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Frontier Airlines Files for Bankruptcy

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Frontier Airlines Files for Bankruptcy

Business

Frontier Airlines Files for Bankruptcy

Frontier Airlines Files for Bankruptcy

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The discount airline has been hit by high fuel costs and the slowing economy, but another factor was at work. Frontier says its main credit card processor unexpectedly said it would start withholding much of the proceeds from the airline's ticket sales.

Low-cost air carrier Frontier Airlines Holdings filed for bankruptcy protection on Friday, the fourth U.S. airline to do so in the past several weeks.

The company said it was forced to file after its principal credit card processor announced a plan to begin withholding a greater share of proceeds from ticket sales.

Frontier officials vowed to continue normal flight operations as the company reorganizes.

The Chapter 11 filing in U.S. Bankruptcy Court in New York prevents the credit card processor from increasing the amount withheld, 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.

ATA Airlines, Skybus and Aloha Airgroup all have filed for bankruptcy in the past two weeks, but Menke said Frontier's reasons for doing so were different. Company spokesmen say it will keep operating — and paying its workers.

Frontier shares lost most of their value in premarket trading Friday, tumbling $1.27 to 30 cents each.

From NPR and wire reports

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