riu girl
DIS Veteran
- Joined
- Jul 8, 2004
- Messages
- 3,576
PLease read and give me your opinion. I know I wrote about this a couple of weeks ago but I am still worried that I will not be able to get my BUF-IAD-MCO-IAD-BUF flights Dec.18-31.
Please tell me what you think:
Chapter 11 Filing Possible, Flyi Says
Independence Air Parent Needs Cash
By Bill Brubaker
Washington Post Staff Writer
Wednesday, November 10, 2004; Page E01
The parent of Dulles-based low-cost carrier Independence Air warned for the first time yesterday that it will be "forced to consider" a Chapter 11 filing for protection from its creditors if it cannot renegotiate aircraft lease payments of $83 million that it owes in January.
Flyi Inc. said unexpectedly high fuel costs and "fierce competition" from larger rivals United Airlines, US Airways, Delta Air Lines and Northwest Airlines caused Independence Air's revenue to fall "significantly below anticipated levels."
United responded to Independence's June debut by increasing service from Washington Dulles International Airport, by matching fares and by offering special frequent-flier incentives, Flyi said in its quarterly filing with the Securities and Exchange Commission.
And the other rival carriers either increased or began service to markets that Independence was serving, the filing said.
Flyi said it "cannot sustain" the losses it projects for the fourth quarter and for 2005 without raising more cash. "We expect to have substantial cash needs as we continue to establish ourselves . . . as a low-fare carrier," the filing said.
In one possible sign of a cash crunch, Flyi said it recently failed to pay $8.7 million it owed on the new Airbus A319 jets it is acquiring. Independence has been flying 50-seat regional jets but planned to add Airbus service to Florida this fall. But on Monday, Airbus said it may cancel the delivery of future jets if Flyi doesn't pay up, the filing said. Flyi said the acquisition of Airbus jets is "critical" to its business plan to serve larger markets with longer-haul flights. Further complicating matters, the Federal Aviation Administration hasn't yet certified Flyi to operate Airbus jets.
Flyi is a new face on a 15-year-old Dulles company that, until this summer, was known as Atlantic Coast Airlines Holding Inc.
Atlantic operated regional feeder jets for United and Delta. Under that arrangement, it assumed relatively little financial risk. Atlantic received a fixed fee for operating the flights, leaving the reservations, marketing and customer service duties to the larger carriers.
After filing for bankruptcy protection in December 2002, United tried to reduce the payments it made to Atlantic Coast, whose management responded last fall by announcing plans to start a full-service, stand-alone airline.
Independence began operations from Dulles with one-way fares as low as $29. And the airline budgeted about $30 million for a marketing campaign that included celebrities such as comedian Dennis Miller and singer Chuck Berry.
But Independence has been selling less than half of its seats -- far fewer than the average airline, which flies about 70 percent full. Flyi reported last month that it had lost $82.7 million in the third quarter, compared with a $21.3 million gain in the third quarter of 2003, when the company was still Atlantic Coast.
Flyi finished the third quarter with $198 million in cash and short-term investments, down from $345.4 million at the end of the second quarter.
Some Wall Street analysts predicted last month that Flyi may be forced to file for Chapter 11 bankruptcy protection as early as January. But Flyi Chairman Kerry B. Skeen said last month that his company had a plan to improve its liquidity by the end of the year. "We are working very hard to see that we have the resources to weather this storm," he said.
Flyi said yesterday it is trying to raise cash by negotiating with creditors to delay or reduce payments it owes on aircraft leases. The company also said it is trying to sell five of its regional jets and some spare parts.
But if the lease negotiations are unsuccessful, Flyi "believes that its cash balances and cash flow from operations . . . will be insufficient to enable the company to meet its working capital needs" and other financial commitments, the filing said.
Flyi also disclosed that it paid a $1.25 million civil penalty to settle an FAA allegation that as Atlantic Coast Airlines it had "failed to have a properly functioning aircraft inspection program and failed to keep appropriate maintenance records." The FAA, in a June 7 news release, had proposed a $1.5 million penalty, noting the airline had taken immediate remedial action, the filing said.
Flyi said the settlement with the FAA "did not involve any findings of violations." The airline said the FAA is continuing to review its maintenance-records program. "The outcome of this review cannot be predicted at the time, but could result in additional fines or actions by the FAA," the filing said.
Thanks,
Suzy V.
Please tell me what you think:
Chapter 11 Filing Possible, Flyi Says
Independence Air Parent Needs Cash
By Bill Brubaker
Washington Post Staff Writer
Wednesday, November 10, 2004; Page E01
The parent of Dulles-based low-cost carrier Independence Air warned for the first time yesterday that it will be "forced to consider" a Chapter 11 filing for protection from its creditors if it cannot renegotiate aircraft lease payments of $83 million that it owes in January.
Flyi Inc. said unexpectedly high fuel costs and "fierce competition" from larger rivals United Airlines, US Airways, Delta Air Lines and Northwest Airlines caused Independence Air's revenue to fall "significantly below anticipated levels."
United responded to Independence's June debut by increasing service from Washington Dulles International Airport, by matching fares and by offering special frequent-flier incentives, Flyi said in its quarterly filing with the Securities and Exchange Commission.
And the other rival carriers either increased or began service to markets that Independence was serving, the filing said.
Flyi said it "cannot sustain" the losses it projects for the fourth quarter and for 2005 without raising more cash. "We expect to have substantial cash needs as we continue to establish ourselves . . . as a low-fare carrier," the filing said.
In one possible sign of a cash crunch, Flyi said it recently failed to pay $8.7 million it owed on the new Airbus A319 jets it is acquiring. Independence has been flying 50-seat regional jets but planned to add Airbus service to Florida this fall. But on Monday, Airbus said it may cancel the delivery of future jets if Flyi doesn't pay up, the filing said. Flyi said the acquisition of Airbus jets is "critical" to its business plan to serve larger markets with longer-haul flights. Further complicating matters, the Federal Aviation Administration hasn't yet certified Flyi to operate Airbus jets.
Flyi is a new face on a 15-year-old Dulles company that, until this summer, was known as Atlantic Coast Airlines Holding Inc.
Atlantic operated regional feeder jets for United and Delta. Under that arrangement, it assumed relatively little financial risk. Atlantic received a fixed fee for operating the flights, leaving the reservations, marketing and customer service duties to the larger carriers.
After filing for bankruptcy protection in December 2002, United tried to reduce the payments it made to Atlantic Coast, whose management responded last fall by announcing plans to start a full-service, stand-alone airline.
Independence began operations from Dulles with one-way fares as low as $29. And the airline budgeted about $30 million for a marketing campaign that included celebrities such as comedian Dennis Miller and singer Chuck Berry.
But Independence has been selling less than half of its seats -- far fewer than the average airline, which flies about 70 percent full. Flyi reported last month that it had lost $82.7 million in the third quarter, compared with a $21.3 million gain in the third quarter of 2003, when the company was still Atlantic Coast.
Flyi finished the third quarter with $198 million in cash and short-term investments, down from $345.4 million at the end of the second quarter.
Some Wall Street analysts predicted last month that Flyi may be forced to file for Chapter 11 bankruptcy protection as early as January. But Flyi Chairman Kerry B. Skeen said last month that his company had a plan to improve its liquidity by the end of the year. "We are working very hard to see that we have the resources to weather this storm," he said.
Flyi said yesterday it is trying to raise cash by negotiating with creditors to delay or reduce payments it owes on aircraft leases. The company also said it is trying to sell five of its regional jets and some spare parts.
But if the lease negotiations are unsuccessful, Flyi "believes that its cash balances and cash flow from operations . . . will be insufficient to enable the company to meet its working capital needs" and other financial commitments, the filing said.
Flyi also disclosed that it paid a $1.25 million civil penalty to settle an FAA allegation that as Atlantic Coast Airlines it had "failed to have a properly functioning aircraft inspection program and failed to keep appropriate maintenance records." The FAA, in a June 7 news release, had proposed a $1.5 million penalty, noting the airline had taken immediate remedial action, the filing said.
Flyi said the settlement with the FAA "did not involve any findings of violations." The airline said the FAA is continuing to review its maintenance-records program. "The outcome of this review cannot be predicted at the time, but could result in additional fines or actions by the FAA," the filing said.
Thanks,
Suzy V.
