Money Will Repay Earlier Loan, Provide A "Cushion"
Republic Airways Holdings is building a reputation for bailing
out cash-starved airlines. On Thursday, Frontier Airlines announced
it has received a new commitment for $40 million in post-petition
debtor-in-possession (DIP) financing from Republic, subject to
bankruptcy court approval and other pre-closing conditions.
The Denver Post reports the loan will essentially repay an
earlier $30 million loan granted by the Indianapolis-based regional
airline, as well as providing Frontier with a $10 million "cushion
to move forward," in the words of Frontier spokesman Steve
"Since filing for Chapter 11 protection, we have lowered our
unit costs, right-sized the operation to adjust for a challenging
economic climate, improved our unit revenue performance and
customer product satisfaction with the introduction of AirFairs and
maintained sufficient liquidity to execute upon our business plan,"
said Frontier CEO Sean Menke.
"This financing commitment is a tremendous vote of confidence in
the company's plan and validates our employees' significant efforts
during the restructuring. This new DIP facility refinances the
existing DIP loan that matures in April 2009, increases the
available financing compared to the expiring DIP loan and preserves
our financial stability as we seek a plan sponsor to emerge from
bankruptcy later this year."
Republic CEO Bryan Bedford added "we believe Frontier is on the
right path to emerge from bankruptcy this summer as a very
efficient, low-cost airline."
Frontier's announcement follows last September's news that
Republic, in partnership with investment group TPG Capital, issued
$60 million in DIP financing to cash-starved Midwest Airlines. As
part of that agreement,
Republic was granted rights to operate 12 regional jets for
Midwest, to replace mainline planes (and mainline
Neither Frontier nor Republic stated whether the regional
carrier might resume flying for Frontier, as part of the loan
agreement. Republic operated regional routes for Frontier from
March 2007, until the Denver-based airline filed for Chapter 11
bankruptcy protection in April 2008 and terminated the contract.
Frontier has since moved its regional operations in-house, through
its Lynx subsidiary.