Graham Warwick/WASHINGTON DC

A US bankruptcy-court judge will make a decision on 3 December between rival bids for Western Pacific Airlines.

Frontier Airlines, which called off plans to merge with WestPac earlier this year, has switched tack and is bidding to take over its bankrupt would-be partner. WestPac itself is supporting a rival offer from investment firm Smith Management.

Both offers are worth an initial $10 million - the sum required to meet overdue lease payments on WestPac's 18 Boeing 737s. Payment is required by 4 December, or lessors could start repossessing some or all of the aircraft.

Frontier has joined investment firm Wexford Management in its bid, which would involve the airline taking over WestPac's assets and absorbing ten aircraft into its fleet. The remaining aircraft would be sub-leased.

Frontier had earlier secured a $15 million loan from Wexford to lease additional 737-300s to help expand its main Denver hub and add to working capital. Part of that cash will finance the takeover bid, with $10 million earmarked to buy the leases on WestPac's aircraft.

Under the Smith bid, the investment firm would provide up to $50 million to bring WestPac out of Chapter 11 bankruptcy protection. WestPac was finally forced to file for bankruptcy on 6 October after Frontier bowed to mounting pressure to pull out of their merger.

Both bids have received support from WestPac's unsecured-creditors committee, which includes the airline's maintenance contractor, BFGoodrich, and fuel supplier Mercury Air Group. Under the Wexford bid, creditors would reportedly receive a 10% stake in the enlarged Frontier Airlines.

Wexford is entitled to take up to 3 million Frontier shares as part of the existing refinancing deal.

Source: Flight International