Frontier Files for Bankruptcy Protection

[Naim 6]

Frontier Files for Bankruptcy Protection

 

By CATHERINE TSAI – 58 minutes ago

 

DENVER (AP) — Frontier Airlines Holdings Inc. has filed for Chapter 11 bankruptcy protection, but unlike other airlines filing for bankruptcy in recent weeks, it plans to keep running while it reorganizes.

 

The low-fare carrier said its filing Friday came after an unexpected attempt by its principal credit card processor to start withholding significant proceeds from the sale of Frontier tickets, which threatened to hurt Frontier's liquidity.

 

The Chapter 11 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. 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," Menke said in a statement.

 

Frontier, whose major hub is in Denver, has been affected as other airlines have by rising fuel costs and the credit crisis in financial markets.

 

ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy recently, 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."

 

He said Frontier was prepared to litigate, if necessary.

 

The creditor listed in bankruptcy court documents as having the largest general unsecured claim against Frontier by far was Wells Fargo, with $93.5 million. Frontier said it had fewer than 50 creditors.

 

At the end of last year, Frontier said, it had assets of $98.3 million and debts of $92.2 million.

 

A Frontier spokesman had said earlier this week the airline had "no concerns about bankruptcy" but added that it was working on strengthening its cash position.

 

Last month, Frontier said it had agreed to sell four planes as it dealt with rising fuel costs.

 

http://ap.google.com/article/ALeqM5hCUJ8DM...3WtWPQD8VVHLT80

[Alan B. 5]

Aiyooo..... another one!

[BC Tam 2]

I just wonder how the US majors are going to weather this ? Even during the boom of just a couple of years back, they were already slipping in and out of Chapter 11. Under the current economic sentiment .......

[Pieter C. 5]

 

Another one down the drain:

 

Frontier Files For Bankruptcy, Flights Unaffected

 

April 11, 2008

US carrier Frontier Airlines filed for bankruptcy protection on Friday, citing unexpected problems with its credit card processor, but said it would operate its flights normally.

 

The low-cost carrier's move to operate normally despite its troubles sets it apart -- at least for now -- from four small struggling US airlines that said last week that they would stop flying.

 

Record fuel prices, along with a steadily weakening US economy, have put the brakes on the airline industry's recovery from a long downturn.

 

Low-cost airlines, even some big ones, are beginning to feel the effect.

 

Last week, Aloha Airlines, Champion Air, ATA Airlines and Skybus Airlines all said they had shut down operations.

 

In a statement, Frontier said its principal credit card processor surprised it very recently by saying that from April 11, it would withhold a chunk of proceeds from its ticket sales.

 

The change would have affected its business plan in a material way, the 14-year-old carrier's Chief Executive Sean Menke said in a statement.

 

"Unchecked, it would have put severe restraints on Frontier's liquidity and would have made it impossible for us to continue normal operations," Menke said.

 

Despite filing for bankruptcy, Frontier said it believes it has enough cash to match its operating needs.

 

The Denver-based carrier reported a fourth-quarter loss in January, citing higher fuel prices and said it would sell four of its nearly two dozen Airbus jets to bolster its cash position.

 

Frontier employs about 6,000 people. It filed for bankruptcy protection in the US Bankruptcy Court for the Southern District of New York.

 

(Reuters)

 

Would miss their most colourful tails, if they really go...

[Keith T 2]

Chapter 11 basically means they're allowed to trade insolvent, something very unique to the US. It gives the airline protection from creditors whilst they reorganise themselves, improve their balance sheet and so on without being harassed by creditors. So no Frontier isn't disappearing for a while yet while they have Ch 11 protection.

 

I think most of the majors in the US have gone into Ch11 at some stage.

[TK 0]

i don't want this "wild life" tail plane to disappear too...

[Tamizi Hj Tamby 1]

Wah,another airline company again?

[BC Tam 2]

Keith,

Are you familiar with the intricacies of Chapter 11 ? Like, is there a time frame/limitation the entity is entitled to try sort things out before the vultures are allowed to swoop on the spoils ?

Look at it from a creditor's point of view, could be a very frustrating wait

[Keith T 2]

Keith,

Are you familiar with the intricacies of Chapter 11 ? Like, is there a time frame/limitation the entity is entitled to try sort things out before the vultures are allowed to swoop on the spoils ?

Look at it from a creditor's point of view, could be a very frustrating wait

 

I don't know much more other than the fact that it fends off the creditors. Then again liquidation doesn't mean creditors get paid quicker - quite a number of Ansett creditors are still waiting till this day.

 

It is a very unique legislation - it's illegal to trade insolvent in lots of other countries.

Edited April 12, 2008 by Keith T

[Pieter C. 5]

Next one to go down the drain is EOS, which operated all-Business Class 757's between STN and New-York !!!

 

When will Silverjet follow ?

 

Amazing l'Avion from France is still operating Paris-New York

[Naim 6]

Next one to go down the drain is EOS, which operated all-Business Class 757's between STN and New-York !!!

 

When will Silverjet follow ?

 

Amazing l'Avion from France is still operating Paris-New York

 

 

From The Times

April 28, 2008

Eos bankruptcy filing signals end to cheap executive travel

David Robertson, Business Correspondent

 

Eos, the premium airline that flew between London and New York, filed for Chapter 11 bankruptcy protection last night, a move that appeared to signal the end of cut-price executive-only flights across the Atlantic.

 

The American carrier’s flights were suspended last night, leaving hundreds of passengers stranded at Stan-sted and John F Kennedy airports.

 

The grounding of Eos follows the collapse of Maxjet last December and the announcement that Silverjet, which operates from Luton, is seeking a bailout from new investors. L’Avion, which flies from Paris to New York, is also thought to be struggling. Last night it emerged that mainstream carrier Continental Airlines had withdrawn from merger talks with United Airlines amid concerns about United’s financial health in the face of high oil prices. Continental is now focused on a possible alliance with British Airways and American Airlines.

 

All four of the pure business class airlines were launched over the past couple of years to take advantage of a boom in business-class travel between Europe and the United States. They hoped to take on the established transatlantic carriers such as British Airways and Virgin by offering services tailored to business-class travellers.

 

However, sustained high oil prices have pushed up operating costs while the worsening economic environment has reduced demand for premium air travel and the new carriers struggled to compete with better-capitalised rivals.

 

Eos occupied the top end of this niche market and flew only 48 passengers on its Boeing 757s, styling itself a budget-first class service. Silverjet, the last of the British all-business-class carriers, flies 100 passengers on its larger 767 aircraft and charges from £999 for a business-class return – about a third of a typical BA business-class fare.

 

None of the three premium-only carriers that operated from Britain has ever made a profit. In regulatory filings in America, Eos said that it had lost $37 million (£18.6 million) in the first nine months of last year on revenue of $53 million. Silverjet was losing about £1 million a month and its share price has fallen from a peak of £2.09 last March to 14p.

 

A spokesman for Silverjet said: “We are a different model to Eos and we remain very confident of continuing to fly.”

 

Eos, which was founded by David Spurlock, a former British Airways executive, was the first of the low-cost business operators to launch, starting flights in October 2005, and it raised $212 million from private equity groups and individual investors. Eos had begun to edge its way into the City’s favours and is thought to have been included on the preferred airline lists of a number of big institutions. However, it still needed additional financing and approached its original investors seeking more money this month. When that move failed, Eos approached rival airlines, including BA and Virgin, to propose a takeover. It found no interest.

 

Jack Williams, the chief executive of Eos, said: “There are times when even though you execute your business plan, external forces prevent you from controlling your own destiny.”

 

Rising oil prices are causing havoc in the airline industry and Eos is the seventh carrier in two weeks to seek bankruptcy protection or go bust.

 

http://business.timesonline.co.uk/tol/busi...icle3828369.ece

[Pieter C. 5]

And, another one went bust: Euromanx - on 09may2008

 

They operated 3 Dash8-100's from the Isle of Man, mainly to the UK...

 

Who will be the next one ?

[Georg Burdicek 1]

next one to die is FAT - Far Eastern Air Transport from Taiwan, ceasing operations today.

In January, China Airlines gave up its seat on the FAT board, and Feb18th the airline seeked bankrupcy protection for three month at taipei court. Obviously reorganization was not successful.

[Pieter C. 5]

Frontier To Charge USD$100 For Flying Antlers

 

May 23, 2008

Bankrupt Frontier Airlines said on Friday it will increase the charge for taking antlers on its planes to USD$100 from USD$75.

 

Colorado-based Frontier is the latest airline to announce new fees in an attempt to counter the cost of record oil prices, which have roughly doubled in the past year.

 

"During hunting season, people do bring antlers back in cargo" said a spokeswoman for Frontier. "If you look at some of the other airlines, they also have an actual antlers fee, so it does happen," she added.

 

Frontier said it also plans to charge a USD$25 fee for a second checked bag, cancel half-price infant seats and take no more bookings for pets traveling in cabins.

 

The fee for children traveling alone on Frontier flights will increase to USD$50 from USD$40.

 

"Unfortunately, we need to review our fee structure to help offset this incredible increase in fuel," said Frontier Chief Executive Sean Menke.

 

Frontier is also taking measures to reduce aircraft fuel burn, including new software that optimizes flight tracks based on air traffic and weather conditions, installation of lighter leather seats, and the use of more fuel-efficient aircraft.

 

Frontier received US court approval last month to operate in Chapter 11 bankruptcy protection.

 

The airline, founded in 1994, competes with Southwest Airlines and JetBlue Airways from its hub in Denver.

 

Sky-high fuel prices and a weakening US economy have stalled the US airline industry's modest recovery from the 2001-2006 downturn.

 

Seven small airlines have filed for bankruptcy or stopped operating in the past five months.

 

(Reuters)