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Frontier Airlines Back In The Game

Frontier Airlines Holdings Inc. has received a commitment of up to $100M in financing that could help the carrier escape bankruptcy.

The carrier received a $75M commitment from Perseus LLC, a private investment firm in Washington, D.C. The firm, which also has an office in Evergreen, Colo., near Frontier’s Denver headquarters, has also agreed to serve as an equity sponsor for Frontier’s reorganization plan, which allows Perseus to purchase 79.9% of the reorganized airline for $100M, all subject to bankruptcy court approval and other conditions.

The announcement “is a major boost to Frontier and builds momentum toward its emergence from bankruptcy as a viable enterprise,” says Sean Menke, president and chief executive officer, in a statement. “Despite the current challenges facing the airline industry, these transactions help point the way toward Frontier’s emergence from bankruptcy as a competitive, sustainable airline.”

Brian Leitch, senior marketing director with Perseus, says in a statement that the company believes in the quality of Frontier’s product, employees and customer service. He believes the company can help the airline through the current state of transition and that Frontier “deserves a chance to succeed in this challenging market, and we are proud to help it do so.”
Whether the investment provides long-term stability for the airline remains to be seen. John Pincavage, an aviation consultant and founder of Westport, Conn.-based Pincavage & Associates, says the financing will keep Frontier in the game for now. Several factors, including fuel pricing and the public’s willingness to endure fees and increased ticket costs, will determine the carrier’s long-term fate.

“If fuel prices go back down to $50 a barrel these guys have hit a homerun, probably a grand slam,” he says. “If oil goes up to $150 a gallon or $200 a barrel, it’s probably not going to matter.”