Independence Air iClub - Independence Air reducing service to Portland, Maine
PORTLAND, Maine (AP) - Effective November 1st, the carrier will cut its five daily flights at Portland International Jetport down to two.
Independence Air spokesman Rick DeLisi says the cutbacks are systemwide and are part of a broad restructuring to curb high fuel and operating costs.
DeLisi says the airline, which has its hub at Dulles International Airport in Washington, has no plans to stop flying out of Portland.
Oct 4, 05, 9:27 am
Makes sense. PWM normally gets a schedule reduction going into winter anyway because it loses the summer tourist traffic.
Oct 4, 05, 9:51 am
I have family in PWM and fly this route a lot on UA. Independence seemed to always have at least as many flights as UA, even in winter. I think this has more to do with their "let's stave off bankruptcy another couple of weeks" plan rather than their "seasonal flight reduction" plan. ;)
Oct 4, 05, 10:51 am
My understanding is that the more restrictive bankruptcy law takes effect October 17, 2005 so you'd think Independence Air will make their decision this week.
That's personal bankruptcy. Indy will go through corporate bankruptcy the old-fashioned way.
Whether they are small retail stores or major publicly traded corporations, businesses will face more restrictions when the new bankruptcy law goes into effect Oct. 17.
The tougher law was one factor that analysts said Delta Air Lines and Northwest Airlines considered before filing for Chapter 11 protection from their creditors a month before the law's effective date.
jaguar is correct. The new law (effective Oct 17) provides (among other things):
1. Relatively short 18 month period of debtor-exclusivity to file a POR (and no extensions, from what I have read, unlike UAL's 34 month period so far);
2. Very, very short 210 day period to decide on lease rejections/acceptance, also incapable of extension;
3. The widely reported limits on retention pay/bonus money to management of bankrupt companies.
I have read that we will see a rash of Ch 11 filings in the next two weeks and that some of the filing companies will be shockers. Nobody will be shocked if FlyI files, however. ;)
Of course, if an airline is destined to shut down anyway, it won't really matter if it files prior to or after the Oct 17 effective date. That date only really matters to companies that expect to successfully reorganize. Dunno which side of that line FlyI falls - the next week or so may tell us.
Okay, so we're all agreed that Indy is bankrupt.
Oct 4, 05, 10:04 pm
Very impressed by FWAAA's knowledge of the industry.
Oct 5, 05, 12:44 pm
Very impressed by FWAAA's knowledge of the industry.
As am I.
It doesn't really seem to matter when FlyI files because with their lack of assets they would likely go Ch. 7. I can't see an investor (or group thereof) sinking money into any domestic airline with still-surging fuel costs.
Oct 5, 05, 4:04 pm
I can't see an investor (or group thereof) sinking money into any domestic airline with still-surging fuel costs.
There are lots of investors and companies that are still interested in the domestic airline industry - the problem is that when you are the ugly girl at the dance you don't always have the option of dancing with the homecoming king. DH no doubt has offers in front of them right now, but is weighing each one as to how it will allow them to keep the corporate identity they have built and would like to hold onto.
I know a lot of people are forecasting Chapt 7 at every chance possible, but I still believe that the problems are fixable (maybe not without Chapt 11 and some pretty drastic changes, but fixable none-the-less).
I do agree that the new bankruptcy law won't really be a factor if DH does decide to file Chapt 11 since they have a fraction of the problems that any of the majors would have to contend with (multiple hostile unions, hundreds of vendors, hundreds of aircraft to re-negotiate for, etc...). If DH files they shouldn't need more than 18 months to either emerge or go away.
Either way, we should see an announcement within the next week or two.
The biggest obligations DH as is to the airplane lessors. Here's the big kicker with a Ch 11 filing. We already have DL and NW in the BK process. They are trying to drop a ton of CRJ-200 (50 seat) off their books. Indy has what, 50 CRJ-200's left? If they filed Chapter 7, the lessors would get back their aircraft. With the market about to get flooded with the DL/NW rejects, that just makes the value of the 50 seaters that DH has worth even less. The major question is: Can the lessors get more money for the DH CRJ's on the open market, or can they get more money by renogiating the leases with DH? If the later is true, then DH is worth more to the creditors alive then dead. They already don't have a pension plan to pay their pilots, so I''m trying to think what their biggest leases outside of their airplanes would be.
Oct 7, 05, 7:44 am
Even renegotiated leases won't help much - the operating costs of the CRJ are simply too high in the context of a low-cost or low-fare airline business model.
The best hope Indy has for continued existence is dumping the RJs in a bankruptcy filing and reorganizing the airline's route structure solely around the A319 fleet. However, even this is not likely to work. Independence Air is not filling an underserved niche - the airline has built market share on the backs of its creditors and employees by continually offering unsustainable fares that created a temporary upward distortion in market demand. Two hundred scrapped flights later, the airline's load factors still trail those of its *lower-cost* legacy competitors.
Strangely enough, the presence of DH likely led to a serendipitous outcome - the preservation of the UA IAD hub. Over the past two years, UA has seen significant demand increases from the uptick in marginal traffic that is normally outside the hub's core focus (e.g., Northeast-Florida connecting traffic). IOW, DH's presence has generally *helped* UA IAD, and might've convinced UAWHQ that there is indeed hope for the hub after all.