I thought it was that all three types are losing money but not every single route, though I might well have missed the distincation. In either case, there's a lot of red ink as things currently stand.

Absolutely true...and what I presented was what I thought was a reasonable "best case" scenario, but one which I don't see as especially probable. The issue of a lopsided hub is a danger, too, a concern I raised about what FL was proposing to do in MKE. Frontier has the advantage of more feeder spokes, so a PIT-MKE E190 can send pax to DFW,MSN, MCI, GRR, DSM, etc and doesn't have to rely just on long-haul connections to LAX and SFO. (Of course having long-haul west coast helps, too.) But certainly not every route can support that kind of lift, nor can some routes support that kind of lift at all the times where there's local demand worth pursuing.

Much of the "best case" scenario relies on some pullback by FL/WN (especially in the RJ markets) and moderating oil prices. Trouble is, the clock is ticking and even if oil will eventually fall or FL/WN will eventually scale back, Frontier can't and won't wait forever. That doesn't mean that Frontier if things don't change by January (for example), Frontier will pull the plug on MKE. But more cuts will happen on the current path.

I agree on the Southwest RJ issue...I think Skywest hopes to plead their case to figure out a way to circumvent or modify the pilot limitations.

I've heard different opinions on at what point FL* has to go in the WN/FL integration. With fuel as high as it is, it seems more like a potentially-moot point. Even if Southwest wanted to enter the world of RJ feed...which is questionable in the first place even if it were allowed...it looks less and less likely to be a profit generator for anybody. Skywest has the incentive to have more major partners and to place as many of their undesirable CRJ's in service as they can. But Skywest choosing to cut their FL* operation down to just 3 lines is telling.

In the mean time, we get good fares (for now) to places like Indianapolis, but we run the real risk that this time next year nobody will be flying it.

SEC filing re program to "restructure" Frontier:

http://phx.corporate-ir.net/phoenix....107&p=irol-sec


There's some fairly big news in today's filing.

Hi mke9499;

I went to this website and download this stuff, could someone please explain in layman's terms what this actually means or are we waiting for the big news next week to drop?

Charlie.

Indeed. There have been some rumors floating around this week and it's good to finally see official confirmation.

Here are some snippets for those who don't want to read the entire filing:

"On its first quarter 2011 earnings call, Republic Airways Holdings Inc. (the "Company") announced a program to restructure the Company's subsidiary, Frontier Airlines, Inc. ("Frontier"), by making changes to its network, fleet allocation and operating costs to improve overall business results by $100 million annually. A part of that effort included restructuring wages and benefits, including the Frontier pilots (the "Pilots") represented by the Frontier Airlines Pilot Association ("FAPA").

On June 10, 2011, Frontier reached a tentative agreement with FAPA pursuant to which FAPA agreed in principle to, among other things, (i) the postponement of certain pay increases, (ii) reduced Company contributions to the Pilots' 401(k) plan, (iii) reduced accruals for vacation days and sick days and (iv) an extension of the collective bargaining agreement by two years (collectively, the "Investment"). The agreement is subject to ratification by the Pilots and final board approval by the Company. The vote on ratification is expected to conclude by June 17, 2011.

In exchange for the Investment, FAPA will receive an equity stake in Frontier. The Company has agreed to certain other conditions which must be met during the term to continue the Investment by FAPA. Those conditions include aircraft growth at Frontier, a liquidity raise of at least $70 million by the Company through one or more debt issuances or other financings, material execution of Frontier's restructuring program by the end of 2011, and a good faith effort by the Company to attract equity investment(s) in Frontier that would reduce the Company's ownership of Frontier to a minority interest by December 31, 2014. In addition, the Company has agreed to establish a profit sharing program for Frontier employees."

Blue, thanks for highlighting the important points. I was crunched for time, and just wanted to get the info posted.

I wonder if timing came into play with the release...late on a Friday afternoon, after the markets closed. Rjet stock hit a 52 week low on Friday and closed a penny off the one-year low.

Very interesting development, and one which can help to further reduce costs and get more employee "skin" in the game with profit sharing. Reducing the RJET holdings of Frontier to a minority position in the next 3 1/2 years does, in a sense, put Frontier "in play" down the road. Putting more daylight between RJET and Frontier itself creats a lot of possible scenarios down the road. But...although this was rumored, there were also lots of other rumors and this plan is actually more stable in the near and mid term than some other things.

At first glance, this does a few things:

(1) Lowers costs further, which will help financial returns
(2) Gives Frontier a more distinct structural identity
(3) Shows RJET shareholders that there is action being taken...at very least it reduces RJET shareholders exposure to Frontier over time.
(4) Gives incentive to increase the Frontier fleet
(5) Gets more employee "skin" in the game, with an ownership stake and with profit sharing

These sorts of measures have been done before in various industries, and they are not always a perfect solution. So this isn't a certain fix. But it's a lot better than some rumored action, and it has some good potential. And...it shows how their recent busienss plan actually can achieve the employee cost savings outlines.

I wonder how this will affect the existing RJET employees who are not part of Frontier, especially E190 crews. What I'm not clear about is what happens to the E190...will E190 flying as Frontier be in the F9 world and certificate, and E190 flying for US* and others will be in the RAH world and certificate?

Supposedly,as part of the deal with the pilots, BB agreed to a 20% cut in his salary this year, as well as a pass on his bonus.

The chautauqua ground staff has been fully integrated with Frontiers and they will go where ever Frontier goes. As for the E190's the pilots cant object to their movement to the Frontier certificate but will be allowed to bid for the plane in seniority order since they are on one list and are in the middle of representation voting. So the agreement that BB made with FAPA (which is now Republic Pilots Council) may be void in a few days since RPC made the agreement with BB and not IBT.

The F/As do have an objection and have already made it about the planes being moved to Frontiers cert. Since those planes are RAH's and fall under the IBT contract they cannot be moved to the F9 cert which is covered under AFA (they have not met with the company at all to start contract negotiations) so they will have a long litigation process to get those planes away from us. I think we would give them up for a much better contract, a non precedence setting agreement and the agreement that RAHs ownership of Frontier will be less than 10%. Also Frontier F/A's have said they wont fly the E190's.

To be quite honest if BB said tomorrow that he is selling F9 RAHers would be over joyed.

Thanks for sharing.

So, how does FAPA get a shareholders stake when, in all likelihood FAPA won't exist in a few weeks?

If Frontier joins forces with another carrier, is this a reasonable scenario?

http://crankyflier.com/2011/06/13/wh...uire-frontier/

They might be overjoyed, but it's actually RAH and BB who drove F9 further into the ground by their poor decisions and bad management of the airline.

What do you think he should have done differently? Not fully defending him (wish he would have given the Q400s a better shot), but taking 2 failing airlines and merging them while being under siege at their 2 largest hubs and a skyrocketing price of oil is not an easy task. Did they bite off more than they can chew? Maybe. But at this point it is too late and it is at least an entertaining airline to follow.

From Denver Post:

http://www.denverpost.com/breakingnews/ci_18263927

Does all of this sound familiar?