Frontier Airlines has a new buyer, a private equity group that may shift the company from its current base in Denver, according to USA Today.
Republic Airways Holdings has agreed to sell Frontier to an affiliate of the private-equity firm Indigo Partners, the company announced on Tuesday. Indigo Partners was a key early investor in the ultra-low cost carrier Spirit Airlines.
The affiliate will pay $36 million in cash, as well as taking on approximately $109 million of Frontier's debt. Republic Holdings will also receive another $32 million as reimbursement for deposits on some previous jet purchases.
Both companies have said that after the sale is completed, the plan is to continue to try to position Frontier, which is currently a small carrier that is best known for the colorful animals on the plane's tails, as well as the devoted customer base in Denver.
"We endorse and will support continued efforts to build Frontier into a leading nationwide ultra-low cost carrier," William Franke, a managing partner with Indigo, said in a statement that announced the agreement. "As airline fares continue to move up, passengers need affordable travel alternatives."
Passengers that want the lowest fare possible, and are less concerned with frills, may welcome another option among the low-cost carriers, according to William Swelbar, a research engineer with the Massachusetts Institute of Technology's International Canter for Air Transportation.
"This fit's Franke's mold and I think he believes that there's some magic here that he can perform with this airline... that through consolidation of the industry, there are opportunities for another ultra-low-cost carrier," Swelbar said. "I'm not so sure that an ultra-low-cost carrier will continue to choose Denver."
Frontier might shrink its Denver presence, according to travel analyst Henry Hartveldt. The company has already taken small steps to reduce its reliance on Denver, establishing focus cities at two small airports, Trenton-Mercer and New Castle Airport near Wilmington.
This article is copyrighted by Travelers Today, the travel news leader