The airline looking to bring Frontier Airlines out of bankruptcy announced plans Tuesday to buy struggling Midwest Airlines.
A day after Indianapolis-based Republic Airways Holdings agreed to pay nearly $109 million for Frontier Airlines and its Lynx subsidiary, it said it is purchasing the Milwaukee carrier from majority owner TPG Capital, reportedly for $31 million.
“This is really a new day for Midwest Airlines,” said Bryan Bedford, chairman, president and chief executive of Republic. “We are acquiring the airline to secure its future, renew its brand promise and help it grow.”
The deal is expected to close within six weeks.
Republic’s offer to purchase the equity in Denver- based Frontier must first be approved by a bankruptcy judge. Assuming another company doesn’t make a higher bid, the deal could be completed by mid-autumn.
“They’re doing a good job of picking up distressed situations,” said Roger King, an airline industry analyst with CreditSights Inc. in New York. “Republic has been a bit of a maverick throughout the last few years. It’s been using its cash position to invest in other airlines.”
Republic operates a regional airline under its own name, as well as Chautauqua Airlines and Shuttle America. It also does regional flying for several major carriers.
Midwest has struggled as other airlines encroach on its Milwaukee hub. AirTran, which last tried to buy Midwest in 2007, has an extensive schedule to the city and Southwest has said it plans to add flights there later this year.
As Midwest has shrunk, it has hired Republic to do much of its flying.
“Midwest is a mere shell of itself, and Republic is buying up what’s left,” King said. “They’re buying two airlines really cheap. Whether they can make money, I don’t know.”
AirTran made several tries at Midwest, including a hostile takeover bid of $78 million for Midwest in June 2005. The offers increased several times so that by August 2007 it had reached an estimated $445 million. Each one was rejected.
TPG Capital, based in Fort Worth, Texas, ultimately bought Midwest for about $450 million in January 2008, including a minority stake held by Northwest Airlines.
The Associated Press contributed to this report.
Margaret Jackson: 303-954-1473 or mjackson@denverpost.com
