Money

Letter To Frontier Airlines Employees From CEO Sean Menke

Dear Team Members,

Subject: Update on Frontier Financial Situation

I know this will come as a very difficult surprise to many of you, but late last night Frontier Airlines Holdings, Inc. voluntarily filed to reorganize under Chapter 11 of the U.S. Bankruptcy Code.

This move stands in stark contrast to what you have heard from me and the management team in recent days and weeks regarding our financial stability and our plans to weather the storm, so I want to share with you the specifics as to why we are making this seemingly sudden change in direction.

But before I do that, I know you won't be able to read this letter with a clear head if I don't state that the Chapter 11 filing does not change our day-to-day lives. We are still up and operational. You are still an employee of Frontier Airlines and will receive your pay and benefits as usual (more on that below).

This week, I was notified by our credit card processor that, as of Friday, April 11, due to "current economic conditions, the rise in fuel costs and the other bankruptcies around the industry," they intended to start withholding 50 percent of the credit card funds received from the sale of Frontier tickets.

If they went ahead and did this, tens of millions of dollars owed to us by our customers would have been withheld by the credit card processor, First Data. This would have drained our available cash almost immediately and would have made it impossible for us to continue normal operations. Therefore, we decided to file Chapter 11 in an effort to fight this unwarranted step by the credit card processor so that we can continue to position the Company for long term success.

I want to emphasize to each of you that this was very sudden and unexpected. We are the victims of a credit market that is very fragile and the tolerance for risk is extremely low. As I have stated many times recently, our executive management team has been working diligently and tirelessly to extend our runway by securing additional cash to bolster our balance sheet. We were successfully making progress on a number of fronts that would position us well for the future and with the protection of the bankruptcy court, we plan to continue to pursue those opportunities.

Moving beyond today's news, I want to be VERY clear that Frontier is open for business and we expect to continue normal operations throughout the reorganization process. Our employees and our customers can be confident that we intend to keep on flying and providing outstanding service and products. Day-to-day, nothing changes with any of our operations, customer programs or for our employees.

Specifically, we expect to continue to:

As always, our customers can count on us for their business and leisure travel. Our cargo customers can depend on their shipments arriving when and where they need to be. With your help, our customers will see no change in the unparalleled level of service that Frontier provides.

I know you have many questions about what the Chapter 11 means for our Company and for you personally. I can assure you that I and the other members of the management team will keep communicating with you as the process continues.

In fact, I commit to you that in addition to the ongoing updates that will be provided, you will hear an update from the executive team every Wednesday afternoon. We will have more details on that in the coming days.

Additionally, we are providing a number of ways you can get further information about the filing and find answers to your questions. A great place to start is to check out the Employee FAQ that is attached to this e-mail and posted on the Intranet. There is also public information about the bankruptcy that can be found at FrontierAirlines.com.

I hope as you learn more, you will come to understand that this reorganization will help position Frontier for long term viability. It can provide us with the means to address our short-term financial challenges and better position us to be a successful competitor in this challenging marketplace. We expect to emerge as a strong, financially stable company. In the meantime, we will be operating our business as usual.

You will probably get questions from your family, friends, vendors and customers. It is important these questions are handled properly so we provide everyone with accurate information. Please reassure those with questions that we are open for business and flying as usual and direct them to our Web site for additional information.

And while I know that rumors and speculation will run rampant externally and internally, I ask that you please refrain from encouraging it. We will fill you in on any news as soon as it becomes available, and internal speculation will likely bleed over to our customers causing unnecessary concern.

Undoubtedly there will be plenty of media articles, analyst commentary and message board postings, but I can't emphasize enough that you will get the most accurate and truthful information from the Company and from the executive team directly.

Frontier has a proud history. Since our founding in 1994, we've grown and succeeded by being a whole different animal, providing a comfortable, accommodating, flexible and affordable experience to our passengers. Your hard work, loyalty and dedication built our past and you are the key to our future.

I know this is a difficult day for all of us, but as we have faced down challenges in the past, so too will we overcome this hurdle. Frontier is dynamic and resilient and I know that collectively we have more than enough talent, dedication and skill to succeed. Thank you for your on-going patience and support.

Regards, Sean