The Deal: Republic Delays Frontier Departure
Phoenix-based Indigo on Oct. 1 announced plans to acquire Frontier from Republic for $36 million in cash and $109 million in debt, but that deal was contingent on Indigo resolving thorny equity rights issues with Frontier's flight attendants and pilots.
Disagreements over redemption of those rights, which were granted to Frontier workers in 2011 in exchange for concessions, had delayed a deal for months prior to the announcement.
Terms of the deal gave Indigo until the end of October to work out those issues and reach an agreement with Frontier credit card issuer Barclays, with the private equity firm required to tell Republic by Monday if it would not be moving forward with the transaction.
Indianapolis-based Republic said Tuesday it had agreed to a 48-hour extension to help Indigo get across the finish line.
"Indigo Partners informed us they have made good progress but have not been able to resolve all the conditions to close the transaction," Republic chairman and CEO Bryan Bedford said in a statement. "They requested and we agreed to extend the deadline by 48 hours."
Sources say that Indigo has a deal in place with Frontier's pilots, but so far has been less successful in dealing with the company's flight attendants.
A labor source said the Association of Flight Attendants believe Indigo's offer to that group was inferior to the deal the pilots agreed to, which is believed to include cash bonuses and a retained equity stake.
The extension is a reminder that all parties involved want to see a deal get done. Republic and Frontier workers are eager to undo the company's 2009 purchase of Frontier out of bankruptcy protection. Indigo, meanwhile, said it hopes to continue to transform Frontier into a so-called ultra-low-cost carrier similar to one-time Indigo portfolio company Spirit Airlines Inc.
-- Written by Lou Whiteman