Possibly the worst kept industry “secret” is out – Frontier has been sold by Republic to Indigo Partners.
Indigo Partners is a private equity firm established by Bill Franke in 2002. Mr Franke has a legendary background (also here) in the industry. The firm undertakes acquisitions and investments in air transportation and related industries. Headquartered in Phoenix, Arizona, and has an office in Singapore. Indigo Partners likes investing in low-cost carriers. Low-cost carriers in which Indigo Partners has made investments in include Wizz Air, Avianova, Tiger Airways, Spirit Airlines and Mandala Airlines. In July Indigo sold its stake in Spirit, and it was after this that industry observers predicted the Frontier deal.The deal has some interesting aspects –
- Republic assigns to Frontier rights for its 80 A319/A320neo on order. In exchange, Republic is reimbursed $32 million in pre-delivery deposits.
- This means Republic stays with its CSeries order. Which will be of some comfort to Bombardier because the Airbus order was unsettling.
- The Airbus order included CFM engines. Mr Franke is a steadfast P&W customer. How this plays out is going to be an item to watch. Absent a bankruptcy no contracts can be broken. The plan being to build Frontier into an ULCC, financing probably trumps all else.
I wonder if the new operators will continue the Frontier strategy of serving small underserved cities like Trenton,NJ, Wilmington,DL, Kearney, NE, and Bloomington, IL.? That type of operation seems to be working quite well for Allegiant and I feel there is room for 2 carriers to run these types of airlines.