAH has made money hand over fist on those CRJs. RAH doesn't own those aircraft and only wanted them till they could get the 145s transitioned over.

So to answer your question.. Yes, exactly like the CRJ deal hopefully.

Expect Frontier get rid of the A318s and turn over flying to RAH for EMB190s.
A318 is a very expensive aircraft CASM wise. On the other hand EMB190s are perfect for those routes.
RAH can provide EB170, EMB190 and Q400 flying for Frontier. Southwest cannot compete with this metal.
Lynx is going to be the next Shuttle America.

Are you serious?

Southwest can't compete with E-Jets and Q400s?

I am serious.
WN cannot compete with EMB190/170 series operated by RAH and Q400.
On markets where there is just enough RASM the 190 will have a better CASM.
You can also check the yields in DEN for all 3 airlines. WN has in most markets lowest yields. I did my research, i am not BSing about it..

Granted SWA is one of the best when it comes to operating cost even they are wondering where the money will come from in the near future.

It all the depends on perspective:

First 6 months of the operation, the CRJ's generated an average of $40,000 in denied boardings per month per station. After six months that number was slashed to $20,000 average per station per month.....I don't believe CAL considered them a success, and that's part of the reason why the leases were not renewed. 20+ 50 seat RJ's flying around, and CAL pilots not giving up on scope....hardly a great outcome!

Back to the subject at hand, as much as it hurts me to say it (because I do like Frontier and their product) Southwest is going to kill them, in the same fashion that they nearly destroyed Airways (pre-merger) in the Northeast. The advantage US had was multiple hubs to compensate for the damage in some of the others. Frontier does not have that luxury. Once again, all the best to those guys.

Gotta tell ya, the Arm Chair CEO's are truly an interesting group. (Don't take offense - I count myself among them)

BB recognizes that as a Regional he is going to make his money a few years at a time with an overall but "ever-slightly-adjusted" long term strategy. Consider the possibilites -- BB guarantees to loan $25M. He settles the $260M claim for actual lost income and expenses -- lets say $10M. Lynx ends up the fourth leg of Republic, which BB gets for pennies on the dollar. (Worst Case) Republic flies the Frontier routes for 3 to 5 years making money all along the way and bang Frontier does not make it. BB ends up with the gates to either market to another code share or sell to SW. Almost no matter how you think this plays out -- BB and Republic win. All for an up-front expense of maybe $15M. One plane costs him more than that.

FYI - SW does not even want most of the routes Frontier has. Secondly, Southwest absolutely wants to keep Frontier alive, but weak. Denver is a great market and the last thing SW would want is a threat from a strong competitor entering upon Frontier's exit. (Let's see -- who could help make that happen). SW is not going to kill them, they will probably supply the defibrilator to keep them alive.

The good Reverend took some short term pain for long term gain by agreeing to gracefully bow out last April. Count on it, he has a plan and is going profit big from this deal.

The CRJ's leases were NEVER intended to be renewed. At least get the facts straight.

Yup, they were a short term fix after XJT decided to keep the 69 airplanes. With 145s being freed up, they are transitioning. Also on the 170 side, we do have two company colored aircraft that can switch between RW and S5.

you must be on drugs. EMB 170/190 have worse economics then the CRJ700/900's and have higher CASM then Frontiers Airbus products. Why do you think the EMB's were the first to go? B6 ended a lot of their options on the 190's and took delivery on only 36 of an initial deal of 50. Their Airbuses are more economical. Between Q400's and Airbus products and Southwest limiting their markets i highly doubt REP will ever see more flying under that banner then you did a year ago. Lets say Frontier turns around and is the position to add a new/or previous aircraft type into the mix... do you think they would rather be like B6 and fly their 190's and get their pilots off furlough or give it to a regional?

The CRJ's for CAL were a success?!?!? you have got to be kidding. You cost CAL millions in missed connections, weight restriction issues, hotel/food vouchers, you still have more mx cancellations on 40 some odd airplanes then XJT does on 205, you refused to get ACARS when CAL asked to improve your performance, and have blamed your cluster of an operation on everyone but your own self to CAL (hardstands, gate agents dont like you, ground crews giving mainline/xjt priority...) You may have made a little money but you did not impress anyone and if thats what you meant by getting your foot in the door... god help us.

Folks need to drop the holier-than-thou attitudes and bologna stats... :rolleyes:

The reality is that mgmt doesn't really care about the pilots. The truth is that RW could operate them cheaper than Frontier; due to economies of scale and employee compensation.

awww... looks like someone is a little bitter than his airline is fading away :rolleyes: