Frontier Airlines bankrupt today!
#4
Joined: Sep 2003
Posts: 1,762
Likes: 0
Frontier is in capter 11 and they will keep flying and try to pull out of their issues. it is a shame that the trigger was a credit card company trying to boost their cut of the ticket price. I've said it before and I'll say it again, de-regulation to the extent it was done was a mistake. The industry is a mess and the Bozo in the White House continues to not pay attention to domestic issues..... as he said in the begining he can only focus on one thing at a time (the war on terror). Wish the rest of us in the workplace had that luxury!
#7
Joined: Nov 2006
Posts: 8,030
Likes: 0
Don't make assumptions without understanding how the system works. Doubt if was poor business practices. This has been a lean and efficiently run airline. The big issue is the current lack of flexibility in the credit markets. Credit card processors have a habit of holding back funds for firms that engage in heavy future sales -- Float. When any airline sells a ticket for a future flight they do not earn that revenue until the flight occurs -- that could be hours or months. The cc processor only advances a portion of the ticket sales (maybe 40, 50%) at the point of sale and holds back the balance until the service is delivered. Of course, the cc processor is protecting their intersts. That can produce a enormous bubble of free cash or float that the airline can use. It is report that the Frontier cc processor decided to increase the hold back to nearly 100% thus effectively killing the float. With no short term credit being available because of the currently liquidity in the credit market, Frontier was instantly out of cash. Another of the many victims of the current credit crunch. There will be more.
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#8
Joined: Apr 2007
Posts: 7,070
Likes: 0
Frontier is an excellent airline and on of my favorites. I hope they can get through this and continue to operate. Losing them would be a big loss for our area as they offer excellent schedules to the west coast, Alaska, and Mexico from here.
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