Frontier Airlines announced Thursday it has a $40 million commitment from Republic Airways Holdings Inc., essentially refinancing a loan it received nearly a year ago when the Denver-based carrier filed for bankruptcy protection.
Frontier will use the funds to repay a $30 million loan from Republic, Credit Suisse Securities and AQR Capital, plus it will have a $10 million “cushion to move forward,” said Frontier spokesman Steve Snyder.
Credit Suisse Securities and AQR Capital have been paid back.
“What we’re doing today gives us the adequate liquidity required to manage the business and be able to focus on finding a plan sponsor, which will eventually allow us to emerge from bankruptcy,” Snyder said.
The repayment is a “very important step” to emerging from bankruptcy, Snyder said.
Frontier officials are working to identify a sponsor willing to invest $125 million to $150 million.
April 1 was the deadline for repaying the loan, called post-petition debtor-in-possession, or DIP, financing to the three firms, which are members of Frontier’s unsecured-creditors committee.
Indianapolis-based Republic was Frontier’s regional-service partner from March 2007 until Frontier broke their contract after filing for Chapter 11.
Since filing for bankruptcy, Frontier has cut costs, improved revenue and “maintained sufficient liquidity to execute our business plan,” Frontier president and chief executive Sean Menke said in a statement.
The loan commitment is subject to bankruptcy-court approval. As a condition of the loan, Frontier agreed to give Republic a $150 million payment for an unsecured claim related to the bankruptcy.
Bryan Bedford, Republic’s president and chief executive, said in a statement that “we believe Frontier is on the right path to emerge from bankruptcy this summer as a very efficient, low- cost airline.”
Ann Schrader: 303-954-1967 or aschrader@denverpost.com
