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Frontier Orders 80 Airbus Jets After Bombardier CSeries Deal

Republic Airways Holdings Inc. (RJET) agreed to buy 80 of Airbus SAS’s upgraded narrowbody jets for its Frontier Airlines unit, half of them smaller models that compete with Bombardier Inc. (BBD/B) ’s new CSeries.

Republic’s letter of intent is for 40 each of the A320neo and the smaller A319neo models, Indianapolis-based Republic and Airbus said today in a statement. The order is the first for the neo version of the A319, which offers more fuel-efficient engines than its predecessor and can carry about 130 passengers. The CSeries targets the 100- to 150-seat market.

Frontier’s Airbus order is only a minor negative for Bombardier since the carrier already flew Airbus jets and “commonality of fleet was a significant consideration,” Hamzah Mazari, a New York-based analyst with Credit Suisse Group AG, said in a note to clients. Frontier has a fleet of 54 Airbus jets, according to its website.

The airline’s parent, Republic, also has 40 firm orders for the CSeries, and probably will allocate those planes to four other carriers it owns, Mazari said. The CSeries order “remains in place,” said James Reichart, Frontier’s vice president of marketing and sales.

As Bombardier’s new jet endured an order drought of more than a year, which ended in June, the Montreal-based company defended the plane by saying its chief competitor was the A319, a model no one had purchased.

“We have a firm order from Republic which we’re very proud of,” John Arnone , a Bombardier spokesman, said today. “Different types of aircraft co-exist in airline fleets all the time. Republic is a valued CSeries customer.”

Bombardier slid 34 cents, or 4.8 percent, to C$6.69 in Toronto, the largest drop in four months. Republic fell 12 cents, or 2.6 percent, to $4.46 in Nasdaq Stock Market trading, the largest decline today in the Bloomberg U.S. Airlines Index.

Republic’s agreement to add the Airbus planes, which have a value of about $7 billion at list prices, comes as it pursues a $120 million restructuring plan for Frontier after buying the Denver-based airline out of bankruptcy in 2009. Frontier pilots approved money-saving concessions last week.

How Republic would be able to buy jets from Toulouse, France-based Airbus after agreeing to purchase 40 CSeries planes with a value of $3.06 billion wasn’t clear, said Bob McAdoo, an analyst at Avondale Partners LLC in Prairie Village, Kansas .

Frontier Airlines Fined for Not Displaying On-Time Performance ...

“Air travelers have a right to know whether the flight they are buying is chronically delayed or canceled,” says U.S. Transportation Secretary Ray LaHood. “Protecting the rights of air travelers is a high priority for DOT, and we will continue to take enforcement action when necessary.”

According to DOT’s airline consumer rule that became effective in April 2010, the 16 largest U.S. carriers must post information on their websites about the on-time performance of each of their flights. The information must include the percentage of flights that arrived within 15 minutes of schedule; the percentage of arrivals that were more than 30 minutes late, with special highlighting if these flights were late more than 50 percent of the time; and the percentage of cancellations if more than 5 percent of the flight’s operations were canceled.

DOT’s Aviation Enforcement Office reviewed Frontier’s website and information provided by the carrier, and found that its on-time performance data were not available to consumers visiting the site during a period of time in early 2011. Frontier did not discover or correct the problem until after the Enforcement Office notified the carrier.

The consent order is available on the Internet at www.regulations.gov , docket DOT-OST-2011-0003.

The mission of the U.S. Department of Transportation (DOT) is to serve the United States by ensuring a fast, safe, efficient, accessible, and convenient transportation system that meets our vital national interests and enhances the quality of life of the American people, today and into the future. The DOT was established by an act of Congress on Oct. 15, 1966. Its first official day of operation was April 1, 1967.