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Indigo Partners to buy Frontier Airlines

October 01, 2013|By Hugo Martin
  • Private equity firm Indigo Partners is reportedly negotiating to buy Frontier Airlines from the Denver carrier's parent company, Republic Airways Holdings Inc. Above, Frontier planes at Denver International Airport.
Private equity firm Indigo Partners is reportedly negotiating to buy Frontier… (David Zalubowski, Associated…)

If you like ultra-low airfares combined with dozens of passenger fees, get ready for the new Frontier Airlines.

Republic Airways Holdings Inc. has agreed to sell the Denver-based carrier to Indigo Partners, the investors who helped finance the super-cheap carrier Spirit Airlines.

Under the agreement announced Tuesday, Indigo will pay Republic $36 million in cash and take on $109 million in debt, according to a statement released by Republic Airway Holdings.

Frontier, already considered a low-cost airline, is expected to adopt a business plan that will charge passengers a myriad of fees to compensate for the ultra-low fares.

The plan worked for Spirit Airlines, giving it one of the biggest profit margins among the nation's airlines.  

Indigo, lead by managing partner William A. Franke,  invested heavily in Spirit Airlines in 2006 and helped convince the Florida airline's chief executive, Ben Baldanza, to adopt dirt-cheap fares and abundant fees.

"As airline fares continue to move up, passengers need affordable travel alternatives," Franke said. "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 deal is conditioned on several agreements, including a contract with the Assn. of Flight Attendants and approval by the Federal Communications Commission for the transfer of Frontier's radio licenses.

The deal was not a surprise because Indigo began to divest itself of  Spirit Airlines earlier this summer. Franke and Indigo principal John Wilson resigned from the Spirit board of directors in August.

Frontier employs more than 3,900 workers and connects to more than 75 destinations.


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