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Frontier May Face Cash Shortage

This one sorta came out of left field:  Frontier Airlines said yesterday that they may face a cash crunch because of the intense competition expected in Denver due to Southwest’s arrival.  They’re also not particularly thrilled with a bankruptcy-boosted resurgence from United.  Don’t go cashing in your Frontier miles just yet, but this announcement just goes to show how crazy the competition could get in Denver. 

Though, truth be told, Southwest tends not to lower prices to levels where they’re not making money.  Their prices are low, but their success is just as much about their no-bullshit factor when it comes to changing flights and their low full fare prices.  Prices will get lower, sure, but neither United nor Frontier wants a nasty fight with $9 fares.  Competition will be healthy, and there’s plenty of room for all three carriers.

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  1. There’s less to that media story than meets the eye. It’s one of those classic cases of a reporter reading the “risk factors” portion of a prospectus and making much of very little. The same thing happened to LCC last week, when the media suddenly discovered the IDENTICAL “risk factors” language that had been published during the summer and concluded that the airline had suddenly hit a rough patch with its merger. In short, it’s wise to always double-check the accuracy of business journalism, which can be spotty at best.

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