atlcrashpad
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Grassstrippilot
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Economy101
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GogglesPisano
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[FONT=verdana, arial, helvetica]DATE:21/11/05
SOURCE:Airline Business
Day of reckoning nears for ailing Independence Air
Analysts believe the future of Independence Air is more likely to be liquidation, rather than buyout or asset purchase, as the regional jet operator files for Chapter 11.
Independence Air’s long-awaited bankruptcy may have demonstrated that independence was the last thing that the troubled regional jet operator needed, but the likely liquidation of the low-fares carrier, formerly Atlantic Coast Airlines, stands to benefit the industry.
Months after most observers gave up on its strategy of low fares on frequent 50-seater flights, Independence parent FlyI had lost nearly a half a billion dollars since June 2004, when it ended its Atlantic Coast feeder operation for United Airlines and began Independence. As losses continued, Independence, based at Washington’s Dulles International, tried to recast itself, dumping many of the Bombardier regional jets and adding a dozen Airbus A319s, but could not withstand the response of former partner United and others on the hotly contested East Coast. These competitors had equally low fares on bigger aircraft.
FlyI chief restructuring officer Steve Westberg wrote in a court filing that rivals reacted to its start-up “by matching fares, reducing [ticket] restrictions, offering additional frequent-flyer incentives, increasing advertising”. United alone increased capacity on competing routes by 37%, Westberg wrote.
Many questioned its strategy of using regional jets, noting the type does not lend itself to low-fare economics. With relatively high costs spread over just 50 seats, there is little margin for empty seats, high fuel costs, or strategic error. Independence thought differences in its hi-tech check-in and Southwest-style in-flight service could give it an edge.
When it went into Chapter 11 in early November, Independence was still true to its informal approach, telling the public in advertisements and on its website: “Just this once, we’re going to be like other airlines” and declare bankruptcy. It added: “Basically, the sun will come up tomorrow. It will be ‘business as usual’ at Independence Air.”
But with just $24 million in unrestricted cash, that will not be easy. It has parked 28 of its remaining 58 regional jets, and although it is flying all 12 of its A319s, few see Independence surviving. Claiming it was “maintaining a dialogue” with 30 interested parties, FlyI set an early January deadline for it to sell the carrier as a whole or, if it cannot find an investor, auction its assets.
Most feel its operating certificate is more valuable than its fleet. A sale to a start-up or even foreign-backed investors, such as the long-delayed Virgin America project, may be the best possible outcome. But, many, including Lehman Brothers analyst Gary Chase, think liquidation is likely. Chase believes “the carrier will shrink significantly or cease operations over the next 60 days”.
Calyon Securities analyst Ray Neidl doubts that stronger low-fares airlines such as JetBlue Airways would rescue Independence. Chase says: “As Independence shrinks further, US Airways and AirTran will be the largest beneficiaries.” Within days of the FlyI filing, AirTran said it would strengthen Dulles schedules with four daily roundtrips to Boston Logan from February.
Some investors and analyst Neidl see hope for FlyI if it returns to operations as a codeshare feeder, but former partner United has replaced it and is suing it, and such a development is considered unlikely. FlyI acknowledged in a court filing that “it recognises that, in this challenging industry environment, an investor or buyer may not step forward”. Standard and Poor’s analyst Betsy Snyder says that after years of speculation about airline liquidation, one might finally occur.
DAVID FIELD/WASHINGTON[/FONT]
SOURCE:Airline Business
Day of reckoning nears for ailing Independence Air
Analysts believe the future of Independence Air is more likely to be liquidation, rather than buyout or asset purchase, as the regional jet operator files for Chapter 11.
Independence Air’s long-awaited bankruptcy may have demonstrated that independence was the last thing that the troubled regional jet operator needed, but the likely liquidation of the low-fares carrier, formerly Atlantic Coast Airlines, stands to benefit the industry.
Months after most observers gave up on its strategy of low fares on frequent 50-seater flights, Independence parent FlyI had lost nearly a half a billion dollars since June 2004, when it ended its Atlantic Coast feeder operation for United Airlines and began Independence. As losses continued, Independence, based at Washington’s Dulles International, tried to recast itself, dumping many of the Bombardier regional jets and adding a dozen Airbus A319s, but could not withstand the response of former partner United and others on the hotly contested East Coast. These competitors had equally low fares on bigger aircraft.
FlyI chief restructuring officer Steve Westberg wrote in a court filing that rivals reacted to its start-up “by matching fares, reducing [ticket] restrictions, offering additional frequent-flyer incentives, increasing advertising”. United alone increased capacity on competing routes by 37%, Westberg wrote.
Many questioned its strategy of using regional jets, noting the type does not lend itself to low-fare economics. With relatively high costs spread over just 50 seats, there is little margin for empty seats, high fuel costs, or strategic error. Independence thought differences in its hi-tech check-in and Southwest-style in-flight service could give it an edge.
When it went into Chapter 11 in early November, Independence was still true to its informal approach, telling the public in advertisements and on its website: “Just this once, we’re going to be like other airlines” and declare bankruptcy. It added: “Basically, the sun will come up tomorrow. It will be ‘business as usual’ at Independence Air.”
But with just $24 million in unrestricted cash, that will not be easy. It has parked 28 of its remaining 58 regional jets, and although it is flying all 12 of its A319s, few see Independence surviving. Claiming it was “maintaining a dialogue” with 30 interested parties, FlyI set an early January deadline for it to sell the carrier as a whole or, if it cannot find an investor, auction its assets.
Most feel its operating certificate is more valuable than its fleet. A sale to a start-up or even foreign-backed investors, such as the long-delayed Virgin America project, may be the best possible outcome. But, many, including Lehman Brothers analyst Gary Chase, think liquidation is likely. Chase believes “the carrier will shrink significantly or cease operations over the next 60 days”.
Calyon Securities analyst Ray Neidl doubts that stronger low-fares airlines such as JetBlue Airways would rescue Independence. Chase says: “As Independence shrinks further, US Airways and AirTran will be the largest beneficiaries.” Within days of the FlyI filing, AirTran said it would strengthen Dulles schedules with four daily roundtrips to Boston Logan from February.
Some investors and analyst Neidl see hope for FlyI if it returns to operations as a codeshare feeder, but former partner United has replaced it and is suing it, and such a development is considered unlikely. FlyI acknowledged in a court filing that “it recognises that, in this challenging industry environment, an investor or buyer may not step forward”. Standard and Poor’s analyst Betsy Snyder says that after years of speculation about airline liquidation, one might finally occur.
DAVID FIELD/WASHINGTON[/FONT]
Turtlesfly
Need a room check?
- Joined
- Aug 16, 2003
- Posts
- 678
As one previously hired by ACA but never given a class date (before going elsewhere), I was going to give my 2-cents' worth on this . . .
. . . but then I discovered that FLYI's stock is trading at 2 cents today, so I thought I would say, "I'll give you my 1-share-of-FLYi-stock's" worth . . .
. . . but then I discovered that FLYI's stock is trading at 2 cents today, so I thought I would say, "I'll give you my 1-share-of-FLYi-stock's" worth . . .
mightybeechdrvr
Member
- Joined
- Oct 10, 2004
- Posts
- 15
Sorry To Hear The Woes at Indy
The management of Indy Air has repeatedly "screwed the pooch" on every front. i.e. refusing to negotiate with United; striking out alone without any real plan of how to succeed; blowing off the Mesa acqusition; never figuring out that United, USAir, Delta, etc. would ever try to compete with you, etc.
The pilots of Indy Air are a fantastic bunch of guys & don't deserve the incompetency that they have had to swallow. Do to a bunch of bloated egos in the board room, hundreds of peoples lives have already been negatively affected with hundreds more in the waiting.
ACA....a once proud airline now reduced to the ash heap of airline history.
Good luck guys!
The management of Indy Air has repeatedly "screwed the pooch" on every front. i.e. refusing to negotiate with United; striking out alone without any real plan of how to succeed; blowing off the Mesa acqusition; never figuring out that United, USAir, Delta, etc. would ever try to compete with you, etc.
The pilots of Indy Air are a fantastic bunch of guys & don't deserve the incompetency that they have had to swallow. Do to a bunch of bloated egos in the board room, hundreds of peoples lives have already been negatively affected with hundreds more in the waiting.
ACA....a once proud airline now reduced to the ash heap of airline history.
Good luck guys!
Lancair
Active member
- Joined
- Apr 17, 2002
- Posts
- 44
I agree with most of that except blowing off the Mesa buy out. What do you mean by that? Do you think it would have been a good thing to work for JO. I was furloughed and found a much better job. I garauntee it's better than working for $21.00 an hour for JO. All it would have done is keep 2000 guys working for a sh*tty airline. I'm glad we fought off the buy out.
blueridge71
Outlasted two companies
- Joined
- Nov 30, 2003
- Posts
- 2,261
mightybeechdrvr said:
Not quite. They were in negotiations for a long time with UAL. We even passed a pay cut TA that was supposed to retain the UAL contract. UAL and Bain Consulting blew us off.
As it turned out, it probably didn't matter, if ACA had signed a deal with UAL, they would probably be in the same boat unless they could cut a deal with another carrier like Air Whisky did. Don't forget that ACA and AWA were sister airlines in the UAX family. Both were screwed over in favor Mesa, Chataqua, and Trans States.
As for the Mesa "deal," that would have been a stock swap that would have resulted in a very unhappy pilot group. There would have been no working with Ornstein.
The big mistake, other than the timing that ACA management had no control over, was, as you say, underestimating the ability of bankrupt companies to outlose Indy on fares.
I personally think that if the timing had been other than when fuel prices were at record highs, you'd probably be reading much different stories about Indy today. As it is, Independence customer service has been rated second only to JetBlue's in several polls.
Anyhow, bids on parts or the whole airline are due around mid-December and the results will be announced in early January.
Good luck to those that remain. Godspeed Independence.
tjsatter said:
Don't you think the industry is starting to run out of other places to go?
Your post is in incredibly poor taste. Telling these poor ba$tards that are about to loose their jobs, "don't worry about paying your mortgage or feeding your kids, just don't step on my toes!"
uke: Pretty pathetic to be soliciting the support of the newly unemployed.
I'm almost speechless.
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blueridge71 said:
So let me get this right. You took some of ACA/FlyI flying and now you're going to tell them they can't take flying that you believe you should have?tjsatter said:
More proof why we can't stop the race to the bottom. No unity. Stop preaching unity and standing up against management if it's only going to serve you. That's not unity, that's being as self centered as you perceive anyone at GJ to be.
Grassstrippilot
Well-known member
- Joined
- Feb 26, 2005
- Posts
- 113
blueridge71 said:
Good post Blueridge71. You beat me to it. I agree. Having lived in the Northern VA for 3 years, believe me, it was ripe for the picking. I remember hearing constantly on the radio and tv how tired people were of having to drive to BWI to get good deals. There was a cry for a "hometown" airline. Unfortunately, the business model was based on $30 a barrel and not $70. Better timing and a little less naive management would have produced better results. I have a lot of good friends still there and I wish them the best. A great group of people, pilots and FAs alike. Man how I miss (most) of those flight attendants.
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