NEW YORK (Reuters) - Shares of Southwest Airlines Co (
LUV.N) shed as much as 4.5 percent on Friday, a day after the low-cost carrier lost its bid for bankrupt Frontier Airlines Holdings Inc (
FRNTQ.PK).
The loss came as a surprise to industry analysts, who had expected Southwest to beat out much-smaller rival Republic Airways Holdings Inc (
RJET.O). Since Dallas-based Southwest announced its intention to buy Frontier, its stock has gained roughly 15 percent.
"It seems natural to take profits on incrementally negative news here," said Next Generation analyst Daniel McKenzie. "The bad news here is exacerbating pricing problems in Denver."
Republic Airways shares rose 7.2 percent, or 43 cents, to $6.43 in early trading on the New York Stock Exchange.
Southwest stock lost 3.6 percent, or 33 cents, to $8.91. It fell as low as $8.82.
Southwest had been the heavy favorite in the bidding war and had offered to pay $170 million for Frontier, which filed for bankruptcy last year.
Republic, which is paying $108.75 million, trumped the Dallas-based carrier's offer by agreeing to waive recovery rights on its $150 million unsecured claim. [ID:nN13534586]