DENVER ( TheStreet) -- Southwest's ( LUV) bid to buy out bankrupt Frontier ( FRNT) in Denver may be viewed as a sign of its failure in the market. By nearly every measure, Southwest has underperformed in Denver. Among the big three Denver airlines, which also include hub carrier United ( UAUA), Southwest has been last in load factor, last in average fares and last in available seat mile, in every month, without exception, since it re-entered the market in 2006 after a 20-year absence. "Southwest is losing money in Denver," says Denver-based aviation consultant Mike Boyd. "Last summer, they put out more red than Sherwin Williams. "When Southwest came to Denver, Frontier stood and fought," Boyd says. "Frontier is a hometown team, they have a better product and people in Denver are enamored with them. They gave Southwest a bloody nose and a lot of heartburn." But Frontier also sought bankruptcy protection in April 2008.
Southwest last week submitted a bid worth at least $113.6 million for Frontier, besting a $108.8 million bid by Republic Airways ( RJET). Although Southwest could not outperform Frontier, "this is a tactical move to take out a competitor," Boyd says. The court's deadline for a binding proposal is Aug. 10, followed by an auction within a week. "It is unlikely that anyone can outbid Southwest, with its strong liquidity and balance sheet," said FTN Equity Capital analyst Mike Derchin, in a recent report. Denver is Southwest's seventh biggest station, with 113 daily departures to 34 cities. In market share, United is first with 34%, Frontier is second with 21% and third-place Southwest has 14%.