Southwest gives up Frontier bid; Republic wins

In a dramatic turnaround of events, Southwest Airlines Co. (Southwest), one of the world's largest low-cost carriers, which boosted its final acquisition offer for the bankrupt Frontier Airline Holdings Inc (Frontier) by around 50 per cent to $170 million last week (See: Soutwest boosts Frontier bid to $170 million), dropped its bid following disagreement between the pilot's associations of both the companies.  

Following Southwest's decision, the other lone contender, Republic Airways Holdings Inc (Republic), which offered $108.8 million for Frontier, that was earlier accepted by both Frontier and the US Bankruptcy Court in New York, surprisingly won the auction.

Frontier filed for re-organisation under Chapter 11 of the US Bankruptcy Code on 10 April 2008 and expects to come out from bankruptcy this autumn.

Southwest had stipulated several conditions to be resolved for the deal to go through; the major one was that the Pilots Association from Frontier joining the Pilots Association from Southwest, telling that its culture and relationships with its employees are too important to compromise.

Southwest's chairman, president and CEO Gary Kelly said: "We said all along that we would only move forward on this deal if it proved to be the right decision for our employees and financially prudent for our company."

Kelly further stated: ''We chose not to amend our bid to remove the labour requirement, a key reason our bid was not selected. Our congratulations to Republic Airways and Frontier Airlines."