Frontier Again Near Bankruptcy as Sale Fails

A desperate effort to save Frontier Airlines from bankruptcy failed Wednesday, despite a last-ditch attempt to sell the grounded carrier to United Airlines.

But Frontier’s parent company, People Express Inc., which as recently as Wednesday morning had raised again the specter of bankruptcy, had not yet delivered the ailing Frontier to federal bankruptcy court here by day’s end.

Nevertheless, a bankruptcy filing appeared imminent, with casualties that would include 4,700 Frontier employees, United’s plans for a rapid expansion and the cash from a sale of Frontier that the parent company, People Express, desperately needs.

Heavy Losses

People Express, a no-frills airline that has dramatically lowered the cost of air travel for many, has suffered heavy losses this year and may be irreparably harmed by the failure to sell Frontier.

United had agreed to purchase Frontier on July 10 but, after several weeks of talks, could not reach agreement with its pilots’ union on how to merge the lower-paid Frontier pilots into the United work force.

Even without a formal bankruptcy filing, the tar of blame for the impending loss of 4,700 jobs was brushed variously over United, United’s pilots’ union and People Express itself for shutting down Frontier on Sunday, making it less attractive to any buyer.

Blow to Colorado

It was a stunning blow to the employees and to the Colorado economy; Frontier’s 3,200 Denver-based employees are expected to add a full percentage point to the city’s 5.5% unemployment rate.

On a radio talk show here Wednesday afternoon, Frontier workers were being interviewed as ex-employees, although a Frontier spokeswoman said hope remained as long as a bankruptcy petition has not been filed.

“I don’t know what I’ll do,” said Bill Bates, a 56-year-old reservations manager who had been with Frontier for 34 years. “I guess I’ll put out a few feelers and see if there’s something541663331happen overnight.”

Wednesday’s developments began with a foreboding statement from the public relations agency for Newark, N.J.-based People Express, which quoted an airline spokesman as saying that “attempts to find a buyer (for Frontier) . . . have failed, and People Express is expected to file for bankruptcy protection in Denver today.”

Bids Didn’t ‘Pan Out’

The statement said that on Tuesday night the People Express board of directors had explored “a couple of avenues regarding the sale of the Frontier unit to other bidders, including United Airlines. The other alternatives did not pan out.”

Then, on Wednesday afternoon, a United spokesman said: “People Express has come in with additional offers.”

But those offers were quickly rejected because, United said, the liabilities involved in a purchase had the potential of ballooning the cost to United well beyond the $146-million purchase price agreed to in July.

United added in a statement: “The airline we attempted to purchase does not exist any more. We believe it is impossible to resurrect this deal after the damage done by these (labor negotiation) delays and the resultant closure of Frontier Airlines.”

Union Blames United

The United unit of the Air Line Pilots Assn. blamed United, saying the Chicago-based carrier never really wanted the entire Frontier airline, just its best assets. As part of the purchase negotiations, United has already bought $50-million worth of Frontier’s gates in Denver, landing slots at O’Hare Airport in Chicago, gates in Dallas and two hangars in Denver.