Frontier one of the 6 airlines fined and forced to refund

SWAMECH

Senior
Apr 26, 2005
348
131
Refunding 222 million and fines of over 2.2 million. Think about that when their last reported funds were 674 million at end of 3rd Q 2022 of cash and cash equivalent. That is over 33% of funds on hand. Bad timing after coming away from the attempt to purchase Spirit Airlines. Hope they recover quickly from all these refunds and fines, might hurt a bit at this time of year.


 

eolesen

Veteran
Jul 23, 2003
15,811
9,373
Please. You're stuck on the headline.... which sounds about as sensational as a DOT seeking to look good to low-information voters would want it to be.

This is a non-event.

Nobody typically cares about the accounting details, but hey, I'll dive into that rabbit hole for you.

F9 appears to have already paid that $222M back to customers already after the DOT started haranguing them over their policies. Depending on how Frontier accrues for earned revenue (actually flown/used tickets) vs. unearned revenue (future ticket sales), that $222M was never actually recognized as income/revenue and held in reserve or escrow. It wouldn't have necessarily been reflected in their cashflow or their cash equivalents because it was still a liability.

The fine is because they jacked people around before DOT started knocking at the door over a year ago. DOT is highlighting the $2.2M fine, but even that's been overblown. DOT is giving $1.2M of that back to F9 because they proved they'd also issued refunds to customers who made voluntary changes.
So.... ultimately it sounds like a $1.2M penalty. That's a rounding error when it comes to their available cash.

Put otherwise, it's 3-5 hours of ticket sales for a day. They're bringing in somewhere around $6M a day right now.

Now... if that $222M is incremental i.e. refunds they denied and now have to pay out, that's going to be a different tune.

I seriously doubt that only because of the $1M credit DOT gave them for their voluntary efforts. If there was another $222M in liability to be refunded, they'd have never offered a credit offset from the original fine, and the fine would be much, much larger based on past practice.
 
OP
S

SWAMECH

Senior
Apr 26, 2005
348
131
Please. You're stuck on the headline.... which sounds about as sensational as a DOT seeking to look good to low-information voters would want it to be.

This is a non-event.

Nobody typically cares about the accounting details, but hey, I'll dive into that rabbit hole for you.

F9 appears to have already paid that $222M back to customers already after the DOT started haranguing them over their policies. Depending on how Frontier accrues for earned revenue (actually flown/used tickets) vs. unearned revenue (future ticket sales), that $222M was never actually recognized as income/revenue and held in reserve or escrow. It wouldn't have necessarily been reflected in their cashflow or their cash equivalents because it was still a liability.

The fine is because they jacked people around before DOT started knocking at the door over a year ago. DOT is highlighting the $2.2M fine, but even that's been overblown. DOT is giving $1.2M of that back to F9 because they proved they'd also issued refunds to customers who made voluntary changes.
So.... ultimately it sounds like a $1.2M penalty. That's a rounding error when it comes to their available cash.

Put otherwise, it's 3-5 hours of ticket sales for a day. They're bringing in somewhere around $6M a day right now.

Now... if that $222M is incremental i.e. refunds they denied and now have to pay out, that's going to be a different tune.

I seriously doubt that only because of the $1M credit DOT gave them for their voluntary efforts. If there was another $222M in liability to be refunded, they'd have never offered a credit offset from the original fine, and the fine would be much, much larger based on past practice.
Now... if that $222M is incremental i.e. refunds they denied and now have to pay out, that's going to be a different tune.

That's how I read it and that's how they presented it. The only part I read that they already paid was the 92 million I believe and yes also the voluntary give backs/rewards for the non-refundable tickets as well. Maybe they did get refunds from the fines or refunds, and we don't know, but it read as if they didn't and yes that could have been done on purpose too. Could have been designed for click bait.
 

eolesen

Veteran
Jul 23, 2003
15,811
9,373
Nah, my gut was right. Those refunds were already paid out in 2020 and 2021.

The whole story is a nothing burger of financial impact and double-speak.

My guess is Mayor Pete smells blood in the water with his boss's ability to run in 2024 and this was just a way to try and look important and electable.
 
OP
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SWAMECH

Senior
Apr 26, 2005
348
131
E. Help me a bit more to understand. You are claiming that these refunds were paid out in 2020 and 2021. I have trouble seeing that as the consumers complaints didn't come until late in 2021 of at least November, per this article where they list the 90 consumers complaints were filed within the last year, and this article is dated Nov 15th 2022? So the DOJ didn't even start looking into this current case until after Nov of 2021. This tells me that they did not pay this current case refunds and fines of 222 million until after the DOJ's orders after their investigation that started in Nov 2021. I am also adding a second article that also says that Frontier is "still in dept" over this 222 million payments to refunds and 2.2 million in fines. Now the case may have been over the 2020-2021 time frame but the payouts I believe as these articles continue to read in 2022 sometime. I also couldn't find where they have listed said payments in quarterly reports thus far. Maybe you have better research access for those type of finance info , but I could find any.
Not arguing here E, just trying to figure out if Frontier might be having some trouble or not after loosing out bid to JB for Spirit.




 

CorvetteMan

Advanced
Jul 7, 2022
119
11
E. Help me a bit more to understand. You are claiming that these refunds were paid out in 2020 and 2021. I have trouble seeing that as the consumers complaints didn't come until late in 2021 of at least November, per this article where they list the 90 consumers complaints were filed within the last year, and this article is dated Nov 15th 2022? So the DOJ didn't even start looking into this current case until after Nov of 2021. This tells me that they did not pay this current case refunds and fines of 222 million until after the DOJ's orders after their investigation that started in Nov 2021. I am also adding a second article that also says that Frontier is "still in dept" over this 222 million payments to refunds and 2.2 million in fines. Now the case may have been over the 2020-2021 time frame but the payouts I believe as these articles continue to read in 2022 sometime. I also couldn't find where they have listed said payments in quarterly reports thus far. Maybe you have better research access for those type of finance info , but I could find any.
Not arguing here E, just trying to figure out if Frontier might be having some trouble or not after loosing out bid to JB for Spirit.




Learn how to use paragraphs
 

eolesen

Veteran
Jul 23, 2003
15,811
9,373
Well, refunds are never reported as a separate charge. Even if they're a year late, the math doesn't change: Sales - Refunds = Revenue

Some people very close to at least one side of this "investigation" have shared enough with me privately that I'll stick with my earlier opinion...
 
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