Frontier Airlines Holdings Inc. and First Data Corp. have settled a dispute on credit card processing fees, resolving a conflict that prompted the airline to file for bankruptcy.
The settlement announced Friday will let First Data continue processing Frontier's Visa Inc. and MasterCard Inc. transactions. The two Denver companies also said that the agreement "provides First Data with appropriate protection for continuing its processing work for customer credit card purchases."
In April, First Data, a unit of Kohlberg Kravis Roberts & Co., told Frontier that it planned to more than double the collateral required under their processing agreement, to $130 million, and that it intended to retain 50% of the proceeds from credit card sales it processed for the airline. Frontier filed for bankruptcy protection two days later, saying that it had been "unable to negotiate any accommodation with First Data" and "had no alternative but to seek" bankruptcy protection.
According to a Friday filing in U.S. Bankruptcy Court for the Southern District of New York, Frontier agreed to let First Data hold a percentage of credit card transactions in a reserve account until a new level of collateral is reached; neither the percentage nor the collateral level was disclosed.
