Rapidly expanding Republic to acquire Midwest Airlines
Republic Airways Holdings continued its shopping spree by acquiring Midwest Airlines in a deal announced late Tuesday, the same day it said it would buy Frontier Airlines.
The Midwest transaction, subject to appropriate regulatory approvals, is expected to close within 4-6 weeks. Republic´s offer for Frontier is valued at $108.8 million (ATWOnline, June 24).
"The acquisition will enhance the strategic positioning of Republic Airways," Chairman, President and CEO Bryan Bedford said. "We will be exploring options to restore and enhance service to various cities as a critical piece of Midwest´s historic, strong brand promise which was strained by the effects of record fuel costs in 2008 and the deep economic downturn in 2009."
Republic said it will acquire 100% of the equity of Midwest and a $31 million secured note by TPG Capital, a Texas-based private equity firm that gained controlling interest of the Milwaukee-based carrier early last year. TPG paid $450 million for Midwest. Last September, Republic struck a deal under which it would operate 12 E-170s on behalf of Midwest Connect and offered the parent company a one-year, $15 million loan as part of the air services agreement.
"At the time we acquired Midwest, we envisioned that it would ultimately become part of a larger airline and network, as the ability to operate as a small, independent carrier is increasingly challenging in this economic environment," TPG Capital Partner Rick Schifter said. "This outcome is a successful one for Midwest, its customers and the communities it serves." He added that TPG will retain a "strategic stake in Republic."
Under the sale agreement, Midwest will replace its fleet of 717s with E-190s. When the transaction is complete, Midwest Chairman Tim Hoeksema will leave the company and Bedford will take over as CEO.
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