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Frontier loses $16.5 million in three weeks

By Chris Walsh, Rocky Mountain News (Contact)

Published May 28, 2008 at 6:25 p.m.

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Frontier Airlines lost $16.5 million during a three-week period in April and saw its cash balance dip to $108.3 million, according to documents filed Wednesday with a U.S. bankruptcy court.

The carrier’s net loss during the period amounted to more than half its deficit for the last three months of 2007, which at the time ranked as the largest in its history. Denver-based Frontier did not issue results for January through March of this year because it filed for bankruptcy less than two weeks after the quarter ended.

The financial results for most of April highlight the struggles Denver-based Frontier faces as it attempts to reorganize in Chapter 11 bankruptcy and secure funding amid rocketing oil prices. Frontier said its fuel costs rose 34.1 percent over the same period last year.

“They’re going to have to get some financing at some point,” said Evergreen aviation consultant Mike Boyd. “When they went into Chapter 11 they had strong future bookings, strong revenue and strong (occupancy numbers), but they’re burning cash, and that’s an issue.”

Frontier’s unrestricted cash balance, including equivalents and short-term investments, fell by $62 million — or 36 percent — from the end of December through April. About $7.5 million of the cash decrease occurred from April 11 to April 30, according to the monthly operating report.

Frontier attributed most of the decline to investments in capital expansion projects, loan payments and a $50 million reclassification of unrestricted cash to restricted cash related to an increase in credit card holdbacks.

Bob Mann, an aviation consultant in New York, said the results might not be as bad as they seem.

Frontier has jettisoned a contract with regional carrier Republic Airways that cost the company millions of dollars in April, and a recent move to sell four planes will bolster its cash by $37.5 million.

Mann also pointed to the $91.7 million in restricted cash Frontier had at the end of April. That amount is dedicated to specific obligations and cannot be freely used by the company. But Mann said Frontier potentially could try to free up a little of that cash.

“The results certainly are not good, but on the other hand, I don’t think they reflect on the company’s current position,” Mann said. “I think when we get the May report we’ll have a better idea.”

Comments

  • May 29, 2008

    2:24 a.m.

    Suggest removal

    SteveM writes:

    P.S. Stop supporting the non-hometown Southwest Airlines which is attempting to cannibalize the two airlines that paid the lionshare for DIA while SWA abandoned DIA due to their unwillingness to pay the landing fees until such time as the debts were paid down to cause the airport to reduce fees and lo and behold look who's back in town and doing everything it can to destroy our local favorite airline. Do the research RMN, you have the articles in your own archives to prove my statements. There are many hundreds of thousands of people that have relocated in the past 10 years and don't know the true story behind SWA. Why not fill them in? Why not also examine their 'brilliant' advertising that touts $69 one way fares, but doesn't say there's only a few such seats at such seats available per flight at the rock bottom prices while the rest of the seats often are off the chart.