Frontiers 08 fiscal report

[amF16]

Fiscal report shows Frontier seeing red

By Greg Griffin
The Denver Post
Article Last Updated: 07/01/2008 01:02:50 AM MDT

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if(requestedWidth > 0){ document.getElementById('articleViewerGroup').style.width = requestedWidth + "px"; document.getElementById('articleViewerGroup').style.margin = "0px 0px 10px 10px"; } Frontier Airlines lost nearly $22 million in May as fuel costs continued to soar, consuming more than half of its revenues.
The red ink in May was more than a third of the $60.2 million loss Frontier recorded for its fiscal year ended March 31. The Denver airline, under bankruptcy protection since April 10, spent 51 percent of its revenue on fuel in May, up from 41 percent in April.
"Every airline is asking, 'How much longer can this go on?' " Frontier spokesman Steve Snyder said. "The way it is now is not sustainable for any airline. We're doing what we can."
Frontier last week announced a 17 percent capacity reduction starting in September that will reduce operating costs. The carrier said in its 2007 annual report, released Monday, that each 1-cent-per-gallon increase in jet-fuel costs it $1.9 million a year. Jet fuel was $4.22 a gallon as of June 23.
The company said Monday that it has spent an estimated $5.2 million on professional services related to its bankruptcy since the filing.
Frontier improved its cash position in May to $110 million, up from $99.8 million in April, by recording a gain of $23 million on the termination of its fuel hedges and a $9.2 million gain from the sale of two planes. Also increasing its cash on hand was Frontier's allowing a $25 million rise in accounts payable, money it owes to vendors.
Frontier also said Monday that it promoted Edward "Ted" Christie III to senior vice president and chief financial officer. He had been serving as senior vice president of finance.
Greg Griffin: 303-954-1241 or [email protected]

 

[airlinepilot]

Let's see...you have $110M and you owe venders 25M (a number that probably grows everyday) which leaves 85M to start June. At a loss of 22M a month....that is pretty simple math. Not slamming F9 guys and gals...at all...been with a company that went under. Everyone need to hedge you bets and get those apps, etc out ASAP

 

[skystud25]

this just out...

F9 has come out with some firm furlough numbers now...155 (could be less with voluntary leaves of absenses, which I'm sure will be few). Some will be furloughed 1 Sep. 08 and some 1 Oct. 08. That's out of about 700 pilots (so about 22%). I have many friends there, and wish them the best.

 

[Cardinal]

The 155 goes back to the most senior guy in the 4/24/2006 class. (Before leaves are factored in).

 

[Toobdrvr]

Clarification

The 155 is the number of pilots recieveing WARN notices. That number is slightly larger than how many will be actually furloughed to cover the company's liability under WARN.

The number of actual furloughs will be lower after attrition (one pilot on the list has recently passed away) and VLOAs, for which interest seems very high.

Hope I'm right. Good luck to us all....

 

[AA717driver]

So they gained $23M from cancelling fuel hedges?

I know that in Ch.11, anything goes but that seems a little short-sighted. TC

 

[stratus72]

The 155 is the number of pilots recieveing WARN notices. That number is slightly larger than how many will be actually furloughed to cover the company's liability under WARN.

The number of actual furloughs will be lower after attrition (one pilot on the list has recently passed away) and VLOAs, for which interest seems very high.

Hope I'm right. Good luck to us all....

So even without the LOA's you're saying the 155 is a likely a higher number than will actually be let go? kind of a cover your A$$ thing by the company? Look's like my number is up on Oct 1st. I missed the cut off number by 15 pilots. Perhaps I'll still have a job? Nonetheless, i really think F9's days are numbered....I really hate to say it.

 

[Hose A. Jiminez]

So they gained $23M from cancelling fuel hedges?

I know that in Ch.11, anything goes but that seems a little short-sighted. TC

Not sure but I imagine that hedges are something you cannot keep during Chapter 11. The 23mil that was realized in the sale of the hedges will likely go to the creditors that get screwed.

 

[starchkr]

stratus...dude...come on, read your emails or the FAPA website, John explains the whole 155 number pretty well in the letters he sent out. The 155 is a worst case scenario, as you said, the company covering it's butt just in case they need that many, most likely will not be that many, but we will not know until July 17th the true "hard" number...also, i would like to think that those 15 numbers should be eclipsed by those taking the VLOA's, you just might be back on reserve...along with myself it looks like. As has also been said, VLOA's look promissing with a lot of interest from what i hear around the crew room...of course we will have to see truly just how many of those talkers actually back up their words and take them.


F9's days may be numbered, you may be correct, but i like to think positive, and believe we can come through this mess...maybe a little worse for the weary, but still an airline at least. If not, well, there is always a backup plan...it may not be in this industry, but it is a backup plan. Come on though, think positive, it makes a better you, and makes those around you feel better as well.

 

[stratus72]

stratus...dude...come on, read your emails or the FAPA website, John explains the whole 155 number pretty well in the letters he sent out. The 155 is a worst case scenario, as you said, the company covering it's butt just in case they need that many, most likely will not be that many, but we will not know until July 17th the true "hard" number...also, i would like to think that those 15 numbers should be eclipsed by those taking the VLOA's, you just might be back on reserve...along with myself it looks like. As has also been said, VLOA's look promissing with a lot of interest from what i hear around the crew room...of course we will have to see truly just how many of those talkers actually back up their words and take them.


F9's days may be numbered, you may be correct, but i like to think positive, and believe we can come through this mess...maybe a little worse for the weary, but still an airline at least. If not, well, there is always a backup plan...it may not be in this industry, but it is a backup plan. Come on though, think positive, it makes a better you, and makes those around you feel better as well.

Starchkr,

You've misunderstood my view of F9's future. Either you're not on this board much (i know you used to be) or you aren't reading my numerous posts. I have been more than positive about our survival. Look at all the guys on here disputing my optimism. However, based on the info we are receiving from our company and public records, basic grade school math will show our days are numbered (6-12 months tops.) Unless there is some stuff in the Sean's bag of tricks (and there very well could be...i hope so, he's sharp), then what else should one believe? So, what if we are back on reserve and still have a job? I think that's great, but if the money drains then we are still limited on our time. I'm told time and time again by my crews that i am one of the most positive people they've flown with lately. it's just time to take the ol' head out of the sand and face a distinct reality....our days are likely numbered.....based on present info. I've got plan B,C and D in line and I hope our coworkers are at least thinking about doing the same. Man, I hope we survive...I love it here!

 

[IADBLRJ41]

That just really sucks.. F9, Midwest all good companies with great service, nice product, friendly employee's. Still not enough.

Good luck guys.

 

[starchkr]

You're right, i am not on here too much anymore...i pop in once or twice a month at most...especially since the pay cuts and BK stuff all started. It's pretty bad listening to all those not at the company complaining about how we the pilot group handle our business and try to do all we can to keep afloat.

I get what ya mean, money is short, and time may be as well. All we can do is help out those who will be on the street in Sep and Oct, and pray everyone has those backup plans we all talk about. Like i also said, i would bet you will be fine, you "should" still have guys under ya when it all shakes out. Hopefully we will be here for the trun in the economy and we will all laugh about this later...if not, well, i guess i will go into the family business and just go blow stuff up in the demolition world.

 

[stratus72]

I agree, we should have some pilots below us come september. Let's hope we get everyone back in due time.

 

[Andy]

So they gained $23M from cancelling fuel hedges?

I know that in Ch.11, anything goes but that seems a little short-sighted. TC

The author of that article doesn't know how to read a balance sheet. The hedges were marked to market and they showed a loss of $23.151M compared to the value that F9 was carrying on their books.

Hose Jiminez is correct that hedges are required to be liquidated in Ch11. I don't know the inner workings of Ch11, but I think that it has to do with on vs off balance sheet transactions.

Note that the author also screwed the pooch on the amount of money that F9 received from the sale of 4 aircraft. According to the filing, they sold the aircraft for $59.090M (assuming that these were the only assets sold) and paid off $38.433M in loans on the aircraft. This appears to only be a partial sale, as they were originally supposed to get $106M for the aircraft and they owed $68.5M on the aircraft.

F9 had a cash burn of $10.856M during the month of May, offset completely by the sale of the aircraft. So from the way I've pieced everything together, F9 should have another $20M or so in cash due to them after the sale of the remainder of the 4 aircraft.

 

[starchkr]

I thiink you are right Andy... the first 2 jets went to Russia a little while ago, the remaining 2 will not go until the end of August...I "believe" that we will get the money for those 2 at that time. I could be wrong, but that is how i understand it. Now the 7 others we are selling...who knows, but i thought i heard they are already sold, just waiting for the announcement...again, could be wrong.