storminpilot
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http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7BAC0876D4%2D4346%2D4578%2D8078%2DE98BC289C330%7D
Independence Air: warns of Chapter 11
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 7:41 PM ET Nov. 9, 2004 SAN FRANCISCO (CBS.MW) -- Cash-constrained Independence Air warned Tuesday of a possible bankruptcy filing if it cannot raise funds to make aircraft lease payments due in January.
The fledging low-fare carrier also said it defaulted on a separate payment for delivery of bigger aircraft it calls crucial to its long-term strategy.
Independence Air is scrambling to defer or reduce an $83 million payment on 50-seat regional jets it now uses. It's also negotiating the sale of four aircraft and spare parts to raise cash.
"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," Independence Air said in a U.S. Securities and Exchange Commission filing.
In the past month, analysts warned the payment could force Independence Air (FLYI: news, chart, profile) into bankruptcy.
In the SEC filing, the airline said it defaulted Monday on an $8.7 million payment to Airbus for delivery of the manufacturer's A319 aircraft, which will be used to carry passengers on longer-haul flights it has planned to the West Coast.
Independence Air said it has sufficient cash to make the payment but is trying to renegotiate the delivery terms for the 27 planes. Airbus can terminate the agreement by Nov. 10, according to the filing. The new planes are expected to lower Independence Air's operating costs.
The airline received one of the planes in September but is waiting for approval from the Federal Aviation Administration to begin flying it.
Over the next three years, the carrier expects the lease commitments for 12 of the A319's will cost $319 million and purchase payments for another 16 will be about $560 million.
Independence Air has struggled since launching its low-fare service out of Washington-Dulles International Airport in June. It formerly was Atlantic Coast Airlines, a regional jet provider for United Airlines and Delta Airlines.
Fierce fare competition from major airlines and soaring fuel prices has led to a revenue shortfall and higher-than-anticipated cash expenditures.
Independence Air reported an $83 million third-quarter loss and expects significant fourth-quarter losses. It ended the Sept. 30 quarter with $198 million in cash.
The airline says it has sufficient funds to fulfill its obligations for the rest of the year and "remains confident in its business model provided that is successful in addressing its liquidity issues."
The stock closed Tuesday at $1.91, up 6 cents.
Independence Air: warns of Chapter 11
By Matt Andrejczak, CBS.MarketWatch.com
Last Update: 7:41 PM ET Nov. 9, 2004 SAN FRANCISCO (CBS.MW) -- Cash-constrained Independence Air warned Tuesday of a possible bankruptcy filing if it cannot raise funds to make aircraft lease payments due in January.
The fledging low-fare carrier also said it defaulted on a separate payment for delivery of bigger aircraft it calls crucial to its long-term strategy.
Independence Air is scrambling to defer or reduce an $83 million payment on 50-seat regional jets it now uses. It's also negotiating the sale of four aircraft and spare parts to raise cash.
"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," Independence Air said in a U.S. Securities and Exchange Commission filing.
In the past month, analysts warned the payment could force Independence Air (FLYI: news, chart, profile) into bankruptcy.
In the SEC filing, the airline said it defaulted Monday on an $8.7 million payment to Airbus for delivery of the manufacturer's A319 aircraft, which will be used to carry passengers on longer-haul flights it has planned to the West Coast.
Independence Air said it has sufficient cash to make the payment but is trying to renegotiate the delivery terms for the 27 planes. Airbus can terminate the agreement by Nov. 10, according to the filing. The new planes are expected to lower Independence Air's operating costs.
The airline received one of the planes in September but is waiting for approval from the Federal Aviation Administration to begin flying it.
Over the next three years, the carrier expects the lease commitments for 12 of the A319's will cost $319 million and purchase payments for another 16 will be about $560 million.
Independence Air has struggled since launching its low-fare service out of Washington-Dulles International Airport in June. It formerly was Atlantic Coast Airlines, a regional jet provider for United Airlines and Delta Airlines.
Fierce fare competition from major airlines and soaring fuel prices has led to a revenue shortfall and higher-than-anticipated cash expenditures.
Independence Air reported an $83 million third-quarter loss and expects significant fourth-quarter losses. It ended the Sept. 30 quarter with $198 million in cash.
The airline says it has sufficient funds to fulfill its obligations for the rest of the year and "remains confident in its business model provided that is successful in addressing its liquidity issues."
The stock closed Tuesday at $1.91, up 6 cents.
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