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Frontier Airlines Receives Alternative Commitment for Debtor in Possession Financing

Written by thomas · Filed Under Commercial 

August 4, 2008

thomas

Republic Airways, AQR Capital and Credit Suisse Commit up to $75 million

DENVER, Aug. 4 /PRNewswire/ — Frontier Airlines Holdings, Inc. today
announced it is moving forward with an alternate transaction for
post-petition debtor-in-possession (DIP) financing. Republic Airways
Holdings, Inc., Credit Suisse Securities (through its affiliates), and AQR
Capital (the “Lenders”), each a member of the Unsecured Creditors Committee
in Frontier’s Chapter 11 Bankruptcy cases, are offering Frontier up to $75
million in DIP financing, with an immediate firm commitment and funding of
$30 million. This new DIP facility provides Frontier with lower financing
costs, less restrictive covenants and greater flexibility to pursue
strategic opportunities without being constrained by more restrictive DIP
provisions. The alternate DIP facility is subject to bankruptcy court
approval and to various conditions.

The Lenders provided the Company with this improved DIP facility
following Frontier’s successful efforts to significantly improve its
liquidity. Over the past two weeks, Frontier announced the Perseus $75
million DIP financing, up to $80 million in additional liquidity through
aircraft sales to VTB Leasing for onward lease to Rossiya Airlines and
other aircraft sale leaseback transactions.

“The agreement by members of our Unsecured Creditors Committee to
extend this financing commitment is a tremendous vote of confidence in our
Company and its business plan,” said Sean Menke, Frontier President and
Chief Executive Officer. “After a careful examination of this offer against
the offer Perseus provided last week, we believe this new agreement offers
immediate access to greater liquidity under more favorable terms.”

Upon court approval, the Lenders will provide immediate funding of $30
million to support Frontier’s working capital needs. The Lenders will
consider funding an additional $45 million subject to the terms and
conditions of the DIP Credit Agreement.

The proposed DIP funding, coupled with Frontier’s recent announcements
of aircraft sales and sale leasebacks, is expected to substantially
increase Frontier’s cash position and provide sufficient working capital
for the Company’s operations, as well as significant staying power in the
market. These announced liquidity initiatives allow the Company to continue
to execute upon its business improvements, focusing on fleet deployment,
cost savings and revenue enhancements. Frontier will continue to evaluate
strategic opportunities in light of this new DIP facility and the
anticipated significant improvement to Frontier’s balance sheet.

Frontier and its subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 10,
2008. More information about Frontier’s Chapter 11 proceedings is available
at FrontierAirlines.com/restructure. Court filings and claims information
are available at frontier-restructuring.com. Frontier’s principal
bankruptcy counsel is Davis Polk & Wardwell.

About Frontier Airlines Holdings, Inc.

Frontier Airlines Holdings, Inc. is the parent company of Denver-based
Frontier Airlines. Currently in its 15th year of operations, Frontier
Airlines is the second-largest jet service carrier at Denver International
Airport, employing more than 5,000 aviation professionals. Frontier
Airlines’ mainline operation has 60 aircraft with one of the youngest
Airbus fleets in North America. Frontier Airlines’ mainline operations
offer 24 channels of DIRECTV(R) service in every seatback along with a
comfortable all-coach configuration. In conjunction with a fleet of ten
Bombardier Q400 aircraft operated by Lynx Aviation (a subsidiary of
Frontier Airlines Holdings, Inc.), Frontier offers routes to more than 50
destinations in the U.S., Mexico, Canada and Costa Rica. In November 2006,
Frontier and AirTran announced a first-of-its-kind integrated marketing
partnership that offers travelers the ability to reach more than 80
destinations across four countries with low fares aboard two of the
youngest fleets in the industry. For more in-depth information on Frontier
Airlines, please visit its Web site at FrontierAirlines.com.

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