Republic Provides DIP Financing to Frontier
08-04-2008 | 11:33 AM
#1
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From: Pawn
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
Looks like some of those furloughs will be canceled. I am sure Republic will resume flying for F9
08-04-2008 | 01:31 PM
#2
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From: E170/175 CA
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.
08-04-2008 | 01:34 PM
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From: e190
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.
08-04-2008 | 02:00 PM
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From: 744 CA
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.
08-04-2008 | 02:14 PM
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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.
08-04-2008 | 02:33 PM
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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.
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.
08-04-2008 | 02:41 PM
#8
Che Guevara
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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.
08-04-2008 | 05:12 PM
#9
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From: On Top
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.
08-04-2008 | 05:53 PM
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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.
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