DALLAS -- Southwest Airlines Co. is seeking to trump a rival bid and acquire Frontier Airlines, a Denver-based carrier operating under bankruptcy protection.
A court had already approved the sale of Frontier Airlines Holdings Inc. to the parent of Republic Airways for $108.8 million, but that deal can be nixed if a better offer comes along.
Dallas-based Southwest said it submitted a nonbinding bid of $113.6 million. Southwest hopes that making the bid will allow it to talk with Frontier and get information to help shape its final proposal.
Southwest said it faces an Aug. 10 deadline for submitting a binding bid. If there is more than one qualified bidder, an auction will be held the following day.
"We are excited about the opportunity to submit a bid," Southwest CEO Gary Kelly said in a statement. "We see a strong fit between our company cultures, a mutual commitment to high-quality customer service, and similar entrepreneurial roots."
U.S. airlines are struggling through a terrible slump in travel, as the recession has grounded many business passengers. But Southwest is widely considered the strongest financially, with about $2.2 billion in cash and short-term investments.
Southwest recently went back into Frontier's home market of Denver, where it also competes against UAL Corp.'s United Airlines. Mike Boyd, an airline consultant in the Denver area, said that explains Southwest's interest in Frontier.
"This is about a tactical need by Southwest to take out their major competitor in Denver," Boyd said. "They've got to make Denver profitable, and if they're going to do that, they need to take out Frontier."
Frontier flies from Denver to many Western cities, including Phoenix and Seattle, often overlapping with Southwest.
Frontier filed for bankruptcy protection in April 2008. According to court documents, a consultant hired by the airline began contacting potential buyers in January, and some met with the airline's management over the next two months.
Some prospective investors backed out, however, because of lack of available credit and the downturn in the airline industry.
Indianapolis-based Republic Airways Holdings submitted its bid in May. Republic extended Frontier a $40 million debtor-in-possession loan and holds a $150 million unsecured claim. Republic operates a regional airline and Chautauqua Airlines and Shuttle America.
Southwest executive vice president Ron Ricks said his airline would operate Frontier as a separate wholly owned subsidiary until its operations could be combined with Southwest.
Ricks said Southwest had "been considering a bid for some time, independent of any action Republic took with its bid proposal. In the past month, we began an intensive study of the airline and expressed that interest to Frontier."
Kelly, the Southwest CEO, was asked two weeks ago whether Southwest was interested in buying Frontier. He declined to comment on Frontier specifically but said Southwest was "open to making an acquisition of assets, of airlines, whatever it might be. We have not found the right fit yet."
Shares of Southwest rose 13 cents to $7.80 in afternoon trading. Republic shares slumped, falling 14 cents, or 2.7 percent, to $5.08.