DALLAS ( TheStreet) -- Southwest ( LUV) says it is looking through the books at bankrupt Frontier ( FRNTQ), and will likely bid for some or all of its assets, raising the possibility of a variety of new ventures for Southwest.

For instance, Frontier flies to Atlanta, Reagan National Airport and Mexico, none of which Southwest currently serves. And Frontier's mainline fleet consist of 51 Airbus jets, and its Lynx Air subsidiary operates a fleet of 10, 70-seat Bombardier Q-400 aircraft, while Southwest operates a fleet of 535 Boeing 737s.

"This is a jump-start to those kinds of exciting new ventures for Southwest," said Executive Vice President Ron Ricks, on a conference call with reporters.

Frontier, in bankruptcy since April 2008, will be sold in an auction next month. Southwest has submitted a bid worth a minimum of $113.6 million, exceeding the $108.8 million bid filed by Republic Airways ( RJET). Southwest must submit a binding proposal by the court's Aug. 10 deadline, with an auction by Aug. 17.

Southwest said its intent is to expand in Denver, where Frontier has its sole hub. "Denver is a big market and Southwest is a growth-oriented company," Ricks said. "Our objective is to expand there in a significant way."

The timing, coming at a low point for airline travel, was not Southwest's choice. "We didn't precipitate the Frontier bankruptcy filing (but) it was just an opportunity we couldn't ignore," Ricks said. Still, the economy of Denver is performing at an above-average level, and Ricks called Frontier "a pocket of opportunity in a sea of pain."

Non-committal regarding how Southwest might use specific assets, Rocks said the slots at National are "a valuable property irrespective of whether we used them or someone else does."

Regarding Lynx, Ricks said Southwest has not decided the subsidiary's future. In the past, he said, "Southwest would have categorically rejected such an opportunity, but we're not categorically rejecting anything now."

Were Southwest to win the auction, he said, Frontier would initially operate as it does today, then over a period of years "you would transition Frontier into Southwest (which) would include retiring the Airbus fleet and bringing on the 737s.

Executive Vice President Bob Jordan noted an acquisition would not be uncompetitive, because United ( UAUA) has about 50% of the Denver market, while Frontier and Southwest have a combined share of about a third. Ricks said Southwest and Frontier overlap in about 27 markets, while Frontier serves about a dozen market not served by Southwest and Lynx serves 10 smaller markets.

-- Written by Ted Reed in Charlotte, N.C..

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