A bankruptcy judge overseeing the restructuring of Frontier Airlines under Chapter 11 bankruptcy protection has approved its purchase by Republic Airways Holdings for $108 million.

Republic is a former partner to Frontier, operating 12 Embraer E-170s from Frontier's Denver hub until June of 2008. Frontier ended the air services agreement after filing for bankruptcy protection in April of the same year.

Frontier's entrance into Chapter 11 protection left Republic as one of the carrier's largest unsecured creditors, and ultimately Republic supplied roughly $40 million in debtor-in-possession (DIP) financing to Frontier.

Under Frontier's plan of reorganization unsecured creditors would receive $28.75 million while an additional $40 million of the sale proceeds would be applied as repayment of the DIP loan.

The agreement covering Republic's purchase of Frontier requires an auction period for Frontier to seek a higher or otherwise better competing bids, and any interested bidder needs to step forward by 3 August, with a final proposal deadline of 10 August.

If no bidder emerges Frontier plans to become a subsidiary of Republic upon its planned emergence from Chapter 11 during the autumn.

Republic is also in the midst of closing a purchase of Midwest Airlines.

Source: Air Transport Intelligence news