Syncmaster From United States of America, joined Jul 2002, 1983 posts, RR: 14 Posted (9 years 5 months 4 days 23 hours ago) and read 1897 times:
Sorry if this has already been posted....
From Frontier's website:
Frontier Airlines to Announce Final Payment on U.S. Government Guaranteed Loan (Dec. 22, 2003)
$70 million loan helped Frontier Stabilize, Grow and Succeed during post-9/11 period
DENVER (Dec. 22, 2003) - Frontier Airlines (Nasdq: FRNT) will announce today that it has become the first airline in America to repay in full its post-9/11 U.S. government guaranteed loan. In a ceremony to be held today at 1:30 p.m. MST at Frontier headquarters, Frontier CEO and President Jeff Potter will present an oversized check for $11.6 million to several members of the Colorado Congressional delegation. The check represents the current outstanding balance of the $70 million commercial loan facility made available to Frontier Airlines primarily based on a loan guaranty from the Air Transportation Stabilization Board (ATSB).
The press conference will be held with Senator Wayne Allard, Congresswoman Diana DeGette, and Congressman Bob Beauprez.
The press conference will be held Monday, December 22, 2003 at Frontier Headquarters (7001 Tower Road) beginning at 1:30 p.m. MST.
"The employees and the loyal customers of Frontier Airlines are grateful to the U.S. taxpayers for this temporary financial assistance," Jeff Potter said. "This loan helped us to weather the challenges following September 11, 2001 as well as the impacts of a stagnant national economy. The loan, along with our employee's dedication and motivation, has helped Frontier continue its growth and return to profitability and we are happy to be the first airline in America to repay this important loan."
Following the terrorist attacks on September 11, 2001, Congress passed the Air Transportation Safety and System Stabilization Act which, among other things, provided $10 billion in federal loan guarantees and credits for airlines that were impacted by the attacks.
Frontier applied for the loan guaranty in June 2002 and received conditional approval on Nov. 5, 2002. On Feb. 14, 2003, Frontier closed on and received the proceeds from the $70 million term loan, of which $63 million was guaranteed by the Air Transportation Stabilization Board (ATSB), with smaller portions guaranteed by other parties. The loan was provided by WestLB, a large European bank, with additional participation by Wells Fargo Bank, N.A. Frontier made a required loan prepayment of $10 million in July 2003 as a result of its receipt of a federal tax refund and a second loan prepayment of $48.6 million in September 2003 as a result of the company's common stock offering in September 2003.
"The events of September 11 and its aftershocks had a debilitating effect on the capital markets," Potter said. "At the time, we were in the midst of our fleet transition plan, and access to capital was a critical success factor. Obtaining approval for this government backed loan helped to ensure that we could continue our business strategy, bring competitive air travel options to more communities and preserve competition in the aviation industry."
"This is an important day for Frontier Airlines, for air travel in Colorado and for the taxpayers of the United States," said Rep. Diana DeGette (D-CO). "Everyone at Frontier Airlines should be proud of being the first airline in the nation to pay off its federal loan. It is a testament to the current and future success of the airline and all of its employees."
About Frontier
Currently in its tenth year of operations, Denver-based Frontier Airlines is the second largest jet service carrier at Denver International Airport with a fleet of 39 aircraft and employing approximately 3,800 aviation professionals. Frontier, in conjunction with Frontier JetExpress operated by Mesa Air Group ("Mesa"), operates routes linking our Denver hub to 37 cities in 22 states spanning the nation from coast-to-coast and to four cities in Mexico. Frontier's maintenance and engineering department has received the Federal Aviation Administration's highest award, the Diamond Certificate of Excellence, in recognition of 100 percent of its maintenance and engineering employees completing advanced aircraft maintenance training programs, for four consecutive years. In August 2003, Frontier ranked as one of the "Top 10 Domestic Airlines" as determined by readers of Travel + Leisure magazine. Frontier provides capacity information and other operating statistics on its Web site, which may be viewed at www.frontierairlines.com.
Luv2fly From United States of America, joined May 2003, 11957 posts, RR: 51 Reply 1, posted (9 years 5 months 4 days 23 hours ago) and read 1866 times:
Well this is good news, Frontier has paid back there loan even before UA has been able to secure there's from the government.
PiedmontGirl From United States of America, joined Nov 2003, 1124 posts, RR: 14 Reply 2, posted (9 years 5 months 4 days 23 hours ago) and read 1843 times:
Hey......good for Frontier. I'm glad to hear this. Very good news!
Luv2fly From United States of America, joined May 2003, 11957 posts, RR: 51 Reply 4, posted (9 years 5 months 4 days 23 hours ago) and read 1817 times:
DLKAPA
Great, now when do they get the widebodies?
Maybe the fact that they do not have these types of planes to fill, is one of the reasons they are doing as well as they are.....
Iflyatldl From United States of America, joined Nov 2003, 1936 posts, RR: 4 Reply 5, posted (9 years 5 months 4 days 20 hours ago) and read 1697 times:
That's great news! Good for F9! After seeing their hysterical commercials and the great things I've heard, next time I'm bound for DEN I'm going to give them a try!
Ah, Summer, Fenway Park, Boston Red Sox and Beer.....
Syncmaster From United States of America, joined Jul 2002, 1983 posts, RR: 14 Reply 6, posted (9 years 5 months 4 days 20 hours ago) and read 1696 times:
Does any one know how much more some of the other airlines have to go on their pay backs?
Mariner From New Zealand, joined Nov 2001, 22719 posts, RR: 88 Reply 7, posted (9 years 5 months 4 days 20 hours ago) and read 1676 times:
Syncmaster:
I would guess that some of them have paid interest payments, but not the capital.
America West starts repayments in '04.
US Airways hasn't started yet, and it's hard to see when they will.
ATA hasn't paid anything back either. They've been in a huge cash crunch, but the word is just out that they've been able to reshcedule some of their debt.
I can't remember who else got the guarantee. Aloha, perhaps?
HA_DC9 From United States of America, joined Jul 1999, 645 posts, RR: 1 Reply 8, posted (9 years 5 months 4 days 20 hours ago) and read 1644 times:
Mariner:
Yes you are correct, Aloha was another airline that got a loan guarantee. I can't remember how much exactly, but I think it was in the $40 something million range. Not sure if they started repayment yet.
Syncmaster From United States of America, joined Jul 2002, 1983 posts, RR: 14 Reply 9, posted (9 years 5 months 4 days 19 hours ago) and read 1578 times:
Forgive me for asking....but did AA get one too? I can't remember
Mariner From New Zealand, joined Nov 2001, 22719 posts, RR: 88 Reply 10, posted (9 years 5 months 4 days 19 hours ago) and read 1538 times:
I don't think AA applied.
At the time, there was a tendency among the majors to believe that the post 9/11 slump wouldn't last, and in any case, it would really only affect the LCC's.
The closing date for applications was June 28, '02, and at least until April of '02, airline travel seemed to be rebounding.
The summer '02 traffic was a disaster, but by the time they all realized it, it was too late.
As to Aloha, I haven't read that they repaid anything.
It isn't a long list of airlines that did apply. There was UAL, of course, but they were rejected and told to try again.
Flairport From , joined Dec 1969, posts, RR: Reply 11, posted (9 years 5 months 4 days 19 hours ago) and read 1525 times:
did B6 and WN get loans?
I'll tell you... after all I've heard about F9, if my travel plans bring me to:
DEN (DIA)
MCI
SFO (until we get nonstop from FLL)
SMF
RNO
BOI
PDX
SEA
SNA
PHX (i'll take HP one way F9 the other)
ABQ (got family there!)
I'll try F9! Even with the $5 DirecTV fee, they are doing something right!
i think this also is a good sign for the industry as a whole. we are pulling out, and in this day and age, if the airlines are doing better, everything will do better!
Mariner From New Zealand, joined Nov 2001, 22719 posts, RR: 88 Reply 12, posted (9 years 5 months 4 days 18 hours ago) and read 1495 times:
Flairport:
B6 and WN didn't apply for loan guarantees - they weren't actual loans from the Feds.
In Frontier's case, they got a guarantee of $63 against a total loan of $70 million.
The bulk of the loan - $60 million - came from a German bank, WestLB - (the hand of Airbus here?) - with some more coming from Wells Fargo and two private individuals.
Flairport From , joined Dec 1969, posts, RR: Reply 13, posted (9 years 5 months 4 days 18 hours ago) and read 1458 times:
ok.... i thought that it was just a standard thing that all airlines had to get these loans. did FL get one?
how is it that these airlines that did not or are paying back loans expanding and STILL making a profit, yet these other airlines are so glommy and hanging by A THREAD... EVEN WITH AN EXTRA $70 MIL!
Mariner From New Zealand, joined Nov 2001, 22719 posts, RR: 88 Reply 14, posted (9 years 5 months 4 days 18 hours ago) and read 1429 times:
Flairport:
There's probably some confusion here. All the airlines did get some money from the ATSB, without application.
The Feds shut down the aviation industry for three (?) days after 9/11, and the airlines were reimubursed.
The ATSB loan guarantees were a whole seperate deal. Airlines had to apply for loan guarantees, if they wanted them, based on their needs.
America West was the first and applied for (and got) about $400 million. US Airways was the biggest - so far - with $900 million.
FL didn't get one because they didn't apply.
The second part of your post is a doozy. I'm not sure I can give you a simple answer.
But I'll try:
(i) as I said above, part of the problem was timing. If the majors had known just how bad business was going to be during the summer of '02, several more might have applied.
(ii) There really was a sense of "it can't happen to us" on the part of some of the majors.
UAL was an example. When they applied (for a guarantee of nearly $2 billion) they provided a set of figures - projections for future revenues.
The ATSB told them, basically, that the projections were bulldust and said no. UAL admitted that yes, perhaps it wasn't the best prepared application in the world.
This is why UAL is being so very careful with their second application.
(iii) No one was really prepared for the spectacular rise of the LCC's. Most of the majors thought that business - as it was - would return eventually.
What is now clear is that busisness will return - but not the way it was.
Anyone who applied to the ATSB had to cut costs to the bone - for the duration of the loan.
Some - like Frontier - already had lean costs. Some who didn't apply, like FL and B6, had very lean costs. So those airlines were able to survive and make profits.
But it took bankruptcy to persuade UAL and US Airways to reduce their costs, and AA came very close to going bankrupt before they reduced their costs.
US Airways has already said they didn't cut costs enough - they need to make more - even though they're out of bk.
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