Monday, Sep. 30, 1985

Business Notes Airlines

For Frontier Airlines the past year has been a struggle. The Denver-based carrier lost $31 million in 1984 and sold almost half its fleet to raise cash. Last week Texas Air Chairman Frank Lorenzo unveiled his plan to solve the airline's woes. Lorenzo, who was outbid for TWA in August by Corporate Raider Carl Icahn, offered $20 a share in a deal that could mean $250 million to Frontier. Said Lorenzo: "It's extremely hard for a small airline to compete."

Purchase of Frontier would enable Texas Air, which also owns Continental, to boost its share of business in the Rocky Mountain region substantially. Frontier, the 15th-largest U.S. carrier, would provide connections to Continental flights in Denver and in other cities that are served by the two airlines. Lorenzo may not be able to acquire Frontier without a fight. GenCorp, an Ohio-based company that holds a controlling interest in Frontier, had been planning to sell the carrier to its union employees for $17 a share. The workers may well decide to oppose the offer by Lorenzo, who is known throughout the airline industry as a union buster.