Indigo under

[festus]

Heard from a friend who works at Indigo that it is now out of business.

 

[njcapt]

Indigo's 2nd try fizzles
Demand limited by Iraq war, slow business travel

By Kathy Bergen
Tribune staff reporter

June 4, 2003

After trying to spread its wings a second time, Indigo, a small corporate-jet airline based at Midway Airport, suspended its core service just three months after its comeback began.

Daily service between Midway and New Jersey's Teterboro Airport, which was revived March 3 after a one-year hiatus, was suspended May 30, the company announced Tuesday.

"The results in the Teterboro-Midway market were not as good as we anticipated in our plans," said Peter A. Pappas, chairman and chief executive of Indigo, a Chicago-based division of NewWorldAir Holdings Inc. Among the dampening factors, he said, were the war in Iraq, the continuing slump in business travel and the sustained weakness in the economy.

"We are going through a restructuring, reallocating our planes to charter service and continuing to look to raise our equity," Pappas said.

The company, which has enough cash to keep going for another two to four weeks, is working with Chicago-based investment firm Lunn Partners LLC in an attempt to raise another $15 million to $20 million in private equity.

"We're keeping our fingers crossed," Pappas said. Meanwhile, the company laid off 10 to 12 employees, which represents nearly 20 percent of its workforce.

By early July, the company hopes to resume regular service, this time to White Plains, N.Y., rather than Teterboro, where there was some community opposition to the service.

The hurdles will be high.

"Elite airlines haven't worked in the past--there are just about no successful examples," said Richard Aboulafia, vice president of the Teal Group, an aerospace consultancy in Fairfax, Va. "So the weight of history is against them."

If the company were to try again, "it would be incumbent on them to explain what will be different next time, that this is what we missed and this is what we need to do," he said.

The company is considering a number of changes, Pappas said, among them offering the service on a membership basis and moving more aggressively into corporate shuttle service.

Indigo had been betting there would be a pool of travelers willing to pay $749 for a one-way flight on new Embraer 135 business jets with 16 soft-leather, executive-style seats and generous legroom.

But the company may have underestimated what it would take to win over the public, said Stuart Klaskin, founding partner of KKC Aviation Consulting in Miami, Fla.

"It's very sad and frustrating where there is a superior product offering, like Indigo's, and they can't get the word out in time as they burn through money--because it can cost a lot of money to run an airline," he said.

Going forward, Pappas said the company will increase its direct-target marketing, zeroing in on highly compensated professionals such as attorneys and hedge fund managers who place a high value on their time.

Lunn Partners LLC raised $10 million in a second round of private equity for Indigo's repeat attempt to sell individual flights on business jets. Founders had raised $19 million for the first run, which began in May 2000 and was discontinued in February 2002.

The company is leasing two Embraers, and its goal has been to add more planes over the next two years, reaching a fleet of 25 leased jets in 2005.

Officials with Brazil-based aircraftmaker Embraer were in touch with Indigo on Tuesday, but still don't have a clear picture of what's going on, said Embraer spokesman Doug Oliver.

"But we're standing by to work with the customer in any way we can to work out something that's mutually agreeable," he said.

The impact on Embraer should be limited, observers said.

"Any manufacturer who enters into a contract with a speculative startup makes provisions for its failure," Aboulafia said.

 

[crash-proof]

Too bad.
It's over now, baby!

http://www.flyindigo.com