Frontier bailout eases travelers’ nerves
August 7, 2008
ASPEN ” Nervous about your Christmas tickets with the struggling Frontier Airlines?
Then you may be relieved to hear that the local experts are singing the praises of a $75 million loan offer to shore up the Denver-based airline.
Shortly after filing for Chapter 11 bankruptcy protection in April, Frontier began providing service from the Aspen airport. It now offers four daily flights between Aspen and Denver.
“The news is just fantastic,” said Jim Elwood, director of Aspen-Pitkin County Airport. “I’m very pleased to hear the financing came through.”
Bill Tomcich, president of Stay Aspen Snowmass, a central reservations agency, said: “This is nothing but good news, no matter how you slice it.”
Republic Airways Holdings, Credit Suisse, AQR Capital and CNH Partners recently offered the airline $30 million immediately, with an additional $45 million to follow. A bankruptcy judge approved the offer earlier this week, according to Tomcich.
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Frontier has said it expects the $75 million loan, along with the revenue from recently announced aircraft sales and sale lease-backs, to greatly improve its liquidity. And Sean Menke, president and chief executive officer of Frontier, suggested in a statement that the offer was a “tremendous vote of confidence in our company an its business plan.”
Tomcich said that while the airline has proven itself in terms of service and reliability, its liquidity challenges have concerned would-be ticket purchasers planning to fly in or out of Aspen.
“There was a lot of apprehension,” he said. “Frontier was very much in the news, being speculated about.”
Travel agent Diann Kroeger, with Carbondale-based Travel Bees Inc., agreed, noting that “discriminating clients,” for whom price was not the first concern, were particularly worried about booking travel with airline.
But Kroeger said news of the loan “definitely” reassures her, and Tomcich suggested the announcement should remove any apprehension about flying the airline.
“I feel better about their future right now than any point since they started flying,” he said.
Tomcich added that he met with senior Frontier officials Friday and reviewed the details of their current business plan, as well as their plan to move from bankruptcy. Between the loan, the new business plan, and the downward trend of oil prices, the company appears a lot stronger today than it did a few weeks ago, he said.
Asked about the airline’s staying power at the Aspen airport, Elwood said he was confident, at least, about the airline’s desire to continue offering service in the Roaring Fork Valley, noting that “they’ve shown they want to be at our airport.”
Kroeger, however, was a little more cautious about Frontier’s situation.
“Everything is different” in this economy, she said, and Frontier’s situation “could go either way.”
“Most of the larger airlines end up getting bailed out,” she said. “Frontier is in the middle.”
She’s never really expected the airline to shut down, she said.
“But you never know,” she added cautiously.
Kroeger noted that Frontier has added a level of reliability to the Aspen airport, as its planes are more likely to be able to fly in inclement weather. It often helps its competitor, United Airlines, with stranded passengers, she said.
Tomcich explained that the aircraft used by Frontier ” the Q400 ” can fly in weather conditions that ground many other carriers’ aircraft.
“It’s quite possibly the most ideally suited airline for the Aspen airport,” said Tomcich, noting the craft is much more tolerant of crosswinds and tailwinds than most planes.
Kroeger also said Frontier has helped control ticket prices at the Aspen airport by providing competition.
Tomcich explained that airport pricing is “almost” the purest form of supply and demand: the greater the supply, the lower the price.
Looking to this fall, he expected fares to be “as affordable as [customers] have seen in a long time.” Even with Delta Airlines pulling its fall service from Aspen, the addition of Frontier’s service has added seats, he said.
And despite recent good news, Frontier “will need our support” come fall, said Tomcich, who urged Aspen residents to fly the carrier in the slower season, to encourage the carrier to keep its schedule of four flights per day.
However, he didn’t expect the trend of “reasonable” prices to last into December, when growing demand typically drives up prices.