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
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
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.
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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.