independence air

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Losses losses everywhere

by Gary Leff on February 28, 2005

Feb 28 2005

Just last week Independence Air said that its fourth quarter results would be ‘slightly better’ than the $82.7 million that it lost in the fourth quarter. I was skeptical, pointing out that the emphasis would no doubt be placed on ‘slightly’. Turns out that the results were worse: a fourth quarter loss of $86 million — and they’re still figuring out the accounting, so this may change. Meanwhile, United lost $326 million in January. After two years of bankruptcy protection they still haven’t figured out a viable business model. It seems the only ones making money on the airline are the consultants UAL’s professional payments alone totaled more than $13 million in January, including $1.4 million to consulting firm KPMG LLP; $2.4 million to Kirkland & Ellis LLP, the law firm that serves as United’s…

Good News at USAirways and Independence Air

by Gary Leff on February 23, 2005

Feb 23 2005

USAirways says it needs $250 million to emerge from Chapter 11 bankruptcy, which strikes me as too low. Air Wisconsin has proposed investing $125 million. Air Wisconsin operates primarily as a regional feeder for United. USAirways has been extremely successful reducing its labor costs, but it remains unclear how their business model can return them to profitability. Still, any indication of interest in providing exit financing is a strong positive sign for the airline. Meanwhile, Independence Air says that it has successfully renegotiated its aircraft leases. After almost four months of negotiations, Flyi said it will be allowed to terminate leases on 24 of its regional jets — about one-third of its fleet. Those concessions will help cut its aircraft lease payments by $94.5 million over the next two years. Creditors are also allowing the…

Warning off Independence Air

by Gary Leff on February 15, 2005

Feb 15 2005

Three and a half weeks ago I declared that Independence Air had some financial breathing room and that it was safe to make bookings through February. While they’re running some significant sales to promote their new West Coast service which starts in the next few months, I’m not recommending that folks buy those tickets at this point. I’m taking a wait and see attitude with the carrier, and wouldn’t suggest significant advance bookings at this time. One of Independence Air’s 73 planes was repo’d on Sunday. And one of the conditions of their cash infusion from GE was that they successfully renegotiate their aircraft leases. The repossession is a pretty good indication that they weren’t completely successful, and I worry about the carrier’s ability to meet the covenants of its GE loan. United seems to…

Independence Air Has Breathing Room, Too

by Gary Leff on January 22, 2005

Jan 22 2005

The year started with a bleak outlook for Independence Air, as news broke that they had missed an interest payment on some bonds leading to speculation that they were close to a bankruptcy filing. (If they were going to file for bankruptcy there was no reason to make the payment, and they’d want to conserve cash in any case.) Then they announced plans for job cuts, renegotiated lease payments on aircraft, agreed to return some aircraft, and obtained a loan from GE. All of this bought some breathing space for the carrier, though did little to improve their revenue outlook. But my opinion of the carrier is somewhat boosted by two big bets being made on the carrier by Wall Street heavyweights. Regulatory filings late Friday indicate that two major hedge funds have acquired 12.5%…

Independence Air to Operate as United Express again?

by Gary Leff on December 24, 2004

Dec 24 2004

It’s still a long-shot, but United requested a bid from Independence Air to operate as a United Express carrier. This is precisely the move being pushed for by Independence Air’s largest shareholder. The Washington Dulles-based low fare carrier has been losing buckets of money and warnings have been issued about a possible bankruptcy filing in January, a mere seven months after starting service as an independent carrier. FlyI used to operate as Atlantic Coast Airlines with most of their flying as the United Express carrier at Dulles and additional activity as a regional carrier for United at Chicago and for Delta at Boston (if I recall correctly, in this last case). The problems they face are several-fold. They decided to sell tickets directly to consumers, bypassing Global Distribution Systems. The model works well for an…