Is This Airline Worth Buying Now?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Republic Airways (Nasdaq: RJET  ) is a survivor, one of the very few in the business of regional air travel now that it is buying Midwest Airlines and bidding for bankrupt Frontier Airlines, based in Denver.

Republic isn't your run-of-the-mill airline. Much of its business comes from other carriers. Midwest has been a customer -- Republic flew routes for the beleaguered carrier as AirTran upped its presence in Midwest's Milwaukee hub, The Associated Press reports.

Other carriers to employ Republic's jets for regional flights include AMR's (NYSE: AMR  ) American, US Airways (NYSE: LCC  ) , UAL's (Nasdaq: UAUA  ) United, Continental Airlines (NYSE: CAL  ) , and Delta (NYSE: DAL  ) . But now Republic wants a bigger piece of the action, and this week it bid $108.8 million for Frontier.

This shouldn't really come as a surprise. According to its most recent 10-Q quarterly filing with the SEC, Republic supplied $40 million in debtor-in-possession financing in April to preserve a $150 million legal claim it has against Frontier.

Under a new deal, Frontier would continue operations as a Republic subsidiary. And that raises serious questions -- principally, would United, which in the first quarter was Republic's second-largest source of regional service revenue, stand for having to compete with its partner? (Both United and Frontier have significant operations in Denver.) I have my doubts.

Perhaps this is just an investment, like the $35 million term loan Republic funded for US Airways that's due to be repaid sometime next year. If so, the micro-carrier could be hoping to recoup its legal claim as Frontier's owner and then sell the remaining assets and operations to a legacy carrier interested in its routes. United would be a possibility, as would Southwest (NYSE: LUV  ) .

Regardless of the outcome, one thing is clear: Legacy carriers, beat up and broke though they may be, still need to offer regional service to smaller cities, and an acquisitive Republic is quickly becoming the dominant supplier.

Taxi toward related Foolishness:

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. Try any of our Foolish newsletter services free for 30 days.

Tim didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy suggests you buckle up for safety.

Read/Post Comments (2) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 25, 2009, at 5:30 PM, calpilot727 wrote:

    There is no value in Frontier's routes. If United wants to fly where Frontier does, then they put an airplane on it. Since de-regulation in '78 that has been the case for routes in the USA.

  • Report this Comment On June 26, 2009, at 9:23 AM, EnigmaDude wrote:

    I completely disagree with calpilot. As a Denver resident I would much rather fly anywhere Frontier goes as opposed to United. The fares are usually identical but the service and quality of the airplanes is far superior on Frontier, they offer in-flight television service, and my daughter loves the animals on the planes! United keeps cutting costs and adding fees while Frontier strives to provide higher quality in all aspects of their business - and it shows!

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 928634, ~/Articles/ArticleHandler.aspx, 10/24/2016 10:42:40 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,233.47 87.76 0.48%
S&P 500 2,150.81 9.65 0.45%
NASD 5,304.26 46.85 0.89%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/24/2016 10:23 AM
RJETQ $0.70 Up +0.05 +7.69%
Republic Airways H… CAPS Rating: **
AAMRQ.DL $0.00 Down +0.00 +0.00%
CAL.DL2 $0.00 Down +0.00 +0.00%
Continental Airlin… CAPS Rating: *
DAL $41.46 Up +0.29 +0.70%
Delta Air Lines CAPS Rating: ***
LCC.DL $0.00 Down +0.00 +0.00%
US Airways Group CAPS Rating: *
LUV $42.46 Up +0.03 +0.07%
Southwest Airlines CAPS Rating: ****
UAUA.DL $0.00 Down +0.00 +0.00%
UAL Corp CAPS Rating: *