Two investment firms are in discussions with Republic Airways Holdings Inc. to acquire discount-carrier Frontier Airlines in a deal that could be valued at more than $1 billion including debt, the Wall Street Journal reported today. Indigo Partners LLC, a Phoenix-based private-equity firm that specializes in airline investments, and Anchorage Capital Group LLC, a New York investment firm focused on distressed-debt trading and sectors including airlines, are competing to take control of Frontier. Under the contours of a deal currently being discussed, a buyer would pay between $20 million and $50 million to purchase Frontier from Republic and then recapitalize the airline with an additional $100 million to $150 million. A buyer would also assume hundreds of millions of dollars of liabilities. There is also a scenario under consideration in which Republic would retain a minority stake in Frontier, they said. The details surrounding any deal remain fluid and could change as negotiations progress.
