Frontier goes Chap 11...

[General Lee]

Press ReleaseSource: Frontier Airlines Holdings, Inc.

Frontier Airlines Files for Chapter 11 Reorganization; Normal Operations Continuing and Unaffected
Friday April 11, 2am ET - 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 - News) 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.


Bye Bye--General Lee

 

[dashtrash]

If you look at the stock today......someone knew it.

 

[SonicPig]

Who's next?

Anybody else get the feeling we are all forked?

Seems like your screwed unless you're in the top 50% at a Legacy. Just widebodys and RJ's, and they're gonna whipsaw the hell out of RJ operators. Wish I could be more upbeat.

The Pig

 

[Deadalus]

Lots of good people there. Unfortunately, if they don't find an outside investor or buyer I don't see them making it.

 

[FmrFreightDog]

Good luck, guys and girls.

 

[F/O]

If you look at the stock today......someone knew it.

Hell, you are smokin something if you didn't think Potter knew it....when he left months ago....

 

[becket]

I can't help but think that Ch. 11. is overly optimistic. The BK laws have changed and an airline is no longer allowed to pull a "T.W.A." and languish for years.

It looks/feels like a sugar-coat. I hope I'm wrong. Frontier has come a long way and I'm pulling for them.

 

[Dan Roman]

Mesa's next if stock price is any indication. It's become a penny stock. They are getting killed in Hawaii and just lost the DAL contract. Not to mention a lot of debt coming due. They actually are trying to issue NEW stock when the old is going for around 80 cents!

 

[Sedona16]

Mesa's next if stock price is any indication. It's become a penny stock. They are getting killed in Hawaii and just lost the DAL contract. Not to mention a lot of debt coming due. They actually are trying to issue NEW stock when the old is going for around 80 cents!

Bet on it! There is no way Mesa will be around after June 16. JO has effectively backed the company into a corner with his recklace decisions. The new stock offering is a wishful hail Marry pass that is doomed to fail.

http://www.businessweek.com/ap/financialnews/D8VU0AMO0.htm

Mesa Air wants to issue more shares

By CHRIS KAHN
MORE FROM BUSINESSWEEK

PHOENIX With its $20-million-a-month Delta Air Lines contract in jeopardy, Mesa Air Group Inc. wants shareholders to allow the carrier to issue up to $37.8 million in common stock to pay off its looming debt.
The amount is more than the total market value of the Phoenix-based commuter airline Tuesday.
Mesa said in a securities filing that it will ask shareholders at the company's annual meeting May 13 to approve the plan to issue new stock so it can repay senior convertible notes in June.
Mesa offered the convertible notes in 2003 to raise $100.1 million. The notes aren't due until 2023, but holders can force the company to repurchase the notes on June 16, 2008.
"The company is preserving its options regarding the payment obligations" on those notes, Mesa General Counsel Brian Gillman said in an interview.
Robert Mann, an independent airline analyst in Port Washington, N.Y., said this could be a reliable way to raise cash, especially with banks increasingly reluctant to loan airlines more money.
"There's just not an appetite to extend further credit to airlines," Mann said.
Mesa told shareholders in the securities filing that it needs the flexibility to pay bondholders with stock. Forcing it to use cash right now "would have a material averse effect on the company's financial condition," the company said.
The airline recently has been roughed up by a series of bad news that's drained its cash reserves.
Mesa's new subsidiary go!, an inter-island airline in Hawaii, sparked a price war among competing carriers and reported a $20 million operating loss in the first 16 months of operation.
Last October, a federal judge ordered Mesa to pay $80 million to rival Hawaiian Airlines Inc. after determining that a Mesa executive intentionally destroyed evidence related to a lawsuit filed by Hawaiian. Hawaiian claimed the evidence would have shown the launch of go! was aided by Mesa's misuse of proprietary information it gathered as a potential investor during Hawaiian's bankruptcy.
In March, Delta Air Lines Inc. said it planned to pull a contract-flying agreement worth $20 million a month with another Mesa subsidiary, Freedom Airlines. Delta said Freedom's carriers had a poor flight completion rate, but Mesa disputes that claim.
They're suing the carrier to keep the contract intact.

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[Deadalus]

It sucks too that the only legacy still hiring is US Airways. They're only hiring because we all started jumping ship and getting the $%@! out of aviation. My first year pay in a job outside of flying is more than I made my last year flying after 15 #T%$%#@$%@^@#%&#! years in aviation.