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Republic Airways Holdings to sell Frontier Airlines to Indigo Partners LLC

2-Oct-2013 8:57 AM

Republic Airways Holdings entered (01-Oct-2013) into a definitive agreement to 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, Indigo Partners' affiliate will acquire all the outstanding shares of Frontier Airlines Holdings Inc in a transaction valued at approximately USD145 million, of which USD36 million (subject to certain adjustments under the purchase agreement) 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. Under a separate agreement, Republic will assign to Frontier all of Republic’s rights under agreements relating to its A320neo order, in exchange for reimbursement of pre-delivery deposits which total USD32 million. The transaction's completion is conditioned on agreements being reached with the Association of Flight Attendants-CWA (AFA) and FAPAInvest LLC no later than 31-Oct-2013, as well as agreement and documentation of other third-party commercial agreements. The transaction is also subject to receipt of Federal Communications Commission approvals for the transfer of Frontier's radio licences, the receipt of certain third-party consents and releases and other customary closing conditions. Republic Airways Holdings expects the transaction to close in Dec-2013. Republic Airways Holdings chairman, president and CEO Bryan Bedford said: "This transaction is a direct result of Frontier’s successful restructuring, continued cost reduction efforts and laser focus on revenue generation. 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." Mr Bedford added: "We continue to be excited about the growth of our fixed-fee operations. Our airline partner brands, including American Eagle, Delta Connection, United Express and US Airways Express, have a bright future at Republic Airways." Indigo Partners LLC managing partner William A Franke stated: "We endorse and will support continued efforts to build Frontier into a leading nationwide ultra-low cost carrier (ULCC). 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." Mr Franke added: "We are appreciative of the support provided by key third-party constituents in the development of this transaction and are hopeful that FAPAInvest LLC and the AFA will provide the support that is critical to closing." [more - original PR]