Frontier Airlines Files for Chapter 11 Reorganization; Normal Operations Continuing and Unaffected
April 11 2008 - 2:01AM
PR Newswire (US)
- 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) 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. About Frontier Airlines
Holdings, Inc. Frontier Airlines Holdings, Inc. is the parent
company of Denver-based Frontier Airlines. Currently in its 14th
year of operations, Frontier Airlines is the second-largest jet
service carrier at Denver International Airport, employing
approximately 6,000 aviation professionals. Frontier Airline's
mainline operation has 62 aircraft with one of the youngest Airbus
fleets in North America. Frontier Airlines' mainline operations
offers 24 channels of DIRECTV(R) service in every seatback along
with a comfortable all coach configuration. In conjunction with its
regional jet fleet, operated by Republic Airlines, and a fleet of
ten Bombardier Q-400 aircraft operated by Lynx Aviation (a
subsidiary of Frontier Airlines Holdings, Inc.), Frontier offers
routes linking its Denver hub to 70 destinations, including 62 U.S.
cities in 36 states spanning the nation from coast to coast; six
cities in Mexico; one in Canada and one in Costa Rica. In November
2006, Frontier and AirTran announced a first-of-its-kind integrated
marketing partnership that offers travelers the ability to reach
more than 80 destinations across four countries with low fares,
aboard two of the youngest fleets in the industry. For more
in-depth information on Frontier Airlines, please visit its Web
site at FrontierAirlines.com. Safe Harbor Statement under the
Private Securities Litigation Reform Act of 1995: Statements
contained in this press release that are not historical facts may
be forward-looking statements as that item is defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements involve risks and uncertainties that could result in
actual results differing materially from expected results and
represent the Company's expectations and beliefs concerning future
events based on information available to the Company as of the date
of this press release. The Company undertakes no obligation to
publicly update or revise any forward-looking statements to reflect
events or circumstances that may arise after the date of this press
release. Additional information regarding risk factors that may
affect future performance at the Company are contained in the
Company's SEC filings, including without limitation, the Company's
Form 10-K for its fiscal year ended March 31, 2007. DATASOURCE:
Frontier Airlines Holdings, Inc. CONTACT: Frontier Media Relations,
+1-720-374-4560, ; or Frontier Investor Relations, +1-720-374-2907,
Web site: http://www.frontierairlines.com/
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