Thread: The airline industry is in big trouble

Originally Posted by CNN

Frontier files for bankruptcy protection

* Story Highlights
* Frontier CEO: Chapter 11 prevents credit card processor from increasing "holdback"
* Rising fuel costs and the credit crisis in financial markets have affected airlines
* Credit listed as having largest unsecured claim against Frontier was Wells Fargo
* Frontier spokesman had earlier said airlines had "no concerns about bankruptcy"

DENVER, Colorado (AP) -- Frontier Airlines Holdings Inc. has filed for Chapter 11 bankruptcy protection, but unlike other airlines filing for bankruptcy in recent weeks, it plans to keep running while it reorganizes.

The low-fare carrier said its filing Friday came after an unexpected attempt by its principal credit card processor to start withholding significant proceeds from the sale of Frontier tickets, which threatened to hurt Frontier's liquidity.

The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing its "holdback," Frontier CEO Sean Menke said.

"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," Menke said in a statement.

Frontier, whose major hub is in Denver, has been affected as other airlines have by rising fuel costs and the credit crisis in financial markets.

ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy recently, but Menke said Frontier's reasons for doing so were different.

"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," he said. "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."

He said Frontier was prepared to litigate, if necessary.

The creditor listed in bankruptcy court documents as having the largest general unsecured claim against Frontier by far was Wells Fargo, with $93.5 million. Frontier said it had fewer than 50 creditors.

It reported assets and liabilities of $50 million to $100 million.

A Frontier spokesman had said earlier this week the airline had "no concerns about bankruptcy" but added that it was working on strengthening its cash position.

Last month, Frontier said it had agreed to sell four planes as it dealt with rising fuel costs.

You knew the airline industry was in trouble once ATA filed for bankruptcy. It's funny, wall street is always right on these things. They saw ATA file for bankruptcy and they knew exactly what that meant. A number of smaller airlines have folded in the last month and it doesn't look like it's going to stop any time soon. With the newest problems with the MD-80 the airlines are losing even more money. They might be in worse shape than after 9/11.

Anyone up for a Ride?

Screw airlines, give me a meal on my 10 hour flight and maybe I'd feel bad.

Originally Posted by The Common Man

Skybus here in columbus folded... which sucked because you could fly somewhere for $10 if you got online early when they released the super discount tickets....

which might be part of the reason they went under.

Yep, those discount carriers are toast.

Originally Posted by slowpokemcgee

Anyone up for a Ride?

Screw airlines, give me a meal on my 10 hour flight and maybe I'd feel bad.

How sweet would it be to have high speed rail network? Buffalo to NYC in 2-3 hours. Buffalo to Toronto in an hour.

Unfortunately, the infrastructure for such a system just isn't there.

Originally Posted by The Toughster

How sweet would it be to have high speed rail network? Buffalo to NYC in 2-3 hours. Buffalo to Toronto in an hour.

Unfortunately, the infrastructure for such a system just isn't there.

You know Amtrak has never turned a profit?

Originally Posted by treydawg

You know Amtrak has never turned a profit?

Amtrak isn't high-speed because they have to share rails with slow-paced freight trains. Also, they haven't turned a profit because they are totally inconvenient and expensive. Why take a 4am train from Buffalo to NYC and get there at 2pm for 100 bucks when you can take JetBlue?

Just drive. Poosays.