According to the Business Journal, Frontier Airlines won approval for their Chapter 11 bankruptcy reorganization plan. The airline filed for Chapter 11 bankruptcy in April 2008 after its primary credit card processor First Data Corp failed to release money earned from the sales of tickets to customers, which threatened Frontier’s liquidity.
The article said:
“This is an extremely proud day for everyone in our company,” Frontier president and CEO Sean Menke said in a statement. “Many people doubted that we would even survive, let alone accomplish a successful reorganization, provide a recovery for our creditors and emerge a stronger competitor and company. … We will be a successfully restructured airline, well positioned to be a competitive, successful, sustainable airline for years to come.”
Frontier’s successful emergence from Chapter 11 bankruptcy was doubtful. The airline faced numerous objections to its reorganization plan; but was able to successfully create a Chapter 11 bankruptcy reorganization plan that satisfied its creditors. The added bonus is that the airline’s Chapter 11 bankruptcy will also give it an advantage over many of its competitors who are facing a difficult market without the benefits of bankruptcy protection from creditors. Many creditors are extremely nervous about the airline industry profitability and some may take actions that further threaten the industry’s stability.
Fortunately for Frontier, it has had the power to slash debt and implement job losses under bankruptcy, giving it the opportunity to reposition itself as a stronger player in the airline industry. Because of this, many analysts predict that those airlines who have filed bankruptcy may be more likely to survive this downturn, while their competitors have an increased chance of going out of business.