September 1, 2009

Republic charts course into headwind

Republic Airways Holding's bid to rebuild two U.S. airlines simultaneously could be a flight into a headwind, industry analyst Vaughn Cordle said.

All Southwest has to do is lower their fares 3 percent in those markets, said Cordle, an analyst AirlineForecasts, referring to routes in which the airlines go head-to-head.

If Midwest and Frontier match those prices, they're already losing money when they can't afford to. Their balance sheet is relatively weak compared to Southwest, he said, the Kansas City Star reported Tuesday.

Republic purchased Midwest this summer for $31 million in the same week it purchased Denver's Frontier out of bankruptcy court for $109 million.

Industry consultant Mike Boyd, president of Boyd Group International, said Republic was prepared.

Five years ago, they (Republic) looked out on the horizon and realized the regional business would not always be this way "¦ and they prepared for it, he said.

They were practically given Midwest, and they found a profitable carrier like Frontier to buy. The credit for that kind of foresight can be summed up in two words: good management.