Republic says it will bring advisers on board to help find a buyer for Frontier Airlines. "We think that airline is going to be attractive either to private equity or to our shareholders or potentially to a strategic investor," Republic Chairman and CEO Bryan Bedford said yesterday. The company had "substantially achieved" the $120 million in cost savings it was seeking for Frontier, Bedford said. Frontier lost over $102 million this year and owner Republic Airways has moved quickly to cut routes. Now Frontier has 95 aircraft from 100 a year ago.
Republic bought Frontier, then a feeder airline for the likes of Delta and US Airways, out of bankruptcy protection in 2009 with a bid of $108.8 million, beating Southwest Airlines in the process.
Republic reported third-quarter net income yesterday showing a fall to $9 million, or 18 cents per share, for the quarter ending 30th September 2011 from $21.2 million, or 58 cents per share during the same period last year. Revenue rose 7.9% to $767.9 million, from $711.9 million a year ago.
Not counting special items, Republic said it would have earned $20.4 million, or 40 cents per share in Q3. Frontier lost $4 million for the quarter as it endured $10 million in expenses from a hailstorm in Denver that damaged planes, as well as $5 million in paper losses on fuel hedges, and $4.3 million in expenses related to its fleet changes.
Republic reported a $17.3 million profit for its feeder operations. The future lies here the airline now says, but it is this operation that led to Chapter 11 two years ago and the going next year will not be much different from then………
Meanwhile BA drags British PM into row with Nigeria
British Airways lobbyists have pressured the British Prime Minister, David Cameron, to intercede on behalf of the airline to save it from losing more than 50% of its flight frequency to Nigeria. Managing Director of the Federal Airports Authority of Nigeria, FAAN, George Uriesi, said yesterday that the Federal Government’s action on British Airways was informed by the need to protect the country’s domestic airlines.
Cameron’s involvement started last Friday following the insistence of the Ministry of Aviation that British Airways should restructure its London-Lagos flight frequency from seven to three weekly.
The UK Prime Minister is reported to have written a strong letter of appeal to President Goodluck Jonathan, seeking a resolution of the matter in more beneficial manner to the two countries. Subsequently the President of Nigeria directed the Minister of Aviation, Princess Stella Oduah-Ogiemwonyi, to grant a week extension to BA to allow both Nigeria aviation authorities and that of Britain sort out the disagreement
So what is all this about? Well actually BA seems to have brought this action upon itself by buying up routes that belonged to Arik Air and was part of a bilateral agreement where Nigeria had been awarded 21 flights between Nigeria-UK, of which Arik uses 12 while the remaining nine belong to Air Nigeria and the now defunct Bellview Airlines.
Under the bilateral air services agreement, Nigerian carriers have slots at Heathrow. Arik Air went to negotiate five slots a week into Heathrow from Abuja, paying about £600,000 to have the opportunity to lease the slots, and the airline was paying about £52,000 per month for the operations, but the British authorities informed Arik Air that from the end of October, it will not be able to lease slots to the airline. It then turned out that British Airways bought those slots, and began to use six slots at about the same time. Nigeria feels that restrictions are now needed to rebalance the bilateral agreement.
The saga goes on. But the route is highly profitable and thus events should be watched closely.