Republic Airways won its bid to acquire Frontier Airlines after a provision in the competing Southwest offer requiring agreement by the two pilot unions proved too large an obstacle.

Southwest issued a statement Thursday night saying its bid was rejected in large part because it would not get rid of a provision in its offer that the deal would not close unless the Southwest and Frontier pilot unions reached an agreement on how to work together, including how to integrate their seniority lists.

Republic Airways Holdings won with its original bid of $108.75 million, much lower than Southwest's $170 million offer, and agreed to waive any right to recovery on its $150 million general unsecured claim.

Bryan Bedford, chairman, president and CEO of Republic said that "Frontier has made impressive strides in returning to sustained profitability in a challenging and uncertain economic environment. We congratulate the employees of Frontier.... Now, we have to turn our attention to the important work of integrating two great brands: Frontier and Midwest Airlines, which enjoy strong loyalty in Denver and Milwaukee." Republic has already completed its acquisition of Midwest.

"We said all along that we would only move forward on this deal if it proved to be the right decision for our employees and financially prudent for our company," Gary Kelly, Southwest chairman, president and CEO said in the Southwest statement. "We have a mission to preserve and protect our culture and the best interests of our employees, customers, and shareholders."

The bids were submitted under the supervision of the U.S. Bankruptcy Court for the Southern District of New York.