Republic Airways to Acquire Midwest and Frontier

Republic Airways Holdings said it is acquiring Milwaukee-based Midwest Airlines from TPG Capital, a Fort Worth, TX-based private equity firm. The transaction is subject to customary regulatory approvals and is expected to close in four to six weeks. The acquisition follows Republic’s Monday decision to be the equity sponsor of Frontier Airlines’ plan of reorganization— and ultimately its owner.

Republic will acquire 100 percent of the equity of Midwest and TPG’s $31 million secured note from Midwest. Consideration will be $6 million in cash and a $25 million, five-year note, which may be converted to Republic’s stock at $10 per share. In addition, TPG will have the right to nominate a member to Republic's Board of Directors.

“This acquisition will enhance the strategic positioning of Republic Airways,” said Bryan Bedford, chairman, president and CEO of Republic Airways. “Midwest has built a strong brand, a loyal base of customers and dedicated team of employees. We look forward to welcoming them to the Republic family and continuing the Midwest tradition of excellent customer care.

“Thanks to the hard work of its employees, Frontier has made tremendous strides during its restructuring process, recently posting its sixth straight monthly operating profit despite challenging economic conditions,” Bedford, continued. “Adding Frontier to the Republic portfolio of operating companies is an opportunity for both companies to build on recent successes and strengthen the Republic organization for the benefit of all stakeholders.”

The Frontier plan, which is subject to bankruptcy court approval and various conditions, would allow Republic to purchase 100 percent of the equity in the reorganized company for $108.75 million. If approved and completed, the plan will result in Frontier’s successful exit from Chapter 11, at which point it would become a wholly owned subsidiary of Republic Airways, alongside the other Republic operating companies: Chautauqua Airlines, Republic Airlines and Shuttle America.

Under the Midwest agreement, Midwest will become a wholly owned subsidiary of Republic Airways, with the Midwest brand continuing. Midwest’s Boeing 717s will be replaced with Embraer 190 aircraft, enhancing Midwest’s ability to offer nonstop service to key destinations important to its frequent flyers.

Republic Airlines offers scheduled passenger service on approximately 1,200 flights daily to 101 cities in 37 states, Canada and Mexico through airline services agreements with seven U.S. airlines.

All of the airlines’ flights are operated under their airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, United Express, Midwest Connect, Mokulele Airlines and US Airways Express. The airlines currently employ approximately 4,500 aviation professionals and operate 212 regional jets.


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