Frontier Airlines sold to investment firm

10/01/2013 6:14 PM

10/01/2013 6:14 PM

Frontier Airlines is being sold to William Franke, a pioneer of the cheap-tickets-and-high-fees airline business that has spread overseas and is growing in the United States.

Franke is the former chairman of Spirit Airlines, which has earned consistent profits by jamming more seats on its planes and charging extra for things that other airlines do for free, such as printing boarding passes at airports or using overhead bins.

Franke’s Indigo Partners LLC is buying Frontier for $36 million plus assumed debt. The carrier has about five daily departures from Kansas City International Airport, serving Denver, Washington and Cancun, Mexico.

Franke made it clear that he’d steer Frontier in the same direction as Spirit.

“We endorse and will support continued efforts to build Frontier into a leading nationwide ultra-low-cost carrier,” Franke said in a statement announcing the deal Tuesday.

Frontier began moving in that direction last year as Republic Airways got ready to sell it. On Aug. 6 it began charging as much as $100 each way for carry-on bags for some tickets bought somewhere other than Frontier’s website.

The companies said they expected the sale to close in December if several conditions were met, including agreements being reached by the end of this month with the Association of Flight Attendants-CWA and a group tied to Frontier’s former pilots union.

There has been a Frontier Airlines in Denver since the 1950s, but that airline was absorbed by People Express and disappeared in 1986. The current version was founded in 1994 by executives from the old Frontier. In 2008 it filed for bankruptcy protection after oil prices spiked. Republic outbid Southwest Airlines to buy Frontier in bankruptcy court in 2009. But Frontier was never a good fit with Republic’s main business of operating regional flights for big airlines such as Delta and United.

Frontier several years ago expanded its service at KCI, and it accounted for about 15 percent of the airport’s passenger market share in early 2012. But the airline cut back sharply over the past year, and as of August it held 4.3 percent of the passenger traffic market at KCI, according to the Kansas City Aviation Department.

Frontier doesn’t necessarily threaten Spirit. The two airlines overlap on just 3 percent of Spirit’s flights, wrote Wolfe Research analyst Hunter Keay in a note before the deal was announced. Spirit has its eye on 400 cities where it could grow, leaving it lots of room even if Frontier begins competing more directly, Keay wrote.

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