Republic Airways Holdings is negotiating with two firms to sell subsidiary Frontier Airlines in a deal potentially worth more than $1 billion including debt, according to media reports.
Indigo Partners LLC, a Phoenix, Arizona-based private equity firm, and Anchorage Capital Group LLC, an investment firm based in New York City, are interested in purchasing the airline, according to anonymous sources cited in the Wall Street Journal.
Frontier Airlines referred questions about the reports to Indianapolis, Indiana-based Republic, which declined to comment.
"Republic Airways does not comment on rumours or market speculation," the company says.
Indigo Partners and Anchorage Capital Group did not respond to requests for comment.
The deal is in the early stages of discussion and would call for a buyer to purchase Frontier for between $20 million and $50 million, say reports.
The buyer would also invest $100 million to $150 million in Frontier and assume hundreds of millions of dollars in debt.
Republic, which purchased Frontier in 2009 for $109 million plus $1 billion in liabilities, has embarked on a plan to transform the airline into an ultra-low-cost carrier.
In recent months, Frontier has cut capacity at its Denver hub and began flying more point-to-point routes, many of them north-south routes along the US east coast.
Frontier lost $53 million in 2010 and $95 million in 2011 on a pre-tax basis, but earned pre-tax profits of $24 million in 2012, according to Republic's financial filings.