Frontier faces rivals' squeeze play in Denver
— -- Frontier Airlines fended off a skittish creditor by seeking bankruptcy-court protection last week, but its future could depend on how successfully it battles two muscular rivals in a city that may not have room for all three.
The scrappy discount airline is now a strong No. 2 carrier in its Denver hometown, behind United Airlines, and well ahead of No. 3 Southwest Airlines. But Southwest is growing rapidly in Denver, a city it didn't even serve until 2006.
By next month, Southwest will be flying non-stop to 13 destinations that weren't on its Denver route map last May.
Some — like Albuquerque, Los Angeles, and San Diego — are among Frontier's top 15 in seat capacity out of Denver, according to a USA TODAY analysis of airline schedule data from OAGback Aviation Solutions. Southwest also is beefing up frequencies on other routes, such as to Chicago Midway, Nashville and Salt Lake City.
"We do not see a future for Frontier as it faces tough competition in Denver from United on the network side and Southwest on the low cost side," Calyon Securities airline analyst Ray Neidl said Friday.
Vaughn Cordle, an analyst at AirlineForecasts, says Frontier lacks enough cash to survive a prolonged economic downturn. He expects it to lose about $80 million this year.
Unlike recent airline bankruptcies at Aloha, ATA and Skybus, which sprang from high fuel prices, Frontier says a creditor's action forced it into bankruptcy court.
First Data Corp., a credit card processor, planned to hold back significantly more proceeds of Frontier's ticket sales from credit cards. That would protect credit card issuers which must give refunds to customers with unused tickets when a carrier goes bust.
With Frontier's Chapter 11 filing, creditors' demands for payments now will require a bankruptcy judge's approval while Frontier keeps flying and reorganizes
Frontier does have problems. It lost $32.5 million in last year's fourth-quarter and its fuel costs rose 22% from late 2006, according to a document filed with the U.S. Bankruptcy Court.
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