Low Cost Carrier Frontier Airlines (F9) filed for Chapter 11 bankruptcy protection yesterday, citing an issue with their credit card processing company, the current financial market and jet fuel as their detriments. Apparently, the company that processes all of their credit card transactions announced that they were taking a bigger cut out of all of their sales which would drastically affect the bottom line for Frontier.

I don't know enough about the credit card market to tell you why they couldn't switch processing companies or how close to the red the airline was before this change, but apparently it's significant enough to warrant Chapter 11 protection.

Before you panic and call to dispute your credit card charges, remember that the airline is only reorganizing as they continue normal operations. No flights have been canceled (which is better than many legacy carriers today), employees will still be on hand to check you in and the airline will continue to take reservations. Chapter 11 is only a means to reorganize finances while operations continue and is an unfortunate, although common, occurrence in the aviation industry. Northwest and Delta Airlines both went into and came out of bankruptcy in the last few years, and both are now operating in the black.

That's not to say you shouldn't be cautious about booking. Make sure you keep your receipts and document your transactions if you book a ticket in case you eventually need to dispute a charge. The nice thing about Frontier is that they have a fairly customer-centric attitude -- hopefully they would never straight out abandon passengers like Skybus did last week.

In the meantime, continue booking with Frontier as you normally would (albeit carefully). If the airline has any chance of making it out of bankruptcy, it's if passengers like you and I have faith in the airline and continue paying for tickets.

Check out Frontier's restructuring website if you want more details on operations.

Filed under: Business, Airlines, News