Flying Freddie
Bitchin' Blue
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- Dec 30, 2002
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Associated Press
FLYi May File for Bankruptcy, Shares Fall
Wednesday November 10, 3:00 pm ET Shares of FlYi Fall As Much As 36 Percent As Company Confirms It May File for Bankruptcy
NEW YORK (AP) -- Shares of FLYi Inc., operator of fledgling low-cost carrier Independence Air, dove as much as 36 percent in Wednesday trading after the company confirmed it may file for bankruptcy if it is unable to make $83 million aircraft lease payments in January.
[size=-2][/size]In afternoon trading, shares of FLYi were down 30 percent, or 59 cents, to $1.32 on almost six times its average volume, leading a broad decline in the airline sector despite crude oil prices that have slipped well below the $50-per-barrel mark in recent sessions.
The American Stock Exchange Airline Index was down 2.8 percent, or 1.56 points, to 53.36 points in intraday activity.
In a quarterly report filed with regulators Tuesday afternoon, FLYi said fierce competition and soaring fuel prices drained more cash than expected when the company converted from a regional carrier to an independent discount airline in June. In October, the company posted a third-quarter loss of $82.7 million, or $1.82 per share, much wider than the year-earlier loss of $21.3 million, or 47 cents per share.
Although FLYi's traffic and occupancy levels have improved over the past two months, its finances are saddled by leases on about 30 planes that it operated as a former regional arm of cash-strapped Delta Air Lines Inc., which is unable to assume liability for the planes because of a poor credit rating.
In its filing, FLYi said it is trying to restructure and retire early some of the leases, adding that it started talks to secure funding to cover the lease payments and future obligations. The company is due to pay $83 million in regional jet lease bills in January.
"If the company is unsuccessful in those negotiations in a satisfactory or timely manner, it will be forced to consider commencing a bankruptcy case under Chapter 11 of the U.S. Bankruptcy Code or may be the subject of an involuntary Chapter 11 case commenced against it by creditors," FLYi wrote in a Securities and Exchange Commission statement.
The airline, however, insists it has "sufficient" liquidity to meet all obligations until January.
Meanwhile, shares of Delta were down almost 5 percent, or 27 cents, at $5.98 on news that the nation's third-largest carrier will cut up to 6,900 positions and plans to issue 75 million shares in its latest efforts to avoid filing for bankruptcy protection.
The Atlanta-based carrier on Wednesday said it will grant shares to employees and creditors in exchange for previously negotiated wage concessions and the deferral of maturing debt as Delta edges toward its 2006 goal of saving $5 billion per year. Delta also said it is on track to reach $2.3 billion in savings by the end of this year.
Delta said achieving quick implementation of the share issuance plan required the New York Stock Exchange to clear Delta's use of an exception to an NYSE policy requiring shareholder approval prior to the offering. The share issue represents significant dilution to the stock as Delta currently has only about 125.6 million average shares outstanding.
The airline added that it will slash between 6,000 and 6,900 non-pilot employees over the next 18 months, reduce certain benefits and cut pay by 10 percent across the board.
Shares of Continental Airlines Inc. were down 2.5 percent, or 27 cents, at $10.68 on the NYSE, Northwest Airlines Corp. shares were down 1.5 percent at $9.99 on the Nasdaq, AMR Corp. shares dropped 3.8 percent, or 35 cents, to $8.88 on the NYSE, JetBlue Airways Corp. was down 4.5 percent, or $1.07, at $22.55 on the Nasdaq and Southwest Airlines Inc. shares fell 2.2 percent, or 35 cents, to $15.67 on the NYSE.
FLYi May File for Bankruptcy, Shares Fall
Wednesday November 10, 3:00 pm ET Shares of FlYi Fall As Much As 36 Percent As Company Confirms It May File for Bankruptcy
NEW YORK (AP) -- Shares of FLYi Inc., operator of fledgling low-cost carrier Independence Air, dove as much as 36 percent in Wednesday trading after the company confirmed it may file for bankruptcy if it is unable to make $83 million aircraft lease payments in January.
[size=-2][/size]In afternoon trading, shares of FLYi were down 30 percent, or 59 cents, to $1.32 on almost six times its average volume, leading a broad decline in the airline sector despite crude oil prices that have slipped well below the $50-per-barrel mark in recent sessions.
The American Stock Exchange Airline Index was down 2.8 percent, or 1.56 points, to 53.36 points in intraday activity.
In a quarterly report filed with regulators Tuesday afternoon, FLYi said fierce competition and soaring fuel prices drained more cash than expected when the company converted from a regional carrier to an independent discount airline in June. In October, the company posted a third-quarter loss of $82.7 million, or $1.82 per share, much wider than the year-earlier loss of $21.3 million, or 47 cents per share.
Although FLYi's traffic and occupancy levels have improved over the past two months, its finances are saddled by leases on about 30 planes that it operated as a former regional arm of cash-strapped Delta Air Lines Inc., which is unable to assume liability for the planes because of a poor credit rating.
In its filing, FLYi said it is trying to restructure and retire early some of the leases, adding that it started talks to secure funding to cover the lease payments and future obligations. The company is due to pay $83 million in regional jet lease bills in January.
"If the company is unsuccessful in those negotiations in a satisfactory or timely manner, it will be forced to consider commencing a bankruptcy case under Chapter 11 of the U.S. Bankruptcy Code or may be the subject of an involuntary Chapter 11 case commenced against it by creditors," FLYi wrote in a Securities and Exchange Commission statement.
The airline, however, insists it has "sufficient" liquidity to meet all obligations until January.
Meanwhile, shares of Delta were down almost 5 percent, or 27 cents, at $5.98 on news that the nation's third-largest carrier will cut up to 6,900 positions and plans to issue 75 million shares in its latest efforts to avoid filing for bankruptcy protection.
The Atlanta-based carrier on Wednesday said it will grant shares to employees and creditors in exchange for previously negotiated wage concessions and the deferral of maturing debt as Delta edges toward its 2006 goal of saving $5 billion per year. Delta also said it is on track to reach $2.3 billion in savings by the end of this year.
Delta said achieving quick implementation of the share issuance plan required the New York Stock Exchange to clear Delta's use of an exception to an NYSE policy requiring shareholder approval prior to the offering. The share issue represents significant dilution to the stock as Delta currently has only about 125.6 million average shares outstanding.
The airline added that it will slash between 6,000 and 6,900 non-pilot employees over the next 18 months, reduce certain benefits and cut pay by 10 percent across the board.
Shares of Continental Airlines Inc. were down 2.5 percent, or 27 cents, at $10.68 on the NYSE, Northwest Airlines Corp. shares were down 1.5 percent at $9.99 on the Nasdaq, AMR Corp. shares dropped 3.8 percent, or 35 cents, to $8.88 on the NYSE, JetBlue Airways Corp. was down 4.5 percent, or $1.07, at $22.55 on the Nasdaq and Southwest Airlines Inc. shares fell 2.2 percent, or 35 cents, to $15.67 on the NYSE.
