Southwest Airlines bid $170 million for Frontier Airlines on Monday, setting the stage for an auction to determine who will take the Denver-based carrier out of bankruptcy protection.
Southwest's bid is well above a previous bid of $108.8 million by regional airline operator Republic Airways Holdings Inc. Assuming Republic stays in the fight, an auction will be held to determine a winner. Southwest said the auction will begin on Thursday.
A Republic spokesman did not return a phone message seeking comment. Frontier spokesman Steve Snyder said the carrier wouldn't have any comment until it finishes reviewing Southwest's bid.
Southwest said its bid could change, but its offer assumes it buys about 80 percent of Frontier's Airbus fleet, or about 40 planes, as well as Frontier's regional carrier, Lynx. Southwest said it expects that Frontier will operate its current planes while shifting to Southwest's Boeing 737s over the next two years.
Southwest said it would keep all of Frontier's current markets.
"Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest and the traveling public," Southwest Chairman, President, and CEO Gary Kelly said in a prepared statement.
A bankruptcy judge had already approved Republic's bid. But the bankruptcy process allows other bidders to step forward. That's what Southwest Airlines Co. did on July 30, initially offering a nonbinding bid of $113.6 million. That gave it the chance to look at Frontier's books and decide whether it wanted to submit a binding bid.
Denver-based Frontier has been operating under Chapter 11 protection since April 2008. Southwest has said its plan is to operate Frontier as a standalone carrier for a couple of years until its operations can be combined with Southwest's.
Shares of Dallas-based Southwest fell 22 cents, or 2.4 percent, to $8.89 in afternoon trading. Shares of Indianapolis-based Republic lost 20 cents, or 3.4 percent, at $5.74.