Frontier Airlines has received bankruptcy court approval to defer seven Airbus aircraft for approximately two years each. The aircraft are identified as part of a 10 March 2000 Airbus A318/A319 purchase agreement.
The deferrals will mean “the substantial majority of Frontier’s pre-delivery payments” for the aircraft are returned, according to documents on file with the federal bankruptcy court in New York.
RZB, which financed a portion of the pre-delivery payments and has a perfected security interest,"will receive a share of the returned deposits in full satisfaction of its secured financing.”
The net payable immediately due to Frontier is “approximately $7.5 million, after effecting a cure payment of approximately $984,000 and a pre-petition setoff of credits otherwise owed to Frontier of approximately $96,000,” according to court documents.
This money will provide “needed liquidity to fund the Frontier’s operations, providing an immediate benefit to the Debtors’ [Frontier Airlines] estates.”
Frontier previously announced plans to cut seven aircraft from its existing fleet starting in mid-August through the end of September. The airline also plans to reduce mainline capacity by 17% starting in mid-August.
After filing for Chapter 11 bankruptcy protection, Frontier has been trying to secure debtor-in-possession financing as it faces increasing competitive pressure from Southwest Airlines in its Denver hub.
In May, Frontier posted loses of $22 million. This follows a $16.5 million loss in the three weeks following its filing for Chapter 11 bankruptcy protection on 10 April.
Market share for Frontier during May in Denver, including codeshare affiliates and subsidiary Lynx Aviation, was 26.7%, up from 21% for the same month last year, the carrier states in a regulatory filing.
Southwest’s market share in Denver during the same month increased to 6.6% from 4.6% in March 2007.