Frontier Airlines gets $40 million DIP Financing

[FlyWolf]

Best of luck to you guys...we really got the short end of things after Republic bought in at Midwest...I got furloughed with 12 years of seniority. Hope your final result goes much better...too many experienced folks losing there jobs to RJs these days. With the economy in the pooper its just that much worse.

Well said.

 

[USMC319]

RAH, AQR Capital, and Credit Suisse pitched in to grant $30mm DIP financing last summer with an option to provide another $45mm in a second installment if needed. The second installment was never excercised.

The original $30mm DIP note is coming due in about 25 days. So essentially this post petetion DIP of $40mm will pay off the original $30mm and allow for additional working capital. There is no $70mm figure as alluded to in several previous posts. Frontier is now looking for exit financing, which will pay this $40mm DIP note off and fund the airline's emergence plan. That number, if and when announced, will be in the $150,000,000 ballpark.

So RAH isn't buying anything, they are however, protecting their investment in DIP capital. And they agreed to accept a $150mm damage claim as a bonus for their efforts in the event F9 doesn't make it out of BK.

 

[eaglesview]

Hope your final result goes much better...too many experienced folks losing there jobs to RJs these days. With the economy in the pooper its just that much worse.

Experienced pilots losing jobs to pilots that will fly for food stamps. The wave of the future. It turns your stomache. No morals left in this business.

 

[Rez O. Lewshun]

don't you just love market liberalism?

 

[RobCat]

Ok, Lets call a duck a duck. To our fellow Midwest pilot I'm sorry for your misfortune. I do not wish any bad will on you but lets be honest. Your company has been going to crap for the last 10 years. We are not the start of your problems. If your memory is that short let me remind you of the AirTran attempt, than the TPG or whatever it was with Northwest. After that RAH. So your first step is to admit that Midwest is not the same as it was in the mid 90's. Don't worry or be ashamed, you are not in bad company there are other airlines that had trouble and RAH helped out.

 

[Flying the Line]

Frontier gets $40 million loan pledge from Republic

By Ann Schrader
The Denver Post
Posted: 03/06/2009 12:30:00 AM MST



Frontier Airlines announced Thursday it has a $40 million commitment from Republic Airways Holdings Inc., essentially refinancing a loan it received nearly a year ago when the Denver-based carrier filed for bankruptcy protection.
Frontier will use the funds to repay a $30 million loan from Republic, Credit Suisse Securities and AQR Capital, plus it will have a $10 million "cushion to move forward," said Frontier spokesman Steve Snyder.
Credit Suisse Securities and AQR Capital have been paid back.
"What we're doing today gives us the adequate liquidity required to manage the business and be able to focus on finding a plan sponsor, which will eventually allow us to emerge from bankruptcy," Snyder said.
The repayment is a "very important step" to emerging from bankruptcy, Snyder said.
Frontier officials are working to identify a sponsor willing to invest $125 million to $150 million.
April 1 was the deadline for repaying the loan, called post-petition debtor-in-possession, or DIP, financing to the three firms, which are members of Frontier's unsecured-creditors committee.
Indianapolis-based Republic was Frontier's regional-service partner from March 2007 until Frontier broke their contract after filing for Chapter 11.
Since filing for bankruptcy, Frontier has cut costs, improved revenue and "maintained sufficient liquidity to execute our business plan," Frontier president and chief executive Sean Menke said in a statement.
The loan commitment is subject to bankruptcy-court approval. As a condition of the loan, Frontier agreed to give Republic a $150 million payment for an unsecured claim related to the bankruptcy.
Bryan Bedford, Republic's president and chief executive, said in a statement that "we believe Frontier is on the right path to emerge from bankruptcy this summer as a very efficient, low- cost airline." Ann Schrader: 303-954-1967 or [email protected]

 

[boomlrd]

This thread would probably be better read in either the LCC/Nationals or Regionals forum.

 

[Horrido]

Thanks for all your wisdom RobCat. Please let me make clear I have no illusions about the fact that Midwest was poorly run...it was always doomed to fail with the leaders it had...many like me hoped that we would have new leadership at some point. I commuted from ATL and really wanted to see the AirTran merger go through...but that honestly probably would have damaged their bottom line. I'm not blaming anyone for what happened but the Midwest management. It was a great airline with a lot of great people who spent many years there providing a superb travel experience. I don't really care who is responsible...I have already found a new job. The point of my post is that long term employees all over the industry are losing jobs to low paying regional jets. Its just the reality of things today. I don't care much for the us versus them attitude that seems quite common in many posts here. I think we all are in this together...I am ashamed of nothing my friend.

 

[CitationLover]

<rant on>
Republic guys appear to be HAPPY capturing our 88 seat flying, but not our 88 seat rates and work rules (heck our rates are based on 60 seat DC-9's). Dumb.

BB is a jesus freak idiot. I hope you lose the wet lease arbitration.

When the new Teamsters union aviation leadership starts sending you "5 letters in 5 days" you can then see what we were dealing with at Midwest (and he was on our side).

Telling a Midwest pilot that Hoeksema is an idiot, is like preaching to the choir. He's back at his happy place (under 10 airplanes to manage).
</rant off>

 

[JoeMerchant]

This should be re-written to say, Republic takes money from US Air, Delta & United and uses that money to help keep their competitor alive, enabling the lowering of revenues.

I like Frontier, don't get me wrong. They are a great airline. I just don't think my employer should be bailing them out when we have our own kettle of fish to work on.

As you said in another post....The tail is waging the dog....It was only a matter of time.....Would the body like to deal with the tail as an equal yet?