Frontier Airlines Files for Chapter 11 Reorganization

Old Apr 11, 08, 12:17 am
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Frontier Airlines Files for Chapter 11 Reorganization

http://biz.yahoo.com/prnews/080411/laf017.html?.v=101

Press Release Source: Frontier Airlines Holdings, Inc.


Frontier Airlines Files for Chapter 11 Reorganization; Normal Operations Continuing and Unaffected
Friday April 11, 2:01 am ET
- Frontier Airlines and Subsidiaries Will Continue to Operate Complete Flight Schedule, Honor All Tickets and Reservations, Maintain EarlyReturns Frequent Flyer Program, and Provide Pay and Benefits to Employees -


DENVER, April 11 /PRNewswire-FirstCall/ -- Frontier Airlines Holdings, Inc. (Nasdaq: FRNT - News) today announced that, following an unexpected attempt by its principal credit card processor to substantially increase a "holdback" of customer receipts, which threatened to severely impact Frontier's liquidity, Frontier and its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.
Frontier intends to continue normal business operations today and throughout its reorganization process. Specifically, it expects to continue to:


-- Operate its full schedule of flights;
-- Honor tickets and reservations and provide refunds and exchanges as
usual;
-- Maintain its EarlyReturns frequent flyer program and other award-
winning customer service programs;
-- Provide employee wages, healthcare coverage, vacation, sick leave and
similar benefits without interruption; and,
-- Pay suppliers for goods and services received during the reorganization
process.


"Frontier is committed to delivering exceptional customer service and we intend to continue delivering on that promise with normal operations throughout our reorganization process," said Sean Menke, Frontier President and CEO. "To be clear, we filed for very different reasons than those of other recent carriers, and our customers and employees can be confident that we intend to keep on flying and providing outstanding service and products.

"Given the recent progress we have made towards strengthening our balance sheet and obtaining additional financing, it is truly unfortunate that we have had to take this action," Menke said. "We felt that Frontier would be able to withstand the challenges confronting the U.S. airline industry, which include unprecedented and significant increases in the cost of jet fuel and the impact of the credit crisis in the financial markets, without seeking bankruptcy protection. Frontier has continued to perform relatively well in this difficult environment, and contrary to the trend, we have not seen a decrease in consumer demand, as demonstrated by our record traffic and revenue in March. Unfortunately, our principal credit card processor, very recently and unexpectedly informed us that, beginning on April 11, it intended to start withholding significant proceeds received from the sale of Frontier tickets. This change in established practices would have represented a material change to our cash forecasts and business plan. Unchecked, it would have put severe restraints on Frontier's liquidity and would have made it impossible for us to continue normal operations. The automatic stay provision of the bankruptcy code prohibits the credit card processor from increasing its holdback, and we are prepared to litigate this issue if necessary.

"By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity. Fortunately, we believe that we currently have adequate cash on hand to meet our operating needs while we take steps to further strengthen our company."

Frontier's Chapter 11 cases were filed today in U.S. Bankruptcy Court for the Southern District of New York. Frontier is filing motions with the Court seeking interim relief that will ensure the Company's continued ability to conduct normal operations, including the ability to:


-- Provide employee wages, healthcare coverage, vacation, sick leave and
similar benefits without interruption.
-- Honor pre-petition obligations to customers and continue customer
programs including its EarlyReturns frequent-flyer program.
-- Pay for fuel under existing fuel supply contracts, and honor existing
fuel supply, distribution and storage agreements.
-- Assume contracts relating to interline agreements with other airlines.
-- Pay pre-petition obligations to foreign vendors, foreign service
providers and foreign governments.
-- Continue maintenance of existing bank accounts and existing cash
management systems.
-- Use its existing cash on hand to fund post-petition obligations.


Frontier's principal bankruptcy counsel is Davis Polk & Wardwell.

More information about Frontier's Chapter 11 filing is available on the Internet at http://frontierairlines.com/restructure. Court filings and claims information are available at http://Chapter11.epiqsystems.com/frontier.
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Old Apr 11, 08, 5:33 am
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Good they will operate full schedule. Rebooked AA flights yesterday to Frontier for today fl DFW to Denver return Monday. Hope AA disorder will help Frontier. It will be my first flight on Frontier.
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Old Apr 11, 08, 6:07 am
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following an unexpected attempt by its principal credit card processor to substantially increase a "holdback" of customer receipts
Quite obviously due to ATA, Skybus and Champion. Credit card companies want to lessen the blow if F9 goes away.
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Old Apr 11, 08, 6:30 am
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I don't know much about business, but it sounds like Frontier filing for Chapter 11 is more of a preventative action. It doesn't seem like the situation with DL, UA, or CO -- their finances were terrible. I read the article such that Frontier filed for chapter 11 so the credit card processing company couldn't screw them over so quickly.
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Old Apr 11, 08, 6:53 am
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Good luck to Frontier and their employees... It looks to me that Frontier is being very proactive in protecting the company so I think they will come out of bankruptcy just fine.
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Old Apr 11, 08, 7:28 am
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Take this as a warning Frontier will go out of business..The clock is ticking..Tick Tock..
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Old Apr 11, 08, 7:33 am
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Friday, April 11, 2008 - 9:06 AM EDT
Frontier Airlines files for Ch. 11 protection
South Florida Business Journal

"....The airline said it made the decision to file for Chapter 11 bankruptcy after an unnamed credit card processor changed its fee schedule, specifically its hold back of customer receipts. That, the airline said, severely threatened its liquidity...."

http://southflorida.bizjournals.com/...html?ana=yfcpc
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Old Apr 11, 08, 7:45 am
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Originally Posted by CAL PHL FLYER View Post
Take this as a warning Frontier will go out of business..The clock is ticking..Tick Tock..
The ending has already been written, there go my miles ! F9 made it impossible to use any way.........................
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Old Apr 11, 08, 7:56 am
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Originally Posted by loboclone View Post
The ending has already been written, there go my miles ! F9 made it impossible to use any way.........................
So why don't you swap them for something else which you can use? The exchange rate is pretty bad, but if you truly think that this is the end and your miles are worthless, at least you can get something out of them.

I personally plan to shift any far-out reservations to United, but will continue to use Frontier for my weekly Denver->New York commute, as last I checked their prices were approximately 50% of what United charged. As was mentioned above, it sounds like this action was not taken because of poor financials, but because the CC companies got spooked by the ATA/Aloha shutdowns. United is raising fares in some markets and hopefully Frontier can follow, plus it sounds like Lynx is starting to make money (and is pretty much Southwest-Proof), so I will go ahead and try to be optomistic on their future.
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Old Apr 11, 08, 8:03 am
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Frontier had a great red-eye going from SNA-PBI (or SNA-FLL), but they discontinued the flights last week!

I was really starting to like this airline too.
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Old Apr 11, 08, 8:07 am
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Can't say I'm surprised. F9's actions in the last several months - selling planes, the Commuter Pass - have been designed to generate quick cash. Cash on hand has been critically low.

I just flew F9 last night when a UX flight was hopelessly delayed. Their flight was delayed as well, and they provided the DirecTV for free to everyone. Possibly the last time THAT happens given the filing.

Unfortunately F9 is squeezed by two stronger companies in their Denver hub - UA and WN. It was probably just a matter of time once WN returned to the DEN market.
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Old Apr 11, 08, 8:31 am
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Am in Portland now with a return to Denver this afternoon. Got a little worried when I could not pull up the details on my reservation but that appeared to be a glitch due to an equipment swap. OLCI was working and I noticed I got dumped from row 11 window to row 1. That was going to be my first experience in the new config row 11 . Since row 10 was blocked out (but 1/3 full per other seat maps) I had to call in to get the exit row back. Called on the Ascent line and had to wait five minutes. Must be a lot of panic calls today.

Waiting to see what comes down from my company on future travel plans. But with our other choice of United raising rates, it may just be business as usual and worry about the expense for re-bookings in the future if this goes further.

I really don't want to be a GM on United again . I am over a third of the way to Summit for this year. I won't be able to hit 2P this late in the year if I switched over.
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Old Apr 11, 08, 8:53 am
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Anyone ever see the movie Sneakers? This sounds a lot like one scene in that to me.
Cosmo: Posit: People think a bank might be financially shaky.
Martin Bishop: Consequence: People start to withdraw their money.
Cosmo: Result: Pretty soon it is financially shaky.
Martin Bishop: Conclusion: You can make banks fail.
Cosmo: Bzzt. I've already done that. Maybe you've heard about a few? Think bigger.
I worry for Frontier. They were certainly already a little bit shaky, but this could put them over the edge.
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Old Apr 11, 08, 9:16 am
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Originally Posted by loboclone View Post
The ending has already been written, there go my miles ! F9 made it impossible to use any way.........................
Loboclone, if F9 goes out of business, then WN may jack up your fares from ABQ-DEN and may even reduce flights because of the lack of competition. I don't know what your problem with F9 is or what WN Koolaid you're drinking but hoping for F9's demise is a little petty. Yes, I've read your other posts. I live in California where WN took over the market and now is reducing flights so they can add more service to take over DEN. Doesn't sound nice to me. Be carefull what you wish for! Too much power for ANY airline is not good. See what Ryan Air did in Europe.
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Old Apr 11, 08, 9:55 am
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Originally Posted by CAL PHL FLYER View Post
Take this as a warning Frontier will go out of business..The clock is ticking..Tick Tock..
Thank you for providing this intelligent and useful commentary that make this FT community so great.
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