From today's Washington post.

http://www.washingtonpost.com/wp-dyn...2004Oct19.html

Analyst Says Flyi Could Go Bankrupt
Independence Air Parent's Stock Price Falls 29% On UBS Research Report
By Bill Brubaker
Wednesday, October 20, 2004; Page E01

The stock price of Independence Air's parent, Flyi Inc., plunged 29 percent yesterday after a Wall Street analyst offered a grim forecast for the four-month-old low-cost carrier.

The Dulles-based airline is "looking at large losses" and a potential Chapter 11 filing "by January, when it must make a large aircraft rent payment," wrote Robert N. Ashcroft, an analyst for UBS Investment Research.

"It's clear to us that Flyi's business plan isn't working," Ashcroft wrote.

Rick DeLisi, a spokesman for the airline, declined to comment on UBS's assessment but said Flyi will offer a "description of our financial situation" when it releases its third-quarter financial results next Wednesday. Flyi has a $100 million lease payment due on its 87 regional jets in January, he said.

"Our service continues to be very well received by customers," DeLisi said.

The bankruptcy warning from UBS came before the airline reported that its September load factor -- the percentage of seats it sold -- was 44.4 percent, down from 45.5 percent in August. That compares with September load factors of 76.6 percent for JetBlue Airways and 63.2 percent for Southwest Airlines. Both are low-cost carriers.

Flyi shares closed yesterday on the Nasdaq Stock Market at $2.43, down 97 cents.

Independence Air's blue-and-white planes have become a familiar sight in the skies around Washington Dulles International Airport. The airline flies 50-seat regional jets to 38 cities.

Its $30 million marketing campaign includes musician Chuck Berry and political consultants James Carville and Mary Matalin.

Independence Air was born in June when Atlantic Coast Airlines, a regional carrier for Delta Air Lines and United Airlines, transformed itself into a low-cost operation. The company reported a $27.1 million loss in the second quarter, citing large start-up costs for Independence.

DeLisi said Independence Air will introduce service Nov. 3 from Dulles to Tampa and Orlando on its first Airbus jets. Independence Air plans eventually to lease 28 narrow-body Airbus jets.

The airline is negotiating with the unions representing its mechanics and flight attendants. The mechanics have threatened to strike if an agreement isn't reached soon; a federal mediator has joined the negotiations.

DeLisi declined to comment on the negotiations.

"I don't think Independence set themselves up in a very wise way," said Aaron J. Gellman, a professor and transportation specialist at Northwestern University's Kellogg School of Management. "They started with a rather large pattern of service with enormous frequency that the market probably didn't need.

"They must be eating cash at a terrible rate. It wouldn't surprise me if they had to file for bankruptcy so they can stick around and fight for another day."



� 2004 The Washington Post Company

Anyone have an email addy of someone in Indy's marketing department? I have a few ideas I want to email them.

I find this to be amusing, there is nothing different about today then there was about yesterday, or the day before. The CC isn't until the 27th so until then anything is just pure speculation. Remember ashcroft was the same analyst who predicted a 90% chance that the mesa takeover would occur. So by his estimate of 65% chance of the big B, we should be profitable by january. I won't speculate on anything until the 3Q results are released.

As far as an email address, you can go through the website, or the company email is first name.last name@ flyi.com. just take out the spaces. But remember they are in the 7 day quite period before earnings. you should be able to find the names of those in the marketing department on the website. Hope that helps.

Anyone can guess at something. Let's hear the facts, why is it clear to "US." Has FLYI not done the impossible in 6 months?: Rebranded an entire airline, changed a corporate culture of over 4,500 employees, operated the largest and most efficient low-cost hub in the WORLD with over 600 flights a day with an ontime performance near 80%. Folks, when someone gets the spotlight by making claims that have not been backed up, we have to question his motives.

So FLYI has been adding capacity, yet their load factor has not changed from the previous month. FLYIs load factor has not changed when almost all other airlines had a lower load factor in September, the worst travel month of the year. Most other airlines are reducing capacity and reporting lower load factors. A question for the history buffs: What was Southwests load factor after four months of operation, how about JetBlue? This analyst went on to say that he was 65% certain that FLYI would declare. Sounds like a, "I'm not really sure, you know, but if I had to guess on this one I am leaning towards, yeah they will probably go ahead and file."

In this same article, Ashcroft said that FLYI has all of the Dorniers in storage. A simple trip to the Delta website will show that they are still operating out of Cincinatti. How can you call yourself an analyst when you aren't even analyzing? This is the same Ashcroft who was all over the analyst reports saying he is 90% sure Mesa will win a hostile takeover less than a year ago. Folks, you got to question his motives. Wouldn't be surprised if one of his buddies is gobbling up as much FLYI stock as he can since Ashcroft just put it on sale.


BBB

[email protected]

It's from their website and will be forwarded to the right people.

BBB

I think now is the time to pick some Indy stock for cheap. I just hope they don't go BB.

And who's fault is it that they started flying over the summer. They chose to do it at this time. But here's the answer. Lets add five more flights to lansing. Yeah, and three more Westchester. Come on, give me a break. They were being questioned from day 1. They haven't proved anything to anyone. 44% load factor ain't going to cut it. How much does it matter if you have rebranded, and changed the employees, and good on time and so on and so on. With no passengers it makes absoloutely no difference. Sorry to break your heart.

FlyI could go Bankrupt. So could Delta. So could American. So could lots of businesses. I could win the lottery.

FlyI has done a lot of things wrong, but they have also done a lot of good things. I think they fly to some cities with too much frequency. Perhaps they need look and see if they can lower the minimum number of flights per day to a city, as right now I don't see any city getting less than 6 frequencies per day from IAD. If they can make the minimum 4 flights without raising their marginal costs too much then they should do it. Cause there are markets such as CRW-WAS that in the 4th quarter of 2003 only had ~30 O&D passengers each way each day, and here is Indy flying 300 seats in and out of CRW each day. I don't see how that can be profitable without a 500% surge in O&D passengers, and while I am sure they have had some "Southwest effect" on their markets I can't see any of them jumping up that high.

Everything that you have said is perfectly true.

Actually FLYI wanted to start this November with AB from day one and an extra $10 million in the bank from UAL, but it was in UALs best interest to end the relationship ASAP. Also, from the beginning FLYI management said that they need at least 15 AB to show a profit with the CRJs. That put their estimates around 3rd quarter 05. Those things do matter. They are the foundation of a company. They are why people return to your company when they have to travel. The early departures will fit in perfectly with the red eye transcons early next year. Not having to wait an extra 3 hours for the next flight to LAN will help sell tickets. FLYIs biggest mistake in my opinnion is their failure to join GDS. Global Distribution Systems are a must for new airlines. Once the airline is famous then it would make sense to only sell from your website. Everywhere that you can find a UAL ticket you should be able to find a FLYI ticket. I expect Kerry Skeen will probably be announcing some sort of SABRE agreement next Wednesday. We'll see.

BBB

The problem with the 3 quarter 05 is that they didn't factor their losses. Don't take this the wrong way. I don't want to see them put thousands of employees out of work. But they have to be smarter with their money.

Yeah, that's a good point. I still can't figure out why they have so many flights to small towns. Let's face it, markets like IAD-ATL have quite a bit of traffic. But CRW - IAD (or CRW - anywhere for that matter) is a marginal market at best, which would have been well served with 2, maybe 3 flights.

I have to say that whoever is handling the online advertising for Indy are morons. On Google, Indy is bidding (using the AdWords program) on a keyword "Independence Air" (you can see the ad on the sidebar) WHEN THEY ALREADY APPEAR AS #1 and #2 in search results.

Independence's contact page:

http://www.flyi.com/support.htm

(That's changed in the last two weeks -- there used to be more individual groups listed.)

They're showing up on Travelocity under a "price" search, though not bookable. I get back the message:

Atlantic Coast Airline (DH) provides only schedules. Please contact the airline directly to make this reservation.
Atlantic Coast Airline
offers non-stop service

I don't remember seeing them before a day or two ago, so maybe they are looking at joining with SABRE to sell tickets.

The UA promotion for O/D at IAD can't be helping them any either. That with the reduced fares on UA would keep many of those flyers from trying DH.

They've been listed on Travelocity for a few months now. They filed their fares for display in the GDS' but have not allowed the selling/ticketing of their fares by anyone yet (except themselves). Hopefully that will come soon, but it will push their costs even higher.

Did FlyI get any subsidies from local governments to bring their low-fare service? For places such as CRW with no low-fare service, they should have tried to get something.