Randall Posted April 11, 2008 Share Posted April 11, 2008 Man this is one of the better airlines I thought. Frontier Airlines files for Chapter 11 bankruptcy Carrier hopes to continue operating as normal By Simon Kennedy, MarketWatch Last update: 6:57 a.m. EDT April 11, 2008 LONDON (MarketWatch) -- Frontier Airlines Holdings Inc. said Friday that it's filed for Chapter 11 bankruptcy protection, but unlike collapsed rivals it hopes to continue operating a normal service. The low-cost airline said the decision was taken after its principal credit-card processor unexpectedly said it would start withholding "significant proceeds" received from the sale of tickets. Frontier (FRNT:lines, Aloha Airlines and ATA Airlines have all shut down. Champion Air will cease flying at the end of May. But Frontier said it expects to continue operating its full schedule of flights, adding it will honor tickets and reservations as well as providing refunds and exchanges as usual. The carrier has a fleet of 62 aircraft and operates routes across the U.S. as well as to Mexico and Canada from its hub in Denver, Colorado. "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," said CEO Sean Menke in a statement. He said, however, that the credit-card processor's decision to withhold more cash had left it with little choice. "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," Menke added. Bankruptcy rules will prevent the planned increase in holdback by the card processor and Frontier said it is prepared to litigate the issue if necessary. Quote Link to comment Share on other sites More sharing options...
ABearWithFurniture Posted April 11, 2008 Share Posted April 11, 2008 I guess the Friendly Skies aren't so friendly after all... Quote Link to comment Share on other sites More sharing options...
Ursa Majoris Posted April 11, 2008 Share Posted April 11, 2008 Card processor? Do they mean Visa? Or Mastercard? Quote Link to comment Share on other sites More sharing options...
dmarc117 Posted April 11, 2008 Share Posted April 11, 2008 Frontier Airlines files for Chapter 11 (1.57 ) : Co announces 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. iim thinking it means that they(card processor) werent giving the full amount of a sale to the airline until the purchaser paid his cc bill....... woes of the credit crisis hurting everyone Quote Link to comment Share on other sites More sharing options...
Controller Posted April 11, 2008 Share Posted April 11, 2008 More likely the credit card processor is holding on to a larger percentage of the company's charges because of concerns about having to refund money if any more airlines go bankrupt. Visa, MC & Amex are refunding ATA and Aloha charges to customers and they've already remitted those funds to the now-bankrupt companies. They will have to stand in line with other creditors in the bankruptcy proceedings. So the CC companies are just trying to protect themselves in the event of more airlines going under. Quote Link to comment Share on other sites More sharing options...
The Irish Doggy Posted April 11, 2008 Share Posted April 11, 2008 More likely the credit card processor is holding on to a larger percentage of the company's charges because of concerns about having to refund money if any more airlines go bankrupt. Visa, MC & Amex are refunding ATA and Aloha charges to customers and they've already remitted those funds to the now-bankrupt companies. They will have to stand in line with other creditors in the bankruptcy proceedings. So the CC companies are just trying to protect themselves in the event of more airlines going under. Yep. At least Frontier will continue to operate unlike the other recent troubled airlines. Quote Link to comment Share on other sites More sharing options...
sundaynfl Posted April 11, 2008 Share Posted April 11, 2008 Wells Fargo (nyse: WFC - news - people ) has Frontier’s largest general unsecured claim, which means they've lent more money to the airline without collateral than any other creditor. Well Fargo informed the airline it will significantly increase its "holdback" of receipts and proceeds from ticket sales starting April 11, limiting the airline's liquidity Quote Link to comment Share on other sites More sharing options...
AtomicCEO Posted April 11, 2008 Share Posted April 11, 2008 This is my fault. I saw a table at the airport where they were advertising a free flight on Frontier if you signed up for a credit card. So I signed up for it, charged a pack of gum on the card, took my free flight, and then canceled the card. Quote Link to comment Share on other sites More sharing options...
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