Frontier Airlines today announced that private investment firm Perseus LLC has agreed to buy a majority stake in the company and will provide additional financing pending bankruptcy court approval. The carrier also hiked change fees and eliminated its current standby policy.
Perseus LLC agreed to purchase 79.9 percent of the reorganized company's equity for $100 million and will provide an additional $75 million in post-petition debtor-in-possession financing for the carrier, which filed for Chapter 11 bankruptcy in April
(BTNonline, April 11). Frontier today filed a motion to approve the transaction with the U.S. Bankruptcy Court for the Southern District of New York. If approved, Perseus will provide funding in two installments.
"Today's announcement is a major boost to Frontier and builds momentum toward its emergence from bankruptcy as a viable enterprise. The $75 million commitment in DIP financing from Perseus is a significant vote of confidence in the employees of Frontier, our product and business plan," Frontier president and CEO Sean Menke said in a prepared statement. "Despite the current challenges facing the airline industry, these transactions help point the way towards Frontier's emergence from bankruptcy as a competitive, sustainable airline."
Also today, Frontier announced that, in lieu of its former standby program, customers who change flights on the same day of departure will receive a confirmed seat on the new flight and be charged the difference between the original fare and the fare at the time of change. Summit-level members of Frontier's EarlyReturns frequent traveler program may change flights on the day of departure free of charge. The changes are in effect for tickets purchased today for travel on or after Aug. 15.
"Anyone who has tried to fly standby without a confirmed seat knows the frustration of not knowing if you will make the flight. With this new policy, customers will immediately know if they have a seat or not," Menke said.
Frontier's $150 change fee in advance of the day of departure represents a $50 increase, matching recent changes by
United Airlines,
US Airways and
Northwest Airlines.