Southwest Airlines Co. (LUV) said Thursday it was preparing to jump start new growth with a bid for bankrupt Frontier Airlines, going up against an offer from Republic Airways Holdings (RJET) in an auction next month.

During a conference call with reporters, Southwest executives likened the offer for Denver-based Frontier to a deal Southwest did two years ago, when it picked up assets of ATA Airlines, then in bankruptcy. That gave Southwest a stronger presence at Midway airport in Chicago, and opened the door to New York's LaGuardia.

Until Thursday, low-cost Southwest, the biggest domestic carrier of U.S. passengers, had planned for no growth this year, as the airline industry struggles with falling passenger traffic. But, with the acquisition, Southwest said it could grow by about 10%, not only in the U.S., but into Mexico, a market currently served by Frontier, but not by Southwest.

Initially, Frontier would be run as a subsidiary airline, but over about two years, would be folded into Southwest.

Ron Ricks, executive vice president of corporate services, and Bob Jordan, executive vice president of strategy and planning, said on a conference call with reporters that Southwest would work next week, ahead of the August 10 auction, to perform due diligence on Frontier's books.

The two said they don't expect to find any serious problems with the deal. "We are in this to win," Ricks said.

If successful, Southwest would face a number of hurdles, including getting antitrust approval from the U.S. Department of Justice, before the deal could close. That could take four to six months, Jordan said, adding "that's not in our control".

The DOJ would be concerned that Southwest would eliminate competition for passengers, and would use its clout in the Denver market to raise fares.

Southwest became a direct competitor to Frontier more than two years ago, when it added service to Denver, Frontier's home town. Ricks said taking over Frontier wouldn't diminish competition in Denver. United Airlines, a unit of UAL Corp. (UAUA), would still have 50% of Denver market share, while Southwest and Frontier would have about one-third of the market, he said. "Our fares now are lower than Frontier's, " he said, and that Southwest would expect to remain the low-cost leader on fare prices.

Overall, the deal would expand Southwest's route network by about 10%, Jordan said. While there is some overlap of service, Southwest would gain access to new markets like Atlanta and Washington D.C.

The deal would give Southwest quicker access to Mexico, but wouldn't change the airline's plans to partner with two other airlines, Volaris in Mexico and WestJet in Canada, to expand in North America.

Southwest Chairman and Chief Executive Gary Kelly said in a statement that Southwest sees a strong fit between the two companies' cultures and commitment to customer service.

Differences at the two carriers include their fleet types, with Southwest committed to an all-Boeing 737 fleet, and Frontier flying only planes made by rival Airbus. Over time, Frontier's fleet would be retired and replaced with Boeing planes, the executives said, adding that it would also take time to decide the fate of Frontier's LYNX commuter business.

Frontier filed for bankruptcy protection in April 2008, and last month received a $108.8 million takeover offer from Republic, which has provided financial backing for its reorganization.

That didn't preclude other bidders. Southwest's proposal is for at least $113.6 million, which the company said would be supported by its strong balance sheet.

Frontier Thursday confirmed its receipt of Southwest's proposal and said it would evaluate Southwest's proposal before providing further comment. The Southwest officials said they had been assured by bankruptcy court representatives that their bid was welcome.

Republic has more on its plate: The Indianapolis-based company expects to close on a bid for Midwest Airlines Friday.

In its most recent acquisition, of ATA assets, Southwest outbid low-cost rival AirTran Holdings Inc.(AAI).

AirTran had also pursued ATA and for a time had a close marketing deal with Frontier that fueled speculation those airlines might merge.

AirTran said Thursday it won't make a bid for Frontier.

-By Ann Keeton, Dow Jones Newswires; 312-750-4120; ann.keeton@dowjones.com

(Kerry Grace Benn and and Doug Cameron contributed to this article)