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Statement From Denver Concerning Frontier Airlines

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Apr 11, 2008 4:33 pm US/Mountain

Statement From Denver Concerning Frontier Airlines

DENVER (AP) ― On April 10, 2008, Frontier Airlines Holdings Inc., Frontier Airlines Inc., and Lynx Aviation Inc. ("Frontier") filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. A Chapter 11 filing permits Frontier to continue operations while developing a plan of reorganization to address existing debt, capital, and cost structures. In 2007, Frontier accounted for approximately 22.7 percent of passenger enplanements at Denver International Airport, approximately 16.3 percent of the airline rentals, fees and charges, and 7.8 percent of airport system gross revenues. See "Aviation Activity" and "Airline Information" at pages 37-41 of the Preliminary Official Statement for the Series 2008 A1-A4 Airport System Revenue Bonds.

The City has no information on the financial condition of Frontier other than from SEC filings, bankruptcy filings, and Frontier press releases and Web sites. However, the City can confirm the following information concerning amounts owed by, and credits due to, Frontier as of April 10, 2008:

Estimated outstanding rents – none

Estimated landing fees for March (due April 20) -- $1.7 million

Estimated Frontier share of 2007 Net Revenue Credit -- $7 million

Estimated Frontier share of 2007 State Fuel Tax credit -- $3.74 million

The above credits are those expected to be applied toward Frontier Airlines' 2007 rents and landing fees.

In addition, the airport has an irrevocable Letter of Credit in its favor in the amount of $3 million. But, due to the above credits that Frontier is expected to receive, the airport does not expect to need to call upon the Letter of Credit.

Under the Passenger Facility Charge Enabling Act, the City imposes a PFC of $4.50 on each enplaned revenue passenger. The PFC is collected by Frontier and other carriers and then remitted to the City minus a handling fee of $0.11 for each PFC collected. Average monthly PFCs for Frontier are approximately $1.9 million. Frontier is current on its PFC payments to the
Airport, and has stated in its bankruptcy filing that it has established a separate account in accordance with law for the sole purpose of holding a cash reserve of sufficient value to cover its PFC remittance liability. Further, Frontier states in its bankruptcy filings that it has not granted, nor will it grant, any security or other interest in the funds in the PFC Account to any third party, and that it is understood that collected PFCs are held in trust and are not considered property of the Debtors' estates.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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