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Old 07-22-2011, 07:41 AM   #1  
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Default Frontier to do contract "fixed-fee" flying

OK, can anyone figure out this quote from Bedford?

Quote:
CEO Bedford: Frontier Airlines well on its way to cost-cutting goal

Denver Business Journal - by Ed Sealover

Date: Thursday, July 21, 2011, 8:29pm MDT
Related:

Travel
[URL="http://assets.bizjournals.com/denver/news/BedfordFrontier3-0-507-527-720.jpg?v=1"]

Frontier Airlines has achieved 80 percent of its cost-cutting goals and expects to issue roughly $75 million in debt, parent company leader Bryan Bedford said in an interview Thursday night with the Denver Business Journal.
Bedford, president/CEO of Republic Airways Holdings Inc. of Indianapolis, flew to Denver earlier Thursday to speak with Frontier employees after the company announced a financial restructuring plan last month and then had 18 of its 59 Airbus planes knocked out by a hailstorm that struck Denver International Airport the night of July 13.
The hailstorm forced the cancellation of more than 200 flights, mostly in or out of DIA. But Frontier as of 8 p.m. MDT Thursday has only two cancellations on its schedule for Friday, both between Denver and Chicago.
Worried that employees would be concerned about the future of the company, Bedford said he found them to be resilient after the twin publicity setbacks. He also said he believes the company is in a good place going forward despite its disappointing financial performance in the first half of 2011.
Much of that optimism, he said, stemmed from the near-realization of $120 million in cost savings that Bedford announced he was looking to achieve in May after the company lost roughly $55 million in the first quarter, due largely to escalating fuel prices.
"We are probably well past the 80 percent mark in terms of actual deals," Bedford told the DBJ Thursday. "We're going to finish the restructuring effort and then we're going to focus on running the business."
The most prominent part of the restructuring involved getting Frontier's pilots in June to give up future pay increases and cut back on company 401(k) contributions and paid leave time in exchange for awarding the group an equity stake in Frontier's ownership.
Bedford said he is now making similar agreements with all other employee groups.
Other cost reductions so far, he said, have included:
-- Roughly $30 million in savings achieved by shifting 76-seat planes from Frontier's fleet to the fleets that Republic operates under different names for larger carriers, where the smaller planes can be more profitable. The airline also will shift some of its 100-plus-seat Airbus aircraft to those fixed-fee agreements during the slower winter season, Bedford said.
-- Agreeing to extend leases on Frontier's aircraft in exchange for lowering costs right now, a move Bedford said will save the company some $25 million.
-- Tightening up contracting terms with Frontier's manufacturers of original equipment to save roughly $20 million.
-- Using upgraded technology and tighter scheduling to achieve $15 million in fuel conservation savings.
-- Saving some $10 million in the cost of advertising and distribution of flight-booking over third-party Internet sites, which Bedford has asked for a break in costs.
While some of the savings goals remain ongoing, such as the employee contracts and price reductions with equipment manufacturers and flight-booking sites, Bedford said he is confident they will get finished.
"So far we haven't had any of our suppliers decide that their business would be better without Frontier Airlines in the picture," he said.
Frontier's board of directors already has agreed to put another $75 million worth of liquidity into the business in the form of a secured debt facility, Bedford said.
He had spoken earlier this year of finding further investors to finance Frontier as well. But with the company achieving its cost-saving goals, that is not an immediate priority, he said.
Frontier does hope to create networks of alliances with similarly sized airlines in other countries in order to increase its capacity to fly passengers internationally, Bedford said. But that also is not a task for the immediate future, he said.
"There's clear interest out there, but people want to see this restructuring done first," he said.
So it appears:
  • Liquidation is a consideration, but "so far" the suppliers like Frontier being around
  • Frontier's fleet, including some of its Airbus jets are going to be shifted into fee for departure agreements as early as this winter
Who's scope allows that? Are we talking about leasing out the airplanes without pilots, but still on Frontier's Certificate?
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Old 07-22-2011, 08:11 AM   #2  
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Quote:
Originally Posted by Bucking Bar View Post
OK, can anyone figure out this quote from Bedford?

So it appears:
  • Liquidation is a consideration, but "so far" the suppliers like Frontier being around
  • Frontier's fleet, including some of its Airbus jets are going to be shifted into fee for departure agreements as early as this winter
Who's scope allows that? Are we talking about leasing out the airplanes without pilots, but still on Frontier's Certificate?
Nobody's scope would allow that. The company recently announced the increase of charters for the winter season, so I believe that is what he is referring to.
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Old 07-22-2011, 08:13 AM   #3  
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Quote:
Originally Posted by Bucking Bar View Post
[*]Frontier's fleet, including some of its Airbus jets are going to be shifted into fee for departure agreements as early as this winter[/LIST]Who's scope allows that? Are we talking about leasing out the airplanes without pilots, but still on Frontier's Certificate?

To me this carries as much weight as:
-When he said we don't have anyone left on furlough
-When he started an abortion debate in a weekly update
-When he instructed flight crew to divert if a passenger is watching porn
-When he referred to our 190's as 100 seaters
-After the Colgan accident, saying that crewmembers "Choose to commute"
-When he said buying a house was a bad decision (after the housing bubble collapsed)
-When he said the FFD market was dead
-When he repeatedly claimed that he saved jobs by buying F9 & YX

Bryan puts his foot in his mouth a lot. I think this is just another example of it.
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Old 07-22-2011, 08:43 AM   #4  
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i have heard that Frontier will be doing some of the apple vacation flying this winter that used to be done by USA3000. I would think that is the only way he could do any FFD flying with an airbus.
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Old 07-22-2011, 08:56 AM   #5  
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Thanks all. That is the most logical explanation yet heard. He used politically charged language, if his intent was to say we're going to do more Charter work.
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Old 07-22-2011, 10:03 AM   #6  
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Originally Posted by Bucking Bar View Post
Thanks all. That is the most logical explanation yet heard. He used politically charged language, if his intent was to say we're going to do more Charter work.
Actually Bar, aren't the FFD setups really just charters...Delta is chartering ASA, SKYW, and RAH aircraft and selling the tickets on those aircraft...Sounds about the same as Frontier chartering their aircraft to Apple Vacations and others.
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Old 07-22-2011, 10:16 AM   #7  
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-- Roughly $30 million in savings achieved by shifting 76-seat planes from Frontier's fleet to the fleets that Republic operates under different names for larger carriers, where the smaller planes can be more profitable. The airline also will shift some of its 100-plus-seat Airbus aircraft to those fixed-fee agreements during the slower winter season, Bedford said.
"But they aren't a single carrier" said ALPA.
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Old 07-22-2011, 12:38 PM   #8  
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i have "heard" that between apple and usa 3000 its 9 - 11 airframes plus all of the annual football charters. pretty sure "Jack" or "flip" won't be hauling folks for a legacy operator.
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Old 07-22-2011, 02:58 PM   #9  
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i have "heard" that between apple and usa 3000 its 9 - 11 airframes plus all of the annual football charters. pretty sure "Jack" or "flip" won't be hauling folks for a legacy operator.
Exactly right, Frontier will be flying under its own brand as opposed to someone else's. Apple Vacations just sells the vacation packages.
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Old 07-22-2011, 04:34 PM   #10  
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"He had spoken earlier this year of finding further investors to finance Frontier as well. But with the company achieving its cost-saving goals, that is not an immediate priority, he said."

I am more concerned about that statement.... BB's promise to the pilots to sell off majority stake in Frontier. So much for that.


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