Frontier Airlines Files for Chapter 11

Frontier files, but will keep flying for now...

Sorry for the crappy looking copy and paste....

DENVER - Frontier Airlines sought bankruptcy protection Friday, the fourth carrier to do so in the past several weeks as exorbitant fuel prices eat into earnings and a weak U.S. economy keeps more people grounded.

Frontier says it will continue operations as it reorganizes.
Frontier Airlines Holdings Inc., the low-fare carrier's parent, said it was forced into bankruptcy after its principal credit card processor announced it would begin withholding a greater share of proceeds from ticket sales.
Denver-based Frontier said it will continue to operate a full schedule of flights, pay suppliers and employees as it reorganizes. The filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its "holdback," Frontier CEO Sean Menke said.
"By filing for Chapter 11, we will now have the time and legal protection necessary to obtain additional financing and enhance our liquidity," Menke said in a statement. "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."
ATA Airlines, Skybus and Aloha Airgroup have also filed for bankruptcy in the past three weeks, but Menke said Frontier's reasons for doing so were different.
"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," he said.
"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 credit card processor, First Data Corp., did not have an immediate comment Friday.
The creditor listed in bankruptcy court documents as having by far the largest general unsecured claim against Frontier was Wells Fargo, with $93.5 million.
Frontier has struggled amid rising fuel prices and aggressive competition at Denver International Airport from both United and Southwest airlines. It blamed a 16.3 percent jump in fuel costs for a fiscal third-quarter loss that more than doubled from the previous year.
At the end of last year, Frontier had assets of $98.3 million and debts of $92.2 million.
The carrier has adjusted routes, put four jets up for sale, laid off 100 employees and conducted an extensive review of its schedule in an effort to rein in costs.
Last week, Calyon Securities analyst Ray Neidl voiced concerns about some budget airlines, including Frontier. He said Frontier's cash holdings were likely to fall well below 10 percent of expected revenue by the end of the year and estimated it would have less than 5 percent of revenue in cash at the end of 2009.
Frontier spokesman Joe Hodas said earlier this week the airline had "no concerns about bankruptcy."
In a research note to clients Friday, Neidl said the bankruptcy "happened more quickly than we expected."
"We do not see a future for Frontier as it faces tough competition in Denver from United on the network side and Southwest on the low cost side," he wrote.

Industry analyst Mike Boyd said it appears the bankruptcy was triggered by Wall Street speculation about Frontier, which likely raised concern at First Data.
"When rumors start, it can kill an airline," he said.
Frontier carries about 21 percent of the overall traffic at Denver International and leases about 20 gates, dominating one of the airport's three concourses.
Frontier opened in 1994 with fewer than 200 employees and two planes, flying between its Denver home and three cities in North Dakota. The airline now has about 350 flights to more than 60 cities and employs about 6,000 people.
Menke took over Frontier last year and said the airline, like others struggling in the rough economic climate, would seek to boost revenues in new ways.
Menke said earlier this year that he would look into a la carte pricing, charging more for specific services. Frontier shares lost most of their value in trading Friday, tumbling $1.09 to 48 cents each
 
Very bad news, but not unexpected. They're sitting on very little cash and have been missing earnings for a few quarters. Their cash finally dipped low enough for the credit card company to demand all payments up front, and that pushed them over the edge. Hopefully they've found some significant DIP financing, otherwise they won't last the year.

wheelsup said:
I think the legacies will be OK, it's all these smaller carriers that will go out.
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Not necessarily. UAL and AMR are teetering on the edge of bankruptcy right now. AMR never had a chance to shed their debt in Ch. 11 after 9/11. They renegotiated as much as they could outside of bankruptcy, but it's looking like it might not be enough with oil at $110/bbl. And UAL is just being led by a complete dolt. Tilton never put together a decent business plan when they exited bankruptcy, and he doesn't seem to be putting one together now. If I had to place bets, I'd say Mesa and UAL would be the next into bankruptcy, and AMR could follow not too long after, assuming oil prices stay up. AirTran can probably last the year, but the hedges aren't good enough to keep things going much into next year. Spirit's probably in trouble also, but hard to tell since they aren't a public company. Their financial condition is only known internally. The year is going to be very interesting in a very bad way.
 
Re: Frontier files Ch.11

Once again, record passenger totals, record load factors, unprecedented pay cuts, lienient bankruptcies that allowed shedding of massive amounts of "debt," failed and written off pension funds and yet no one can make money?

Either money is being siphoned off to certain groups' pockets (shock) or airlines aren't charging enough for seats (shock).

Not that this really applies to Frontier, but WTF. Every other industry/business on the face of the Earth passes on increased operating costs to their customers, except the airlines.


This all being said it's not really a surprise as F9 has been in trouble for a while now. Hopefully they stay afloat and the employees don't take it in the @$$.
 
Re: Frontier files Ch.11

PCL_128 said:
As Congressman Oberstar said yesterday, it's about time to start looking at re-regulation.
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Been saying that for a very, long time.

The only benefit passengers have recieved from deregulation is "cheap" tickets. Every other phase of the "experience" has teetered on the verge of prison abuse for some time now. So really the overall effect has been an overwhelimg negative for passengers.

Sure the ticket might be cheap but how much cheaper is it when you miss a funeral, wedding, business meeting? get canceled, delayed, etc. or bumped because the flight is oversold.

Enough is enough.
 
Re: Frontier files, but will keep flying for now...

aww damn..

Will anything happen?! I just book my one way ticket to houston on june. Hopefully the will not cancel my flight..
 
How would re-regulation influence hiring at the legacies? Would it be a much harder process? Or still pretty much 'who you know'?
 
Re-regulation would instantly cut capacity, reducing jobs, etc. so it would make it significantly harder to get those jobs that do open up IMO.
 
Just jumpseated home on them yesterday from DEN-SNA. That sucks! The captain was not a friendly guy.........to anybody!
 
[modhat]Merged about three or four concurrent threads into one[/modhat]
 
pilot602 said:
The only benefit passengers have recieved from deregulation is "cheap" tickets.
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That haven't even gotten that much benefit from that. When you take inflation into account, there's only been a slight reduction in most fares. The consumer has been completely screwed on quality and reliability and barely seen any improvement in price for their trouble. Deregulation is a failed experiment, whether Alfred Kahn wants to admit it or not.

Seggy said:
How would re-regulation influence hiring at the legacies? Would it be a much harder process? Or still pretty much 'who you know'?
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I doubt the process would change much. It's always been about who you know.

wheelsup said:
Re-regulation would instantly cut capacity, reducing jobs, etc. so it would make it significantly harder to get those jobs that do open up IMO.
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No reason to believe that whatsoever. Load factors are at record levels. Bumped passengers are at record levels from oversold flights. Regulation would include subsidies, most likely, so capacity reductions due to rising fares would be minimal. A new CAB wouldn't allow fares to creep much higher because of public outcries for "reasonable" fares, so government subsidies would have to make up the shortfall to keep carriers marginally profitable. The conventional wisdom that regulation would reduce capacity has no facts to back it up.
 
Baronman said:
Guys...they will continue to operate their flights under Chapter 11, this is not the same as the last 4 airlines that ceased all operations.

How quickly forget even Southernjets was in Chapter 11 protection just 2-3 years ago...
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yes but BK is a lot different now with the new rules. outcomes are not as high.
 
Frontier files Chapter 11

Frontier files Chapter 11

http://origin.insidebayarea.com/ci_8893688

By George Avalos
staff writer
Article Created: 04/11/2008 02:30:28 PM PDT

nColorado airline pushed into bankruptcy by credit card processor; fourth carrier to fail in two weeks

OAKLAND — The skies remained unfriendly Friday with word that Frontier Airlines filed for bankruptcy, and American Airlines cancelled 24 Bay Area flights, including all flights serving Oakland.

Alaska Airlines provided one of the few bright spots for an industry that is being jolted by turbulence from bankruptcies, service shutdowns, and safety-related flight cancellations. Alaska said it resumed full service Friday after cancelling 11 flights on Thursday, including some in the Bay Area.

An ominous new problem surfaced Friday when Frontier Airlines became the latest airline to file for bankruptcy. Even worse, Frontier was pushed past its limit by problem that could spread to other carriers: credit card troubles. It became the fourth airline to file for bankruptcy protection in the past two weeks.

The carrier on Friday blamed its Chapter 11 bankruptcy protection on a cash squeeze caused by its credit card processing company. Card processor First Data decided to keep a larger chunk of the airline's ticket revenue.

The move ends a policy under which the processor, First Data Corp., passed on most money from ticket sales to Frontier. The change is intended to protect First Data, which would be on the hook for ticket refunds if Frontier stops flying. Frontier plans to
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continue operating while in bankruptcy.

Frontier has five flights per day scheduled at San Francisco International Airport and also flies into San Jose International Airport.

First Data's decision represents a new threat to an industry facing challenges on numerous fronts. Jet fuel prices have jumped 74 percent in one year and a new government focus on safety has grounded thousands of flights lately.

"It's just a god-awful time for this industry," said Bob Mann, an independent airline consultant based in Port Washington, N.Y.

Frontier's problems spooked investors in Mesa Air Group over fears that Mesa Airlines could falter just like its discount-fare rival Frontier.

Previously, Aloha Airlines, ATA Airlines, and Skybus Airlines had filed for bankruptcy. All had served Oakland Airport. The carriers blamed skyrocketing fuel prices and slumping demand.

The industry's setbacks and uncertainties might mean that customers could remain in the dark for some time to come. Aquino faces that sort of a murky outcome as he wonders if his friend will arrive from Boston this weekend.

"The people at the counter told me to check the American Airlines Web site," Aquino said. "They just don't know."

The cancellations by American Airlines forced some air travelers in the East Bay to scramble yet again to find alternative ways for trips to be completed. Other area residents were unsure if friends or relatives would arrive on time over the weekend.

"I have a friend coming in from Boston, but American can't be sure if she will have a flight," said Ed Aquino, a Vallejo resident.

Aquino spent some time at the American Airlines counter at Oakland Airport. He kept asking questions about his friend's flight, but ultimately could get no firm answer. His friend is due into the Oakland area this weekend.

Katie Tankersley, a Tracy resident, found a flight to New Orleans on Friday after her American Airlines booking was cancelled on Thursday. American was able to transfer Tankersley to a United Airlines flight. But the new flight includes a five-hour layover in Los Angeles and a midnight arrival in The Big Easy.

"It's good they are doing this for safety and maintenance," Tankersley said. "I wish they had done these inspections ahead of time and not at the last minute."

Airport officials said that American scrubbed flights at all three Bay Area air travel hubs:

n—Oakland International Airport said nine flights were shelved.

n—San Francisco International said eight flights were cancelled.

n—San Jose International Airport said seven flights were scratched.
 
Re: Frontier files Chapter 11

umm yea..it really is a good idea to do a search first or at least look on the first 3 pages and THEN post if you don't see what you want to post about.
 
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