Frontier Defers Bankruptcy Bid as ‘Certain Parties’ Join Talks

Frontier Airlines, the financially imperiled carrier that has been grounded for three days, deferred its threatened bankruptcy filing once again Tuesday, while its parent company, People Express, said it was discussing Frontier’s fate with “certain parties” interested in the airline.

The announcement cast further doubt on an effort by United Airlines to purchase Frontier, a key competitor here, for $146 million. Apparently stymied from completing the purchase by a labor impasse with its pilots’ union, United said it had but one, “very brief” telephone conversation with People Express on Tuesday, and that it involved neither negotiations nor a decision on an acquisition.

Need for Quick Cash

The decision to delay any bankruptcy filing here seemed to underscore People’s need for quick cash from a sale of Frontier, which analysts say could be hamstrung by a bankruptcy filing. Frontier has reportedly been losing $10 million a month, and People Express, whose own airline lost $132.48 million during the first half of this year, has said it can no longer carry Frontier.

Tuesday passed with no resumption of talks between United and its pilots’ union, no bankruptcy filing as had been forecast and no resolution of the fate of Frontier, the nation’s 15th-largest airline, and its 4,700 worried employees.

The silence was broken only late in the day when Newark-based People Express released a statement: “People Express Inc. stated today that its wholly owned subsidiary, Frontier Airlines Inc., has deferred for another day filing for protection under the bankruptcy code.

“Donald C. Burr, chairman of People Express, said, ‘We are talking with certain parties who have expressed an interest in Frontier Airlines. Pending the outcome of these discussions, Frontier is refraining from making its bankruptcy filing. We regret the continuing uncertainty for everyone involved, but we are anxious to explore fully all possible alternatives to bankruptcy.’ ”

No Further Comment

A spokesman for People Express said there would be no further comment.

It was the second day that the airline had failed to carry out its bankruptcy threat. When Frontier grounded its 42 airplanes on Sunday, it said it “intends to file a petition for relief under the bankruptcy code on Monday.” But late Monday that was deferred, the airline said, “until tomorrow morning.”

The crisis for Frontier, its workers and Denver, where 3,200 Frontier employees live, escalated last week when United and the Air Line Pilots Assn. broke off talks on how to merge the lower-paid Frontier pilots into the United cockpit crew work force. United demanded a five-year phase-in to parity of wages; the pilots first wanted 18 months and have since offered 30 months. The two sides have not talked since Monday morning and no new negotiations are planned, a United spokesman said.

Losing $1 Million a Day

How long Frontier can delay a bankruptcy filing without a sale of some sort is unknown, but a spokesman for the airline said that Frontier is losing $1 million a day.

In the face of such uncertainty, rumors abounded Tuesday that United would buy all of People Express, that it would buy only some of Frontier’s assets and that Texas Air Corp., parent of Continental Airlines, was interested in Frontier. Continental, with Frontier and United, is one of the three major carriers that dominate air travel in Denver.