Published: July 26, 2013
With Frontier Airlines' financial restructuring "substantially" completed, the Colorado-grown carrier could be flying as an independent company by late spring.
Bryan Bedford, chief executive of Frontier's parent, Republic Airways Holdings, said Tuesday that a strategic adviser will be hired by the end of this month to develop details.
The goal is to have options, which include spinning off Frontier to Republic shareholders or selling to investors, by late spring. Republic will refocus on fixed-fee flying for major carriers, which it did before buying Frontier out of bankruptcy in 2009.
"Our board and management team believe that Frontier as an independent business is the right thing to do, that it can flourish as an independent business," Bedford said.
Most of the $120 million in financial improvements promised last summer have been made, including grounding small jets, halting unprofitable flights and cutting capacity, Bedford said.
In August, Republic reported Frontier had lost $90 million in the first half of the year. It reached an agreement for pay and other benefit concessions with its pilots union, with similar adjustments from other employees.
On Tuesday, Republic announced third-quarter operating revenue of $767.9 million, a nearly 8 percent increase from the same period last year. Frontier's 10 percent rise in unit revenues drove the revenue increase.
Bedford said he will try to pick up discussions with Gov. John Hickenlooper and Denver Mayor Michael Hancock on whether "there is a path here to get the business re-established" in Denver.
"We would love to do more work in Denver. We would love to get maintenance work back in Denver," Bedford said, "but the real estate costs and sale-and-use taxes have always been a challenge for us."
Appointment of a chief operating officer is critical for Frontier to stand alone. Bedford said there is a short list of four candidates, with an announcement expected by year's end.
More cost savings lie ahead, including a systemwide capacity cut of 10 percent to 12 percent next year, with most occurring in Milwaukee. Between 2 percent and 3 percent capacity cuts are expected in Denver, with staffing reduced mostly through attrition, Bedford said.
Aviation consultant Mike Boyd of Evergreen wondered who might emerge as a buyer, saying: "The fruitcakes come out of the woodwork" in such situations.