Independence Air Lender Repossesses a Plane
By Bill Brubaker
Washington Post Staff Writer
Saturday, February 12, 2005; Page E01
The parent of financially troubled Independence Air said late yesterday that a lender had repossessed one of the airline's 73 leased regional jets.
Flyi Inc. said the lender, which it did not identify, filed suit against the low-cost carrier in New York after it failed to make a lease payment due last month, according to a filing with the Securities and Exchange Commission.
This month, Flyi cut about 150 of its 560 daily flights and announced service to five West Coast cities beginning in the spring. (Dennis Brack -- Bloomberg News)
The disclosure by Flyi comes at a critical time for the Dulles-based carrier, which has been struggling to avoid filing for protection from its creditors.
Rick DeLisi, Flyi's spokesman, said the repossession of the single jet will not affect the airline's schedule of flights, but he declined to comment further. Flyi serves 39 cities out of Dulles with its 50-seat regional jets and 132-seat Airbus A319s.
Last month, Flyi said it agreed with a major creditor, GE Capital Aviation Services Inc., to return as many as 20 of its regional jets in an effort to avert a bankruptcy filing. Flyi said GE Capital also agreed, subject to "a number of conditions," to restructure lease payments on 27 more regional jets and to give the airline a five-year, $19.5 million loan.
One of the conditions was that Flyi make "similar agreements with the lenders and lessors on other aircraft." John Oliver, a spokesman for GE Capital Aviation Services, declined to comment last night.
Flyi has not indicated whether it was able to renegotiate with various creditors $83 million in aircraft lease payments that were due in January. The airline previously said failure to renegotiate the payments could force it to file for Chapter 11 bankruptcy protection.
On Feb. 1, Flyi eliminated about 150 of its 560 daily flights, mostly in and out of Dulles. The airline announced on Monday it will begin Airbus service to five West Coast cities this spring.
Yesterday, before Flyi disclosed the repossessed aircraft, Robert N. Ashcroft, an analyst for UBS Investment Research, wrote: "While lessors have little incentive to push Flyi into [Chapter] 11, they're not charities either, and it takes only one to lose patience and issue a default notice to start to unravel the situation." He gave Independence Air a 30 percent chance of surviving as a low-cost airline.
