Frontier Airlines Files for Bankruptcy

Denver-based Frontier Airlines Holdings Inc. today filed for bankruptcy protection, but executives at the low-cost carrier said they hope to continue operating normal service. Frontier becomes the latest airline to fall victim to rising fuel prices and the economic downturn, following Aloha Airlines, Skybus Airlines, ATA Airlines and charter carrier Champion Air.

Frontier said it was forced to seek bankruptcy protection when its principal credit-card processor unexpectedly said it would start withholding "significant proceeds" received from the sale of tickets, according to MarketWatch. Unlike other carriers which have shut down in the past month, Frontier said it expects to continue operating its full schedule of flights, and promised to honor tickets and reservations. The carrier operates 62 aircraft operating North American routes.

"We felt that Frontier would be able to withstand the challenges confronting the U.S. airline industry, which include unprecedented and significant increases in the cost of jet fuel and the impact of the credit crisis in the financial markets, without seeking bankruptcy protection," said CEO Sean Menke in a statement.

However the credit-card processor's decision to withhold more cash pushed Frontier over the brink.

"This change in established practices would have represented a material change to our cash forecasts and business plan. Unchecked, it would have put severe restraints on Frontier's liquidity and would have made it impossible for us to continue normal operations," Menke said.

Bankruptcy protection would prevent the credit card processor from carrying out its planned increase in holdback.