WASHINGTON --
Independence Airs parent company, FLYi, filed for Chapter 11
bankruptcy protection and plans to continue operations. But the
airline needs to find an investor or buyer within the next 60 days
to survive.
Most analysts
believe its more likely the airline will liquidate or that bids
will be made to pick up the pieces by buying some of the airlines
assets, such as its 12 Airbuses.
Whatever the
ultimate outcome, its likely to come quickly: FLYi filed with just
$24 million in unrestricted cash and $46.8 million restricted. The
airline has no debtor-in-possession financing and is asking the
court to set a Jan. 5 deadline for a court-supervised
auction.
In order to make
itself more attractive to potential investors or buyers,
Independence immediately began moves to cut costs under the Chapter
11 process. For example, FLYi owns or leases 58 regional jets but
is flying only 30 of them, and is seeking court approval to end
leases on the aircraft it no longer uses. The airline also quickly
reached agreements on new wages and work rules for mechanics and
flight attendants.
Independence said
there has been investor interest. But analysts, many of whom have
been predicting Independences demise since it launched service in
June 2004, remain skeptical.
Independence
hasnt made money since it started, in part because it relies
heavily on 50-seat regional jets that arent efficient enough for
the number of passengers it can carry, and it had so many it felt
compelled to operate multiple flights to small markets.
Independence also has faced fierce competition from United at
Dulles. High fuel prices havent helped.
Independence also
started service without making itself available in any GDS. It
eventually published fares in GDSs to attract more business
customers.
To contact
reporter Andrew Compart, send e-mail to [email protected].