Monday, April 14, 2008
Frontier Files for Bankruptcy
Frontier Airlines sought bankruptcy protection Friday, the fourth low-cost carrier to file for Chapter 11 in the last few weeks, as the price of aviation fuel reaches ruinous heights and a slowing economy keeps more consumers from flying. The airline will continue operations as it reorganizes.
The discount carrier was forced into bankruptcy by the same problem that’s afflicting millions of Americans: credit card debt. The airline’s principal credit card processor announced that it would start to withhold a larger share of owed proceeds from ticket revenue. Frontier’s Chapter 11 filing in U.S. Bankruptcy Court in New York blocks the credit card processor from increasing its "holdback".
"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," said CEO Sean Menke in a statement.
ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy in the past two weeks. Related story