Frontier Airlines Joins Airline Bankruptcy Conga Line

Frontier Airlines has joined the conga line of bankrupt airlines today, according to a statement from the company.

Unlike the abrupt demise of the likes of ATA and Skybus, Frontier will continue operating normally as it restructures. The airline says that its credit card processor was “holding back” customer payments and severely threatening the airline’s liquidity–an action which prompted the company to file for Chapter 11 protection.

Frontier says:

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.”

For more information about how Frontier’s bankruptcy affects you, click here.

Bankruptcy Information [Frontier Airlines]
(Photo:Zonaphoto)

Comments

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  1. DeafChick says:

    Told ya.

  2. dmolavi says:

    this blows. frontier is by far my favorite airline, since they service my favorite destination: colorado. at least they’re still flying. from what i understand, they did this so that CC processor couldn’t hold back any more than it had, effectively stopping them in their tracks. i hope they get out of this, as this is one airline i want to see survive.

  3. doireallyneedausername says:

    This is interesting. I totally told my friends Frontier was next. I mean, a Fortress Hub like DEN, with both SWA and UAL having hubs there…its a recipe for disaster. At least the bankruptcy filing was due to a greedy CC processor, rather than actual cash flow/liquidity issues involving passenger bookings/fuel costs. And at least they’re reorganizing rather than liquidating and shutting down w/o notice.

  4. doireallyneedausername says:

    Btw, just had to throw this in:

    Frontier Airlines: “Experiencing a WHOLE different animal…Bankruptcy.”

  5. egogg says:

    dangit! Frontier just started flights into my local hub. Errgh.

    They’d better pull through this–I hate to say this but there the only carrier that hasn’t screwed me over (yet). I have a whole bunch of FF miles on their system.

  6. wezelboy says:

    Bummer. I like Frontier.

  7. satoru says:

    Frontier might be doing this because in essence everyone else is doing it. They’re probably in semi-bad shape but obviously they’re doing ok because they’re continuing to fly.

    By filing Chapter 11 now, your stock might not take as big a hit if you do it later. It can be bundled into the psychology of “the airlines are in trouble” rather than “your company sucks” kind of mentality. At least now you get some breathing room and time to rethink what to do without the investors/board trying to put you on a burning stake.

  8. LiC says:

    …Frontier partners with AirTran, does this mean AirTran’s on the rocks too?

  9. alice_bunnie says:

    I’m wondering if lots of companies are doing this hoping for another big government bailout?

  10. jamesdenver says:

    @doireallyneedausername:

    Denvr really isn’t a fortress hub anymore – thankfully.

    Locally we all wish them the best – With Southwest, Jetblue, and Frontier DEN is completely different than it was 10 years ago – when UAL really was the dominant carrier.

  11. psychos says:

    @doireallyneedausername:

    The large presence of both United and Southwest makes DEN not a fortress hub by definition. If either one was not present, prices would be significantly higher. CVG is a fortress hub. MSP Is a fortress hub. You will find average prices from these airports significantly higher than somewhere like DEN that has healthy competition.

    Frontier has very good load factors and yields compared to the other carriers who have recently gone entirely out of business. I do not believe that their location in DEN is all that relevant to their current straits.

  12. angrychicken says:

    This actually makes me kinda sad. I’ve never had a bad experience flying Frontier and I can’t say that about any other airline.

  13. pastabatman says:

    is the airline business just not a good business? as in, at all?

    if so why do they keep trying over and over and over?

  14. glad to others feel the same way I do about Frontier – I’ve had nothing but good experiences when I’ve flown Frontier, hope they come out of this ok.

  15. Franklin Comes Alive! says:

    Southwest has only recently (i.e. in the last few years) moved full-scale into Denver. That has to have put a real hurt on Frontier.

  16. SadSam says:

    What’s up with the CC company holding back the $?

  17. bsalamon says:

    sounds like the credit card companies also screw over airlines…wow

  18. Gamethyme says:

    I HATE Frontier – when my wife and I flew to Indianapolis last year, they cancelled our reservations for the return flight, claiming that we weren’t on our flight TO Indianapolis. Even when we presented our ticket stubs, they stood firm on their claim.

    We had to escalate several levels to get a return flight.

    I won’t fly Frontier again.

  19. Corydon says:

    Local news reports here in Denver are saying that their credit card provider went from “holding back” 45% of payments to 100% of payments and this was the cause of the bankruptcy.

    WTF? Anyone know what this all about? How on Earth does a company paid to pass payments made by credit card along to you get to hold on to 100% of each charge?

    I could see holding back some of the charge in case there’s a chargeback or fraud or something, but even 45% sounds outrageously high to me.

    Can anyone explain this?

  20. APFPilot says:

    @SadSam: @bsalamon: @Corydon: It really is simple. After Aloha and ATA going TU and telling their customers to request charge backs the Credit Card processors want to cover their asses.

  21. mduser says:

    @LiC: I hope not…though AirTran does have a contract with the federal government to provide seats at certain rates, so that could be a guaranteed source of revenue that keeps them afloat.

  22. Corydon says:

    @APFPilot: If that’s the case, that’s a really stupid move on the part of the CC company.

    They could have gone to Frontier and laid out their concerns and either gotten some assurance that Frontier wasn’t going anywhere or verified that there was indeed a problem (which I concede there may well be, but from the information we have right now, this isn’t the case).

    So now the credit card processor has basically forced their client into bankruptcy. That sounds like the kind of company I’d love to do business with!

    And it still doesn’t explain why they were holding back 45% in the first place. Are there that many chargebacks on any given day? Is there really that much credit card fraud?

    Sounds like a real scam to me. Maybe we need a Consumerist for Corporations website :P

  23. Imaginary_Friend says:

    @Corydon: Maybe they use PayPal.

  24. mike1731 says:

    This makes me very sad. Of all the airlines I have flown in the past two years, Frontier is by far my favorite. Their fleet is clean and well maintained, their local connections from my home (Wichita KS) are typically not packed to the gills, and their flight crews are exceptionally friendly. Far better than the major lines. I just purchased tickets on them to California in another week, glad they’re still flying. I just hope some of the small airlines like Frontier and Midwest Express survive the current industry meltdown.

  25. APFPilot says:

    @Corydon: F9′s impending doom has been well known about in the industry. They were unable to get any kind of bond or assurance that they would not go under that satisfied the credit card processor….

  26. Wormfather says:

    This is what should have happened after 9/11, not to say that 9/11 was the airline’s fault, but their craptastic financials dictated that any small thing going wrong should have been the end.

  27. Snarkysnake says:

    Have they ever thought of changing credit card processors ? I mean, honestly, there is something missing here. Has the CC processor been heard from. Confirm ? Deny ? Obviously,ticket revenue is the lifeblood of an airline, but couldn’t they have obtained an injunction to force the CC processor’s hand ?

    I ‘m not buying this story as presented. Still, I hope they survive.

  28. snwbrder0721 says:

    I’ve gotta join in the chorus of “Frontier is Awesome” because, well, they are. It pains me to have to fly via any other airline, Frontier truly stands above the rest.

  29. Poshua says:

    @Corydon:

    My understanding is that, if the airline ceases operations, passengers left holding worthless tickets can charge back the tickets to the credit card processor. The processor is then left to try to collect the chargeback from a bankrupt airline. Card processors retain significant holdbacks from airlines that are financially vulnerable in order to cover this exposure; they can tap the holdback to cover what they can’t get out of the bankruptcy. So, it’s not the case that the processor was being silly or that Frontier could have just gone out and found someone else to provide this service on less onerous terms.

  30. VA_White says:

    Oh gosh. I just flew Frontier for the first time last year and they are the best. This sucks. I was really rooting for them. Hopefully they’ll be able to pull through.

  31. rolandsherpa says:

    I will not hesitate to book future flights on Frontier. I just wish there was a way to pay cash and avoid the whole credit card processing fiasco. They are a good company, are solvent (more assets than liabilities…though not by much) and are doing what they can to stay in business. I don’t see them abruptly closing their doors like the others. Hopefully, they will win some customers from the whole Southwest/American Airlines fiasco…I know that they were one airline that stepped up to get fliers home.

  32. dodongo says:

    I thought Frontier and AirTran’s relationship didn’t go much further than basic codeshare and frequent-flier arrangements. Is that not correct?

    AirTran is no frills, but I have to say, they’ve been prompt and reasonable every time I’ve dealt with them.

  33. dollywould says:

    Meg, have you heard any rumors about Midwest? I would be sad if they closed, as they’re one of my only options from LAX to KCI and they are always fantastic.

  34. speer320 says:

    Dang i liked there planes the pertty

  35. JustaConsumer says:

    I got a very nice email from Frontier yesterday telling me they will continue to operate normally and honor their miles. Frontier is by far the best airline out there. This appears to be a scam by their creditors that were short on cash. Fly Frontier! Only 15,000 miles for a free ticket. Really, it works!

  36. lautaylo says:

    We’ve always had great service on Frontier out of IND – cheap, no delays, good inflight, etc. No frills, but cozy. I wondered if something was fishy when DH tried to book tickets to Cancun for a medical assist trip. He tried to purchase 2 round-trip tickets online using his credit card in Dec. last year, and the processing wouldn’t go thru. He had to go to the airport and pay cash at the ticket counter for a flight in Feb. – a bit of a strange experience. It all went off without a hitch, but now I realize other people have probably had the same problem. That sucks – I hope they keep going, because they were by far the cheapest out of the tri-state area to the West Coast. I would hate to have to start bumming rides to CHI to fly…*shudder*