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Bankruptcy court approves frontiers exit

inflightboi175

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Frontier Airlines won bankruptcy-court approval Thursday for its reorganization plan, clearing the way for the Denver airline to emerge from Chapter 11 protection.

Under the plan, Frontier is to be acquired about Oct. 1 by Republic Airways Holdings Inc. (NASDAQ: RJET), which intends to operate Frontier as a stand-alone airline under its own name. Indianapolis-based Republic has not said whether it plans to keep Frontier's headquarters in Denver.

Thursday's confirmation hearing in U.S. Bankruptcy Court in New York was uncontested, with Frontier already having resolved a small number of objections to its reorganization plan.

"This is an extremely proud day for everyone in our company," Frontier President and CEO Sean Menke said in a statement. "Many people doubted that we would even survive, let alone accomplish a successful reorganization, provide a recovery for our creditors and emerge a stronger competitor and company. ... We will be a successfully restructured airline, well positioned to be a competitive, successful, sustainable airline for years to come."

Frontier filed for Chapter 11 protection in April 2008 after its principal credit card processor, First Data Corp., held back money from sales of tickets to customers, which the airline said threatened its liquidity.

After shedding jets and cutting costs and jobs, the airline has reported several straight months of profitability.

Menke thanked Frontier employees for "their hard work, sacrifice and resiliency during the bankruptcy."

Earlier this month, Frontier's unsecured creditors voted overwhelmingly to approve its plan of reorganization to exit bankruptcy.

Republic Airways Holdings won an auction in August to buy Frontier and make it a wholly owned subsidiary. Republic — which also owns regional Chautauqua, Midwest and Republic airlines, as well as Shuttle America — hopes to enter into the low-fare national carrier business with its purchase of Frontier.

It won the auction over a bid from Dallas-based Southwest Airlines partially on the strength of its plan to pay back creditors 16.88 cents on the dollar, which was almost 5 cents per dollar higher than the offer made by Southwest.

Existing shares of Frontier stock will be canceled under the reorganization plan.

Now the question becomes whether Frontier will continue to be based in Denver, and whether some of its several thousand local jobs will move elsewhere.

Republic signaled earlier this month that it is considering shifting as many as 250 Denver-area Frontier jobs to Milwaukee or Indianapolis.
 
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