Southwest bids $170 million for Frontier Airlines

— -- Southwest's bid is well above a previous bid of $108.8 million by regional airline operator Republic Airways Holdings. Assuming Republic stays in the fight, an auction will be held to determine a winner. Southwest said the auction will begin on Thursday.

Southwest said its bid could change, but its offer assumes it buys about 80% of Frontier's Airbus fleet, or about 40 planes, as well as Frontier's regional carrier, Lynx. Southwest said it expects that Frontier will operate its current planes while shifting to Southwest's Boeing 737s over the next two years.

Southwest said it would keep all of Frontier's current markets.

"Given Southwest's history and track record of running a successful airline, we believe that our bid is the best option on the table for Frontier, Southwest and the traveling public," Southwest Chairman, President, and CEO Gary Kelly said.

A bankruptcy judge had already approved Republic's bid. But the bankruptcy process allows other bidders to step forward. That's what Southwest Airlines did on July 30, initially offering a non-binding bid of $113.6 million. That gave it the chance to look at Frontier's books and decide whether it wanted to submit a binding bid.

Frontier has been operating under Chapter 11 protection since April 2008. Southwest has said its plan is to operate Frontier as a standalone carrier for a couple of years until its operations can be combined with Southwest's.

Shares of Dallas-based Southwest fell 24 cents, or 2.6%, to close at $8.87 Monday. Shares of Indianapolis-based Republic lost 29 cents, or 4.9%, to $5.65.