April 12, 2008
Frontier Airlines Bankruptcy
Well this has been the fortnight, as they say, for airlines' bankruptcy filings.
Frontier Airlines filed chapter 11 on April 10, 2008 in the Southern District of New York, case No. 08-11298-rdd, Assigned to Judge Robert D. Drain. The immediate cause of the filing was the "notice" by the carrier's credit card processor that it wanted an additional $75 million (or roughly 40% of its cash on hand) to be held in a reserve account to cover anticipated future losses. It was going to begin holding 50% of the credit card receipts until the fund increased to $130 million.
Frontier is considerably bigger than ATA and Aloha with some 6,100 employees including 666 pilots. It lost $32 million in the last quarter of 2007. The cost of gas has risen from $2.12 per gallon on 12/31/06 to $2.58 on 12/31/07 to $3.39 on 4/9/08. It has 62 planes, 38 leased and 24 owned.
There are no figures in the First Day Declaration on the value of the assets versus the total amount of debt.
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