DENVER -- It's good news for Larry, Grizwald and Jack. The lynx, bear and rabbit that famously adorn Frontier's tails are going to be staying in town after all.

It's also good news for employee Andrew Hatfield. He told 7NEWS Friday that he, " can take a deep breath and not have to worry about his job."

He added, "We have been on pins and needles."

Frontier Airlines on Thursday declared that Republic Airways Holdings is the winning bidder in the auction to acquire Frontier.

Republic Airways Holdings won the bankruptcy court auction, buying the Denver-based carrier for almost $108.8 million.

Frontier spokesman Steve Snyder said it will be business as usual for its passengers.

Southwest Airlines Co. said its $170 million bid was deemed unacceptable because the carrier would not back down from a requirement that its pilots and Frontier's pilots work out their integration before the deal would close. That was a non-issue for Republic, which has said it plans to keep operating Frontier as a stand-alone carrier.

Southwest planned to absorb the airline over about two years, dumping Frontier's Airbus planes in favor of its all-Boeing 737 fleet, and rehiring only a small percentage of Frontier employees.

Pilot union negotiators for Southwest and Frontier talked until late Wednesday without reaching a deal.

"Republic submitted the highest and best bid, which included substantial improvements from its original investment proposal. Republic waived virtually all conditions precedent to closing and has advised Frontier that it yesterday received Hart-Scott- Rodino antitrust clearance for the transaction," Frontier said on its Web site.

"We appreciate the participation of both Republic and Southwest Airlines in our auction process," said Frontier President and Chief Executive Officer Sean Menke. "We are pleased to have Republic as a plan sponsor that will allow Frontier to emerge from bankruptcy as a well-financed, competitive and sustainable airline. This plan provides for Frontier and Lynx to maintain normal operations as a subsidiary of Republic, with further capital and growth opportunities in the future. This is also great news because it is expected to preserve the jobs of most Frontier employees, who have worked tirelessly to further build our unique brand and deliver outstanding service to our customers. I would be remiss if I didn't mention my 5,000 plus team members. Today’s announcement is the beginning of a wonderful new chapter for this proud organization and would not have happened without the hard work, dedication and sacrifice of them all."

In a letter sent to Frontier employees, Menke said, "I am very proud of all your work that has allowed us to accomplish this milestone together. Of course, we still have a lot of work ahead of us as we move forward with Republic, but I'm optimistic about our future ... We've received a tremendous amount of support from our loyal customers in the past few weeks. Please show them their confidence and loyalty is well placed."

"I look forward to welcoming Frontier to our Republic family," said Bryan Bedford, Chairman, president and chief executive officer of Republic. "Frontier has made impressive strides in returning to sustained profitability in a challenging and uncertain economic environment. We congratulate the employees of Frontier. Their commitment and perseverance during the bankruptcy process has allowed the Frontier brand to survive and thrive."

"We have a mission to preserve and protect our culture and the best interests of our employees, customers, and shareholders. This was a great opportunity that required us to act fast. A lot of people worked very hard with every intention of making this work. We were fortunate to be in a position to examine the acquisition to see if it was the right decision for Southwest Airlines. We chose not to amend our bid to remove the labor requirement, a key reason our bid was not selected. Our congratulations to Republic Airways and Frontier Airlines," said Gary Kelly, Southwest's chairman of the board, president, and chief executive officer.

Frontier Airlines would become a wholly owned subsidiary of Republic, an airline holding company that owns Chautauqua Airlines, Midwest Airlines, Mokulele Airlines, Republic Airlines and Shuttle America.

Frontier currently expects to emerge from Chapter 11 this autumn.

Frontier and its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 10, 2008.

Talks Between Southwest, Frontier's Pilots Unions Hit Snag

Talks ended between the pilot unions of Southwest and Frontier around midnight Wednesday, said Carl Kuwitzky, president of the Southwest Airlines Pilots' Association.

It appeared the talks broke down over seniority, the ranking of pilots that determines their rights for schedules and protects them if there are layoffs. Kuwitzky said the Southwest pilots' offer was to put Frontier pilots at the bottom of the combined seniority list.

For pilots in an airline merger, that's considered the worst possible outcome.

Kuwitzky said Southwest pilots offered to guarantee that their Frontier colleagues would not lose pay if they go from being a Frontier captain to being a Southwest first officer.

Kuwitzky said they based their offer to Frontier pilots on the career expectations of both. Southwest pilots had higher career expectations than Frontier pilots, who work for a carrier that won't get out of bankruptcy unless someone else buys it, he said.

"We understood their needs. They wanted their jobs, and we think we've offered all of them jobs at Southwest, which we think would be a much more secure future for them than Republic would be," he had said.

Southwest had already told Frontier mechanics and others represented by Teamsters Local 961 in a meeting Wednesday that it intended to eventually liquidate Frontier and hire only a handful of the 450 Frontier mechanics and others represented by the union, said Matthew Fazakas, president and principal officer of the local.

"We obviously think that's outrageous," Fazakas said Thursday. "They told us only a handful of people would be offered jobs, and they were not coming over by seniority."