Republic Completes Purchase of Midwest, But Frontier Hangs in the Balance

At least one of Republic's purchases has sailed through without trouble. Last week, Republic completed the purchase of Midwest Airlines. It will operate as a wholly-owned subsidiary for now, but its fate may be up in the air until it's determined who will buy Frontier.

As we all know, Republic is trying to buy Frontier, and it looked like it would succeed until Southwest stepped in. Now Southwest has submitted a higher offer and they have much more firepower if they really want to win. (They say they do.) But what does that mean for Republic?

It certainly puts a wrench in their plans. It was clear that Republic was hoping to get some benefit from having both Midwest and Frontier. I think the codeshare that was announced between the two shortly after the acquisition efforts became public is a testament to that fact. I would have thought that Republic would have possibly even tried to combine the two.

But Midwest alone has far starker prospects. Milwaukee has become a bloodbath with both AirTran and Southwest pounding on each other. Midwest has seen its product deteriorate significantly, and I don't think the brand is worth nearly as much as it used to be. If Midwest is an isolated carrier, it really can't take advantage of any significant connecting traffic to help fill its planes. Frontier could have provided that to some extent. It would be an interesting dual hub operation, at least.

So I'm sure the folks in Milwaukee are anxiously awaiting the results of the Frontier auction. It could have big implications for them.