- 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.
SOURCE Frontier Airlines Holdings, Inc.
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Related links:
http://www.frontierairlines.com
CONTACT:
Frontier Media Relations, +1-720-374-4560,
Media@flyfrontier.com; or Frontier Investor Relations,
+1-720-374-2907, Investor@flyfrontier.com
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