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Topic: WSJ: Investment Firms Looking At Buying F9
Username: enilria
Posted 2013-04-09 12:25:56 and read 6180 times.

Not an airline, huh. Can't say that's great. Can't read the article without a subscription. Anybody with a wsj sub?

online.wsj.com/article/SB10001424127887324504704578412631654366830.html

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: AeroWesty
Posted 2013-04-09 12:31:28 and read 6143 times.

Quoting enilria (Thread starter):
Can't read the article without a subscription. Anybody with a wsj sub?

Simply google the article title, then follow the link: Investment Firms in Talks to Buy Frontier Airlines

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: LAXintl
Posted 2013-04-09 12:34:24 and read 6104 times.

Basically says RAH is in primary talks with two investment firms in a deal that would be worth more than $1bil including debt.

Indigo Partners LLC, (Spirit Airlines fame) and Anchorage Capital Group which focuses on distressed-debt trading are leading candidates.

Under the contours of a deal currently being discussed, buyer would pay somewhere between $20 million and $50 million to purchase Frontier from Republic and then recapitalize the airline with an additional $100 million to $150 million. The buyer would also assume much of existing liabilities.

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: enilria
Posted 2013-04-09 12:44:42 and read 6033 times.

So despite the $1 billion mentioned, Frontier is really worth $20-50m. That's almost nothing. Not sure why Indigo would prop up a competitor to NK. Who knows about Anchorage, but they'd be looking at it as a short term play.

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: stlgph
Posted 2013-04-09 12:55:19 and read 5946 times.

Quoting LAXintl (Reply 2):
Indigo Partners LLC, (Spirit Airlines fame) and Anchorage Capital Group which focuses on distressed-debt trading are leading candidates.

Indigo is 15.53% out in Spirit. Anchorage is 2.07% out.

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: flyinryan99
Posted 2013-04-09 13:03:04 and read 5882 times.

Quoting enilria (Reply 3):
Not sure why Indigo would prop up a competitor to NK. Who knows about Anchorage, but they'd be looking at it as a short term play.

It's the Berkshire way of doing business...They own parts of two competing major aviation insurance companies...Reap the rewards of both competitors when they fight against each other to maximize profits. Kind of makes sense..

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: mariner
Posted 2013-04-09 13:07:18 and read 5846 times.

Quoting enilria (Thread starter):
Not an airline, huh. Can't say that's great.

From the git-go, BB said that it was unlikely to be an airline.

Nothing has changed - I'm not sure why you thought it would.

mariner

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: jjsilver
Posted 2013-04-09 16:51:33 and read 5392 times.

with the consolidation in the industry it seems natural for new owners to enter the market. They are hardly 'non airline" (indigo for sure) owners but they are not another name brand airline. In a consolidating market it is natural for new players to enter when the incumbents are preoccupied with consolidation and cost reductions. When you consolidate you often see so many cost reductions that will pay off short term that you do not see the next challenge around the corner. This is not a bad thing for AA/US, but it is an opportunity for others.

F9 has supposedly been on the market for a long time and I bet there was nothing but smiles when AA/US was announced. Suddenly they were slightly more attractive. A deal takes on a life of it's own once the process begins. Logic exists before it begins but at some point emotions kick in. Add another party and it becomes even more interesting.

The industry is rarely a great investment. But as an observer of the industry I expected the minute AA and US were a possibility the wheels would be turning for anyone who has capital and some experience in the industry. The US can support other players....even though the results do not scream that.

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: LAXintl
Posted 2013-04-09 17:30:53 and read 5243 times.

I believe if RAH finds someone to take over of Indigo's caliber that would be good news.

A private equity investor in the long run will be to shine the company up and resell it for a nice profit. So while yes there might be some slashing and burning, there will also be investment made to improve the operation.

Indigo certainly has good experience with bunch of LCC player - Spirit, Wizz, Tiger. Indigo is headed by former America West CEO.

Also behind the wings of Indigo investments often is TPG founding partner David Bonderman who has teemed up on his own in other airline deals. Now why is this interesting - Frontier CEO David Siegel has worked for Bonderman and TPG on more then one occasion.

Topic: RE: WSJ: Investment Firms Looking At Buying F9
Username: mariner
Posted 2013-04-09 17:48:31 and read 5172 times.

Quoting jjsilver (Reply 7):
F9 has supposedly been on the market for a long time and I bet there was nothing but smiles when AA/US was announced.

The prospect of eventual separation was announced a couple of years ago, but Republic didn't hire Barclays (to help do the deal) until about six months ago.

Quoting LAXintl (Reply 8):
Also behind the wings of Indigo investments often is TPG founding partner David Bonderman who has teemed up on his own in other airline deals. Now why is this interesting - Frontier CEO David Siegel has worked for Bonderman and TPG on more then one occasion.

TPG have kept Siegel employed for the last dozen years or so. What's missing from this debate is the point made in the Denver Post article:

http://www.denverpost.com/breakingne...-investment-firms-potential-buyers

"There is also a scenario under consideration in which Republic would retain a minority stake in Frontier, they said."

Which was the way BB originally outlined the deal with the FAPA agreement in march 2011 - that Republic would become a minority investor by the end of 2014. And that the pilots (and f/a's, in a contingent agreement) would get small percentage holdings of the airline.

BB later described the process by which Republic would make money from the deal, from the IPO. So far, it is playing out almost exactly as he said - that the deal would be in the best interests of RJET shareholders.

mariner

[Edited 2013-04-09 17:51:32]


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