No, this is not consolidation. This is not the beginning of the next merger wave. This is not even about 'bottom fishers'. Instead, Republic Airways' buying spree - in which it is buying both Frontier Airlines in bankruptcy court and Midwest Airlines from private investors - is about protecting its investments. Republic, which owns three regional carriers, has been a lender of next-to-last resort for other airlines. It put money into the US Airways bankruptcy, and it lent Midwest $15 million last year as the Milwaukee-based carrier teetered on the edge. That deal came with strings: Republic also got a deal to fly its regional jets for Midwest, and so a source of revenue. With Frontier, based in Denver, Republic's $108 million bid to bring the carrier out of bankruptcy is way to recoup moneys Frontier already owes it for some flying that the Indianapolis-based Republic did for it.The deals do also get Republic two brand-name airlines, each of which has had a strong, almost cult-like following. In Milwaukee, where Midwest is based, people think of it as their hometown airline, while Frontier has a similar appeal in Denver. Of course, both cities also have Southwest, whose competition certainly helped squeeze Frontier and which just announced service at Milwaukee.
(Photo: Republic Embraer in Midwest Airlines livery, via Flickr)
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