How Much Will Southwest Pay for Frontier?

August 11 2009, 10:38 AM

southwest-airlines-logoSouthwest Airlines upped its bid for Frontier Airlines yesterday by 50 percent in the hopes of winning Thursday's court auction of Frontier assets (via USA Today). Southwest had already topped the only other bid---$108.7 million from Republic Airways Holdings---by about $5 million. But in a stunner, Southwest offered more than $170 million in cash yesterday, reports The Denver Post. For Frontier employees who don't want competitor Southwest to take over, Southwest appeared to throw them a bone, saying that Frontier would continue to operate its Airbus jets as usual until Frontier's fleet is retired during a transition to Boeing 737s over two years.

"We believe our bid, ultimately, should be seen as the strongest offer by all interested parties, including Frontier, its creditors, employees and customers," says Southwest chief executive Gary Kelly. Local television personality Aaron Harber, a consummate air traveler, writes (via INDenverTimes) that "Southwest adroitly waited until the last minute to announce its bid---as sophisticated auction bidders do. After all, why start the bidding if all it is going to do is increase the price of what you are buying?"