WP: FlyI to Cut Fleet of Jets, Workforce
Feb 23, 2005, 12:43 pm
#1
Original Poster
Join Date: May 2004
Location: BKK
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WP: FlyI to Cut Fleet of Jets, Workforce
Flyi Inc., parent of low-cost carrier Independence Air, yesterday announced it completed a financial restructuring plan under which it will cut its fleet of regional jets and reduce its workforce in return for tens of millions of dollars in concessions from creditors.
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 company to defer another $70 million in lease payments over the same period. Flyi also said it was given a five-year, $16.1 million loan from GE Capital Aviation Services Inc. In exchange for the concessions from its creditors, which Flyi did not name, the airline agreed to issue them about 8.3 million shares of stock.
Flyi has five A319 Airbus jets and plans to add seven more by June, despite just-announced changes that include staff and fleet cuts.
For now, the plan eliminates some of the questions Wall Street analysts had about the future of the financially troubled Dulles-based carrier. Many had predicted Flyi would file for Chapter 11 bankruptcy protection this winter.
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 company to defer another $70 million in lease payments over the same period. Flyi also said it was given a five-year, $16.1 million loan from GE Capital Aviation Services Inc. In exchange for the concessions from its creditors, which Flyi did not name, the airline agreed to issue them about 8.3 million shares of stock.
Flyi has five A319 Airbus jets and plans to add seven more by June, despite just-announced changes that include staff and fleet cuts.
For now, the plan eliminates some of the questions Wall Street analysts had about the future of the financially troubled Dulles-based carrier. Many had predicted Flyi would file for Chapter 11 bankruptcy protection this winter.
Feb 23, 2005, 7:44 pm
#2
Join Date: Jun 2003
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Burning the furniture to stay warm. . .its not a sustainable strategy
Feb 23, 2005, 8:36 pm
#3
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Originally Posted by NeoOfTheCRS
Burning the furniture to stay warm. . .its not a sustainable strategy
Feb 24, 2005, 5:42 am
#4
Join Date: Feb 2005
Posts: 196
I've got a couple of questions for you Spampurse
Originally Posted by spampurse
So running 87 CRJs in a low cost model wasn't such a good idea... DH is adjusting their game plan to try to turn a profit, and having the flexibility to adjust your game plan in a turbulent market is the only strategy for a company in financial trouble.
Any chance that you can get Indy tp start service to MSY? My friends and I love going down there but every time that we try it seems like we end up on DL because all of the cheap seats on FL are already sold out. My friends and I alone could easily fill one of your CRJs evey other month on that route.
Another thought is a little sleepy airport called GPT, while you may not have heard of the Mississippi Gulf Coast (just assuming) it's got something like 20 casino's down there and building more.
Second,
What is hapenning with all of those "Spectrum" (I hope that I am remembering that correctly) seats that DH bought for the CRJs that they are now returning? Did they hold onto all of the old seats when they changed them out?
Third,
(maybe I should put this in multiple threads, I don't know the protocol as I am new here, but anyways)
As for the 87 CRJs as a low cost fleet; while I don't want to pretend that this would have fixed everything I think that if DH had diversified away from IAD a little and did a little more direct flights, maybe like WN does and just pick US routes and fly them for tons less. I don't know the complexities involved with that but I think that a little more point to point service would definetly be a good option.
Feb 24, 2005, 5:49 am
#5
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Point to Point Service
DataBaseDude hit the nail on the head. Point to Point service would be a big winner. Especially since on RJ's I am only willing to fly short hops, I don't first want to make a connection (unless I'm trying to build segments for status 
) . If it takes as long to fly as it would to driive, it defeats the purpose of flying. My two cents...
--Jon
) . If it takes as long to fly as it would to driive, it defeats the purpose of flying. My two cents...--Jon
Feb 24, 2005, 3:55 pm
#6
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Hey DataBaseDude...
Like I said before, I am just a pawn in the game and can't pretend to know exactly what the higher ups were thinking... but here are my thoughts on your questions...
1) I really hope that we start flying to MSY soon, but my thinking is that it won't be until late 2005 or early 2006. As a rule of thumb DH has said that they don't like flying routes on the CRJ that are longer thank 2hrs. IAD - MSY would be probably more like 2.5 or 3hrs. The CRJ has the range to make the flight (we actually used to fly it back in the UAX days) but the problem is that if there is any kind of weather at the destination then you have to start bumping people because you max out on your weight (more fuel required). IMO I think that they will wait until they can put an airbus on that route, but that will probably be on the second wave of airbuses (early 2006) and the remaining airbuses that are to be delivered this year will beef up the west coast markets.
2) I am not aware of any of the Spectrum seats being returned, but the only thing that I can think of is that they ordered extras that they no longer need since they got rid of (or are going to get rid of) so many CRJs. I seriously doubt that DH would put the old UAX seats back in because 1) they are about as comfortable as a rock, and 2) they would have to re-cover them before putting them into service in the DH fleet and that costs money.
3) I think that the main reason they didn't use the CRJs in a point to point capacity is because DH's whole game plan from day 1 has always been set up around the airbuses. To a certain degree we are still following the "feeder airline" pattern from our UAX days (CRJs go to smaller stations pick up people and deliver them to the hub where they board the Airbuses to larger destinations). You could make a good case for it either way, but I'm not a big fan of the point to point service.
Like I said before, I am just a pawn in the game and can't pretend to know exactly what the higher ups were thinking... but here are my thoughts on your questions...
1) I really hope that we start flying to MSY soon, but my thinking is that it won't be until late 2005 or early 2006. As a rule of thumb DH has said that they don't like flying routes on the CRJ that are longer thank 2hrs. IAD - MSY would be probably more like 2.5 or 3hrs. The CRJ has the range to make the flight (we actually used to fly it back in the UAX days) but the problem is that if there is any kind of weather at the destination then you have to start bumping people because you max out on your weight (more fuel required). IMO I think that they will wait until they can put an airbus on that route, but that will probably be on the second wave of airbuses (early 2006) and the remaining airbuses that are to be delivered this year will beef up the west coast markets.
2) I am not aware of any of the Spectrum seats being returned, but the only thing that I can think of is that they ordered extras that they no longer need since they got rid of (or are going to get rid of) so many CRJs. I seriously doubt that DH would put the old UAX seats back in because 1) they are about as comfortable as a rock, and 2) they would have to re-cover them before putting them into service in the DH fleet and that costs money.
3) I think that the main reason they didn't use the CRJs in a point to point capacity is because DH's whole game plan from day 1 has always been set up around the airbuses. To a certain degree we are still following the "feeder airline" pattern from our UAX days (CRJs go to smaller stations pick up people and deliver them to the hub where they board the Airbuses to larger destinations). You could make a good case for it either way, but I'm not a big fan of the point to point service.
Feb 25, 2005, 5:46 am
#7
Join Date: Feb 2005
Posts: 196
You misunderstood
I didn't mean put old seats back in the Indy jets that they are keeping, I meant put the old seats in the jest that they are getting rid of? (or did they not do the transformation on those jets yet?)
As for point to point service, listen to the guy that agreed with me, it makes much more sense on the smaller aircraft.
If I have to fly north so that I can connect and go back south, I avoid it
Also look at CLT - LAX as an example, flying northeast and then connecting and going west is crazy, when FL starts up service people will be able to fly southwest (direction not airline) and then connect and go West. That setup will be better for people headed in that direction.
As for point to point service, listen to the guy that agreed with me, it makes much more sense on the smaller aircraft.
If I have to fly north so that I can connect and go back south, I avoid it
Also look at CLT - LAX as an example, flying northeast and then connecting and going west is crazy, when FL starts up service people will be able to fly southwest (direction not airline) and then connect and go West. That setup will be better for people headed in that direction.
Feb 25, 2005, 6:19 am
#8
Join Date: Apr 2004
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Remember that many of DH's routes, especially the second-tier airports like SWF would connect in a 'logical' direction' to West Coast destinations, some routes to the south aside. And connections aren't always 100% logical, for example why would someone fly Jet Blue from Buffalo to Long Beach via JFK? Plenty do even though they have to fly east before they fly west. FL flies people from MSP-BOS via ATL, which is extrememly out of the way, yet still manages to sell seats because of low fares. Granted, the CLT market is a special case, mostly because it is a hub city and therefore has many connections and competition. Part of the DH business plan was to fly to cities no other LCC would touch, feed them through Dulles to popular business/leasure destinations. Although I think every passenger would love point-to-point flights to their most popular destinations, it requires time, huge assets, and lots of risk. DH can't afford to try something totally different than its current plan until it is more financially stable (as per this thread topic). And most passengers really don't mind the odd connection, especially when they paid much less than a legacy carrier would charge them for the same flight.
Feb 25, 2005, 10:46 am
#9
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Nice spin. I suppose the repo man was welcomed at IAD to help get rid of your old furniture. 
Originally Posted by spampurse
DH isn't "burning furniture to stay warm" they are getting rid of the old furniture because it doesn't fit in with the style of their new house. So running 87 CRJs in a low cost model wasn't such a good idea... DH is adjusting their game plan to try to turn a profit, and having the flexibility to adjust your game plan in a turbulent market is the only strategy for a company in financial trouble.
Feb 25, 2005, 8:42 pm
#10
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The point-point flying Indy has tried has not worked. They have already dropped routes like Huntsville-Florida and said in one of the restructuring articles they would be further dropping other upper South to Florida routes (like Knoxville or Columbia to Orlando/Tampa). It would be hard to build that brand name in each city one by one.