If successful, Southwest stands to gain Frontier’s coveted presence in Denver and the Rocky Mountain region, as well as its valuable vacation routes to five cities in Mexico and one destination in Costa Rica.
The bid comes before an Aug. 10 court deadline to submit non-binding bids for Frontier, which filed for bankruptcy protection last April.
The potential merger also grants Southwest the ability to better compete with traditional carriers, especially United Airlines, which is currently the number one carrier at Denver International Airport.
Frontier is known for its entrepreneurial culture and quirky aircraft livery featuring wild animals. Each Frontier plane—and the animal painted on its tail fin—is given a unique name.
“We have always prepared in good times to weather the bad times and to be able to take advantage of a good opportunity, like this one, when presented to us,” said Ron Ricks, executive vice president at Southwest, in a statement. “We have the cash, access to capital, and collateral that allows us to take advantage of this existing opportunity and synergies between Southwest and Frontier.”
Analysts say that the deal is a big boost Southwest, which is known for snapping up smaller rivals on the cheap. It’s also one of a handful of airlines with the financial wherewithal to make a major deal in the current market environment.
Last year, Southwest purchased ATA Airlines and took over ATA’s valuable slot at New York’s LaGuardia Airport. Southwest previously only flew out of Islip Macarthur Airport located in Long Island.
“We are confident that our bid, if successful, will boost low-fare competition and benefit consumers in Denver and other cities our expanded network will serve,” Ricks said.
But the biggest obstacles facing Southwest are merging two different company cultures, pilot unions, and aircraft fleets.
Frontier flies an all Airbus fleet of 51 planes, while Southwest employs only Boeing 737s. The two types of aircraft need different maintenance systems and gate setups.
In an interview with the Wall Street Journal, Frontier Airlines Pilots Association President John Stemmler had this to say about Southwest, “There was a time when people when people wouldn’t dream about going to Southwest because you didn’t know if it would still be flying in a few years because it was such a small company. Now these are coveted jobs.”
“It went from one of the lowest paying to one of the highest. Southwest has grown to point to where it’s really stable, which you can’t say about a lot of other airlines.”
Southwest has 121 daily departures and has its biggest operations out of Las Vegas, Chicago, and Phoenix, Arizona. The company is known in the airline industry for its effective fuel hedging activities, which is a major reason for its recent financial success.
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