Frontier Airlines Files for Chapter 11

[sanjet]

http://flyfrontier.mediaroom.com/index. ... &item=1465

Frontier Airlines Holdings, Inc. (NASDAQ: FRNT) 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.

[N2]

Man oh man this is getting brutal!

[atpilot]

I certainly hope that this isn't the start of an industry wide downturn.

[Four1oh]

I certainly hope that this isn't the start of an industry wide downturn.

I'll say it for you. This is the start of an industry-wide downturn. Batten down the hatches people, if you have a secure job, I wouldn't be going anywhere risky until we see how bad it'll be.

[skycoupe]

Did anyone bother to read the article, or is everyone just yelling "The sky is falling"?

I quote
"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."

and

"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."

[THEICEMAN]

Well...they have only filled for bankruptcy protection. Frontier will continue to operate as usual and jobs shouldn't be cut.......At least I hope for their sakes!

[just curious]

Before everyone switches to "The Sky is falling" mode, just rmember that bankruptcuy protection is often entered into as a negotiating technique by many companies to forestall or even negate obligations such as user fees for Navcan, or employee wages or pension plans, and to derail labour negotiations.

ACE was a beneficiary of this as was NorthWest, so why not Frontier?

[Four1oh]

NOTHING IS WRONG!!! EVERYTHING IS FINE!!!

[Alex YCV]

Read carefully... this is a very particular case, where the credit card company unilaterally extended the freeze on funds from ticket transactions. With things being a little too close for comfort, and risking that they would end up with a cash crunch, they pulled the plug.

This isn't a shut down, but rather a restructuring to handle a massive curveball presented by their credit card processor. I suspect part of that reorganization will be to add multiple processors to avoid this stupidity.

This one isn't an airline problem - this is a bank trying to cover their asses and making a problem as they do it.

[Axial Flow]

I heard a comment not too long ago that if you weren't running in Chapter 11 then you weren't being competitive enough in the industry....that's why I love my job but hate the industry