Frontier is looking a bit ugly

It was in the news earlier this week that Frontier is laying off an additional 120 people in Milwaukee.   Likely these are more former Midwest employees but the hit hurts just the same. 

It’s another sign of just how much Frontier is bleeding and another sign of just how much Republic Airways is approaching their investment with a lack of enthusiasm. 

Frankly, I thought Southwest was the better suitor for Frontier but I didn’t believe that Republic would lose interest quite that rapidly either.  The truth is, Republic has never shown much enthusiasm for its purchases of Frontier and Midwest.  They blame high fuel prices for their problems.  I blame a lack of expertise in running a brand airline, getting rid of the expertise that did come with Frontier and just not really going “all in” with their purchase.

There is now speculation that there will be no interested buyers for Frontier and it is hard to argue with that.  There is a tiny bit of speculation that Frontier could be of interest to JetBlue largely because of fleet commonality and, somewhat, service commonality.

Going up against Southwest and United in Denver is not for the faint of heart.  I don’t disagree that jetBlue could be interested and I do think there is some “fit” there.  I also don’t think JetBlue has enough guts to make such a purchase.  They have signaled their complete happiness with being the airline they are today and have made little effort to grow into new markets.  Denver certainly isn’t an attractive market for the risk adverse management of JetBlue.

But another airline does come to mind.   Virgin America.  The fleet commonality works and they *are* being smart about competing with legacy airlines.  I don’t think you would see Frontier in Milwaukee for very long or quite as much flying in Denver either.  But I think Virgin America has an aggressive enough management cadre to figure out how to make Denver profitable and how to use the remaining fleet to enter into other profitable markets quicker.

The real question is whether or not Virgin America could even financially swing such a deal given how much Frontier is burdened with debt.

2 Responses to “Frontier is looking a bit ugly”

  1. Terrific analysis of both Virgin and JetBlue management. JetBlue will continue to be mediocre as they squander their $1.2 billion of cash/equivalents while Virgin smartly and agressively continues to whittle away at JetBlue’s future potential profit centers. I’m selling short on JB because they operate in the fear regime.

  2. In 2008, there was a class of people in the DFW area wanted JetBlue in the market bad. JetBlue has avoided Dallas / Fort Worth as if American Airlines has some *bad* pictures of JetBlue managers that it’s threatened to use.

    Now? The moment has passed and Virgin America is impressing more and more people in the area as the better choice. JetBlue could have had that status. Now, I’ll wager that Virgin America gets into the DFW – NYC/BOS area sometime in the next 12 to 18 months.

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