Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Frontier Airlines Seeks Refuge in Bankruptcy Court

What an awful two weeks for the airline industry, eh? Among the recent headlines:

  • "Aloha Airlines shuts down passenger operations: report," Reuters news agency, March 31.
  • "ATA Airlines discontinues all flights, files for bankruptcy," Associated Press, April 3.
  • "Skybus calls it quits, experts called the airline's model 'dumb'," Associated Press, April 5.

To these we can now add one more: Denver-based Frontier Airlines (Nasdaq: FRNT  ) , a carrier I've had the pleasure of flying several times, filed for Chapter 11 bankruptcy protection on Friday.

The good news? No shutdown is planned. According to a letter sent to frequent fliers by CEO Sean Menke, Frontier filed for court protection because of an "unexpected" increase in the amount its principal credit card processor, First Data, plans to withhold from the sale of tickets.

Menke, quoted in a company press release, says that a Chapter 11 filing freezes creditors from taking action that would alter a pre-existing revenue-sharing relationship.

No word yet on whether First Data plans to challenge Frontier's stance, but executives say they are "prepared to litigate" the issue if necessary.

Now for the bad news: Frontier joins an auspicious list of carriers to have spent time under the purview of the bankruptcy courts. United parent UAL (Nasdaq: UAUA  ) , Continental (NYSE: CAL  ) , Delta (NYSE: DAL  ) , and Northwest all share that dubious distinction.

American Airlines parent AMR (NYSE: AMR  ) stands out as one of the few to keep the courts at bay. But the carrier isn't without problems. American canceled some 3,000 flights last week because of maintenance issues.

For Frontier, a discounter that contends in its home market with top discounters Southwest (NYSE: LUV  ) and JetBlue (Nasdaq: JBLU  ) , the filing means it will get time to restructure and work through liquidity issues. That's good. But I question whether it will be enough.

Southwest, for all of its faults, can turn a profit charging just $110 per passenger. Frontier hasn't been close to making money while charging just $104 a seat.

So, good luck, Frontier folk. You run a friendly, fun-to-fly airline. I just hope that, in today's market, "friendly" and "fun" can still be profitable.

Taxi toward related Foolishness:

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 620584, ~/Articles/ArticleHandler.aspx, 10/24/2016 2:55:50 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,229.50 83.79 0.46%
S&P 500 2,151.11 9.95 0.46%
NASD 5,304.01 46.61 0.89%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
AAMRQ.DL $0.00 Down +0.00 +0.00%
CAL.DL2 $0.00 Down +0.00 +0.00%
Continental Airlin… CAPS Rating: *
JBLU $18.63 Up +0.06 +0.32%
JetBlue Airways CAPS Rating: ****
LUV $42.30 Down -0.13 -0.31%
Southwest Airlines CAPS Rating: ****
UAUA.DL $0.00 Down +0.00 +0.00%
UAL Corp CAPS Rating: *