Posted 03.24.2009

Long, strange trip for Frontier

Airline eyes return to upright position after profitable quarter

By Nora Caley

When Frontier Airlines filed for Chapter 11 bankruptcy protection in April last year, the carrier was the fourth to file for bankruptcy within a few weeks. But while Aloha, ATA, and Skybus ceased operations, Denver-based Frontier is not only still flying but recorded a net profit of $1.1 million for the quarter ending December 2008. As the airline works to emerge from bankruptcy, the rest of Denver’s aviation industry has its own challenges. Denver International Airport had a slight decrease in passenger counts at the end of 2008, and some expansion projects have been delayed. Chicago-based United Airlines emerged from bankruptcy in 2006 but is losing money. Dallas-based Southwest Airlines is becoming more competitive.

Industry experts say Frontier is not like other airlines. “Usually you go into bankruptcy because there is bloat and fat,” said Mike Boyd, president of the aviation consulting firm Boyd Group International, in Evergreen. “But for Frontier it never was that.” Frontier filed for protection after Greenwood Village-based First Data, the credit card processor, said it would start withholding 100 percent of credit card receipts, up from 45 percent. That would have severely limited Frontier’s cash flow, so it acted quickly. “The automatic stay provision of the bankruptcy code prohibits the credit card processor from increasing its holdback,” the airline says on its website. In its December operating report, Frontier indicated it had sold four aircraft, negotiated concessions from all represented labor groups and launched the AirFairs pricing that lets customers choose Economy, Classic or Classic Plus.

Photo courtesy Frontier Airlines. Photography by Tim Samples.

Jim Young, vice president of sales, marketing and distribution, says AirFairs offers flexibility in a commodity-driven marketplace.  “We have people tell us all the time that they would pay a few more dollars to fly on Frontier, but if somebody offers a fare for even a few dollars less, we find people typically go for the lowest price,” he said. The airline also laid off workers. When it declared bankruptcy, Frontier had about 6,000 employees. Today it has about 5,000. Still, the airline is beloved in Denver, said Henry H. Harteveldt, a travel analyst for Forrester Research Inc. in San Francisco.  “Frontier is nice to customers and employees, and management is trying to maintain good labor relations,” he said.

Boyd notes that Frontier’s flight attendants are not unionized, an anomaly in the industry. “Flight attendants are normally a group that is out there alone, and they feel cut off,” he said. “The fact that they haven’t felt the need to unionize speaks volumes about the airline.” Donald P. Schenk, president and chief executive officer of ACA Associates, a New York-based airline consulting firm, says smaller airlines have the advantage of higher levels of employee morale, and therefore, better customer service.

“A huge challenge for legacy airlines is a large portion of employees have worked for them for 20, 30 or 40 years,” he said. “They have in good faith bargained for a deal which the economy no longer lets the airline keep. They are stuck in jobs they no longer like, working for a company they don’t believe has treated them fairly.” Boyd added that Frontier’s “A Whole Different Animal” campaign doesn’t hurt. “Competitively that may be cheating,” he said. “You take a shot at Frontier, and you’re taking a shot at a cuddly little deer or bear.”

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Last updated on Mar 31, 2009 at 03:29 PM

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