The Deal: Indigo to Sell Out of Spirit Air as It Plans Bid for Frontier
NEW YORK (The Deal) -- Private equity firm Indigo Partners is liquidating its stake in discounter Spirit Airlines
Phoenix-based Indigo, which is run by former America West Airlines CEO William Franke, has been a shareholder in Spirit since injecting $70 million of equity and debt into the airline in 2006. Indigo along with co-investor Oaktree Capital Group
Spirit said in a late Monday, July 29, filing that Indigo was selling its just more than 12 million shares to the public in an offering that would end Indigo's ownership of the airline. As part of the sale Franke, who is non-executive chairman of Spirit, and Indigo representative John Wilson will step down from the Spirit board.
The exit comes just a week after Republic Airways Holdings
Indianapolis-based Republic acquired Frontier out of bankruptcy in 2009 and added Midwest Air Group soon after in an attempt to build a viable discount brand. The company has had Frontier, which competes against titans Southwest Airlines
Frontier operates 52 Airbus SAS jets with service to 80 destinations in the United States, Costa Rica, the Dominican Republic, Jamaica, and Mexico. Spirit flies 51 Airbus planes to 49 North and South American destinations with a heavy emphasis on connecting U.S. tourists to Caribbean and Latin American vacation spots.
Raymond James & Associates managing director James Parker in a note said that an Indigo deal for Frontier would be a negative for Spirit because Franke and Indigo "have intimate hands-on knowledge of the Spirit business model and its market potential," and could turn Frontier from an also-ran to a viable competitor.