On April 10, 2008 Frontier Airlines filed for reorganization under chapter 11 of the U.S. Bankruptcy Code. Frontier took this action because their credit card processing company held back funds owed to Frontier for ticket sales.
This action by Frontier's credit processor took working funds that Frontier needed to continue to pay employees, purchase fuel and other supplies and severely impacted the liquidity of the airline. Since 2001 we have seen Northwest Airlines, Delta Airlines, United Airlines and US Airways file for, and emerge from, bankruptcy. We have also seen Aloha Airlines, ATA and Skybus close their doors in the past few weeks without notice. Champion Air, a small Minnesota airline that once provided air transportation for Northwest Worry Free Vacations, has also announced that as of May 31, 2008, they will cease operations. The actions by these airlines was probably the main reason for Frontier's credit card processing company to withhold more funds. From over 3,500 flight cancellations by American Airlines to the cancellation of flights by Delta Airlines, Alaska Airlines and Midwest Airlines due to confusing FAA maintenance directives, the turmoil in the sky in the last 30 days has made us wonder what is going on with the airline travel industry. Hopefully, these bumpy, turbulent times will fly away before the busy summer travel season begins in about two months.
