Republic Airways Holdings Inc. reports it will sell Frontier Airlines to an affiliate of Indigo Partners LLC in an all-cash transaction.
Under the terms of the stock purchase agreement, which has been approved by Republic’s Board of Directors, the buyer, an affiliate of Indigo Partners, will acquire all the outstanding shares of Frontier Airlines Holdings, Inc. in a transaction valued at approximately $145 million, of which $36 million is to be paid in cash for the equity of Frontier Holdings and the balance is indebtedness that will be retained by Frontier. In addition, Indigo plans to invest additional funds directly in Frontier after the closing.
Republic said Indigo Partners and its principals, led by managing partner William A. Franke, have a history of investing in airline transportation and related industries and creating successful, differentiated companies.
“This transaction is a direct result of Frontier’s successful restructuring, continued cost reduction efforts and laser focus on revenue generation,” said Republic Airways Chairman, President and Chief Executive Officer Bryan Bedford. “I am confident that Frontier will enjoy future growth as Indigo continues the process to position the airline as a leading ultra-low-cost carrier in the United States."
"We endorse and will support continued efforts to build Frontier into a leading nationwide ultra-low cost carrier (ULCC),” said Franke. “As airline fares continue to move up, passengers need affordable travel alternatives. Our goal will be to meet that need in more markets as we invest in the airline to grow its footprint, while maintaining a commitment to quality service, customer choice and satisfaction and continued employment opportunities for the Frontier team.”
Completion of the transaction is conditioned on agreements being reached with unions and other conditions. The deal is expected to close in December 2013.