Republic Airways Sees Separate Frontier in 6 to 12 Months

Republic Airways Holdings Inc. (RJET) said its Frontier Airlines business may begin operating as a separate company in six to 12 months, without specifying whether that would happen through a sale or a spinoff.

Frontier will be an “ultra-low cost” carrier and its headquarters will return to Denver, Republic said in a U.S. regulatory filing today. Indianapolis-based Republic named veteran industry executive David Siegel as Frontier’s chief executive officer yesterday.

Republic veered away from its traditional role of providing regional flights for larger carriers when it acquired Frontier out of bankruptcy in 2009 and began competing on main jet routes. Republic said in November it would sell or spin off Frontier to shareholders in an effort to restore profits.

“We believe we have a good story to tell investors about Frontier’s future,” the company said in the filing. “None of this guarantees we’ll find investors, but we are optimistic about our chances.”

Republic rose 0.8 percent to $5.37 at 3:59 p.m. in New York trading. The shares have fallen 16 percent in the past 12 months.

Republic also said it expects Frontier to be profitable for all of 2012. Republic should have a fourth-quarter 2011 profit of 31 cents to 36 cents, excluding one-time items, because of record full planes and higher revenue from each seat flown a mile at Frontier, the company said on Jan. 25. At that time, the average profit forecast was 9 cents.

Frontier Concessions

None of the steps under consideration now to boost profits at Frontier involves asking employees for additional pay cuts, Republic said. Frontier earlier this year secured concessions from employees, vendors and aircraft lessors.

Siegel, who has served as a Republic director, previously was chief executive officer of US Airways Group Inc. and Xojet Inc., a private jet charter service. He also was an executive at Continental Airlines Inc. and Northwest Airlines Inc. in the 1990s.

“One of Dave Siegel’s key strengths is great experience working with the types of investors who participate in transactions such as the split we’re looking at here,” Republic said in the filing. “Dave brings great credibility to this process.”

Republic CEO Bryan Bedford will remain chairman of Frontier, the company said. Robert Ashcroft, who previously oversaw network planning, scheduling and pricing at Allegiant Travel Co. (ALGT), was named senior vice president for finance at Frontier.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: James Langford at jlangford2@bloomberg.net

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