Chapter 11 confirmed for Independence

 
Old Nov 7, 05, 5:03 am
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Chapter 11 confirmed for Independence

http://today.reuters.com/investing/f...TCY-URGENT.XML


NEW YORK, Nov 7 (Reuters) - FLYi, Inc. (FLYI.O: Quote, Profile, Research), parent of low-fare carrier Independence Air, on Monday said it and its subsidiaries filed to restructure aircraft leases and other obligations under Chapter 11 of the U.S. Bankruptcy Code.

The company also said it would request court approval to engage in a formal court-supervised auction process to seek assistance to continue its operations.
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Old Nov 7, 05, 5:09 am
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Press Release Source: FLYi, Inc.


FLYi, Inc. Files for Voluntary Chapter 11 Reorganization
Monday November 7, 6:23 am ET
- Independence Air To Continue Flying And Serving Customers
- Auction Process Announced For Potential Investors Or Purchasers


DULLES, Va., Nov. 7 /PRNewswire-FirstCall/ -- FLYi, Inc., parent of low-fare airline Independence Air, today announced that FLYi, Inc. and its subsidiaries (the "company") including Independence Air, have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to restructure the company's aircraft leases and other obligations to achieve necessary cost savings.

The company also announced it will request court approval to engage in a formal court-supervised auction process to seek outside investor(s) or purchaser(s) it needs to continue its operations. If the process is successful, it is expected to be concluded within the next sixty days. Those who have expressed interest during previous discussions, as well as new parties, will be invited to present their bids. Bidders will be permitted to demonstrate their interest in investing in the company, or to bid on all or portions of the company's assets. The company currently anticipates that it has the financial resources to fund its obligations-including the payment of employee wages and benefits-during the process.

As it undertakes the auction process, Independence Air plans to continue serving customers, and to continue its flight schedules in the ordinary course of business. The company plans to honor reservations and tickets on Independence Air and to allow its 1,000,000+ iCLUB(SM) members to continue to accrue and redeem points on the airline with no restrictions. The company has no plans to make any additional changes to its operating schedule or route map of destinations at this time. Independence Air now offers approximately 220 daily departures to 36 destinations.

"After careful consideration, we have concluded that a court-supervised restructuring will allow us to complete our cost-savings initiatives while seeking outside investors or purchasers, and represents the best solution for Independence Air, our customers, employees, creditors and the communities we serve," said Kerry Skeen, Chairman and CEO of FLYi, Inc.

He added, "Since the launch of Independence Air almost 18 months ago, our employees have helped us achieve a remarkable degree of customer service success and brand recognition while operating in what has been described as the most challenging economic environment in airline industry history, including record high fuel prices and extreme revenue weakness. These circumstances have prevented us-and virtually all U.S. airlines-from meeting financial goals. We have already reduced operating costs by undertaking a comprehensive operational restructuring. We will continue that effort and move quickly to use the tools of the Chapter 11 process to implement other changes that will allow us to achieve an even more competitive cost structure to make us more attractive to potential investors or purchasers."

As part of this cost-cutting effort, the company has announced it is undertaking a process aimed at company-wide wage reductions. Taking a leadership role, CEO Kerry Skeen has agreed to an immediate 25% salary reduction on top of a 15% cut earlier this year. President and Chief Operating Officer Tom Moore will take a 20% cut, on top of an earlier 10% reduction. Management and other salaried employees will be subject to an immediate 5% pay reduction. The company has been engaging the leaders of its unionized work groups-pilots, flight attendants and mechanics-in an effort to enact changes to wage rates and work rules. It is anticipated that an announcement on a tentative agreement with both the flight attendants (AFA) and mechanics (AMFA) will be released shortly.

Mr. Skeen concluded, "We want to once again offer our sincere thanks to the seven million passengers who have flown with us so far. Since we launched last summer, we have built a brand that truly stands for something -- a very different style of service -- and our customers have been more than generous in their praise of our people. As we work behind the scenes to address the company's financial situation, we thank you for your continued support of Independence Air at Washington Dulles and in all the communities we serve. "

In conjunction with today's filing, Independence Air filed a variety of "first day motions" to help ensure a smooth transition into the Chapter 11 reorganization case. During the auction process, vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization.

The company filed its petitions in the U.S. Bankruptcy Court for the District of Delaware. The company's petitions listed assets of approximately $378.5 million and liabilities of approximately $455.4 million as of September 30, 2005. Unrestricted cash as of the day of filing is $24.0 million.

Miller Buckfire and Co., LLC and ENA Advisors have been retained as the company's financial advisors and Jones Day has been retained as restructuring counsel. Gibson Dunn & Crutcher LLP serves as the company's corporate counsel.

All FLYi, Inc. shareholders are advised that the likely outcome of the company's Chapter 11 case is the cancellation of the company's existing common stock without consideration, in which case FLYi stock would have no value. FLYi stock is highly speculative and the company urges investors to use extreme caution in decisions about the stock.

Independence Air began low-fare service from its hub at Washington Dulles International Airport on June 16, 2004, and has served over seven million passengers to date. The company first began commercial air service on December 15, 1989, and operated previously as Atlantic Coast Airlines.

Independence Air is the low-fare airline that makes travel fast and easy for its customers with a customer first attitude, innovative thinking and a willingness to challenge the status quo.

Independence Air, FLYi, the "i" logo mark, FLYi.com, iCLUB and Tender Loving Service are service marks of Independence Air, Inc.

This press release contains forward-looking statements and is made as of November 7, 2005, and the company undertakes no obligation to update its disclosures, whether as a result of developments in its efforts, or as a result of any other new information, future events, changed expectations or otherwise, prior to its next required filing with the Securities and Exchange Commission. Such forward-looking statements are subject to risks, uncertainties, assumptions and other factors that may cause the actual results of the company to be materially different from those reflected in such forward-looking statements. Such risks and uncertainties include, among others: the ability of the company to continue as a going concern; factors that could impact the company's ability to complete a court-supervised auction process that is necessary for the company to continue operations, including the ability to attract potential investors or acquirers through the court-supervised auction process, to obtain favorable bids from such potential investors or acquirers and to reach definitive agreement with one or more potential investors or with a potential acquirer and to obtain requisite court approval for any such agreement; the action of the company's debt holders and other creditors to the company's bankruptcy proceeding and to the company's auction process; factors that could affect the company's ability to maintain operations during its bankruptcy proceeding, including the reaction of customers, suppliers and competitors to the company's bankruptcy proceeding; the ability to obtain improved wage rates and work rules with the company's unionized work groups; the ability to maintain and improve yield with a reduced network reflected in the company's current flight schedule; the ability to successfully obtain revised terms from lessors for aircraft the company intends to continue operating; the ability to manage inventory to maximize yield; the effects of high fuel prices on the company's costs, and the availability of fuel; the ability to adjust operations, realize on internal or external sources of liquidity or otherwise address the company's financial obligations; the costs of returning aircraft and related records to lessors for aircraft that are rejected by the company; the ability to successfully hire, train and retain employees; the seasonality of air travel; and general economic and industry conditions, any of which may impact Independence Air or the company, its aircraft manufacturers and its other suppliers in ways that the company is not currently able to predict. Certain of these and other risk factors are more fully disclosed under "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Risk Factors Affecting the Company", and "Risk Factors Affecting the Airline Industry" in the company's Form 10-K/A for the year ended December 31, 2004 and Form 10-Q for the quarter ended June 30, 2005.




--------------------------------------------------------------------------------
Source: FLYi, Inc.
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Old Nov 7, 05, 5:57 am
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Is there ANY hope? What will most realistically happen? I'd hate to see them totallly go away. IDE was GREAT for GSP!
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Old Nov 7, 05, 7:52 am
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I just read the AP story. Since they're already talking about an auction, it looks like they don't expect to emerge.
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Old Nov 7, 05, 8:17 am
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Originally Posted by EricH
I just read the AP story. Since they're already talking about an auction, it looks like they don't expect to emerge.
Reuters news story says:

the auction is expected to take place within 60 days, the airline said, adding that it expects to have enough financial resources to fund its obligations during that time, including paying its employees.

Sorry to see them go but it was doomed from Day 1.
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Old Nov 7, 05, 8:33 am
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This sucks. Looks like IAD fares are headed back up again.

On another note: I've got some flights booked on DH for December and January. Should I worry? I had the thought to book flights on UA to BOS but the 60 day window thing caught my eye. Three of my flights fall inside that window and one outside of it. My initial feeling is that they will probably still be flying but .... you never know.

Suggestions?
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Old Nov 7, 05, 9:18 am
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The new bankruptcy laws don't really allow for much else other than auction. The local news said they were hoping for an investor or buyer within next two months - not sure what the prospects really are for either option.
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Old Nov 7, 05, 9:24 am
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I'm amazed they waited so long to do this.

Last edited by jaguar; Nov 7, 05 at 9:25 am Reason: additional info
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Old Nov 7, 05, 10:03 am
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Originally Posted by jaguar
I'm amazed they waited so long to do this.

Just another indication of how incompetent management is. They were absolutely stupid not to file before Oct. 17th. Good riddance, at this point in time the last thing the airline industry needs is a stupid competitor. The other airlines have enough problems without worrying about what what some suicidal competitor is going to try next.
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Old Nov 7, 05, 10:54 am
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I'm sorry for the employees but agree this was a doomed and irrational experiment from the outset. I've been saying so since before they launched.

It's incredibly stupid and irresponsible to blow millions of dollars and fool with thousands of employees' lives like this just to stick it to UA, which I still think was the main motivator for Indy.
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Old Nov 7, 05, 11:10 am
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Originally Posted by mid
I've got some flights booked on DH for December and January. Should I worry? My initial feeling is that they will probably still be flying but .... you never know.

Suggestions?
I think you'll be fine for December but all bets are off for January. I hope you paid with a credit card.
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Old Nov 7, 05, 11:23 am
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Originally Posted by MileageAddict
I think you'll be fine for December but all bets are off for January. I hope you paid with a credit card.
I'd make other plans, even for the December flights. But maybe mid doesn't mind the very real possibility of trying to fly standby during December if FlyI shuts down. Or the expense of buying full Y walkup fares for those flights. Me - I'd rather plan now and still get some advance purchase fares on an airline like WN, that is guaranteed to still be flying, as opposed to one that hopes to still be flying.
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Old Nov 7, 05, 11:40 am
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Originally Posted by BearX220
I'm sorry for the employees but agree this was a doomed and irrational experiment from the outset. I've been saying so since before they launched.

It's incredibly stupid and irresponsible to blow millions of dollars and fool with thousands of employees' lives like this just to stick it to UA, which I still think was the main motivator for Indy.
Bear,

As a former employee of ACA (pre-FlyI), I've followed the situation very very closely. As poor as this business plan may have been, hanging in there with UA was just plain stupid. The new contract that UA wanted ACA to sign guaranteed no future relationship with UA. Yes, the only guarantee in aviation is that there are no guarantees, but the new contract would have allowed to drop ACA at UA's whim. They would have done the same thing to ACA that they did with Air Wis. As I may have mentioned elsewhere, ACA had the choiice of getting shot standing still or getting shot while running away. They ran. They are just as dead, but at least they gave it a fighting chance. The old contract was certain death. Given that, what other possible situation would you have envisioned? Interestingly enough, had UA gone under, I had visions of Air Wis, ACA, and SkyWest forming a "new" UA. All it would take is for somebody to operate narrowbodies. Funny how ACA/FlyI did end up with Airbusses.

It's funny that there is actually some sympathy for employees on this board. On every other forum here, everybody expects the employees to bend over backwards to make financial sacrifices for the airline they work for, and get upset when the employees threaten to strike over further wage reductions.
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Old Nov 7, 05, 11:56 am
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Honestly, there was NO fighting chance for Indy Air - the company screwed up bigtime at literally every turn, from marketing to pricing to distribution to scheduling to fleet.
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Old Nov 7, 05, 1:24 pm
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Originally Posted by DHAST
It's funny that there is actually some sympathy for employees on this board. On every other forum here, everybody expects the employees to bend over backwards to make financial sacrifices for the airline they work for, and get upset when the employees threaten to strike over further wage reductions.
It does not come as a surprise to me. On the 3 occasions I flew FlyI since its inception, every single employee I encountered surprised me with a great smile, great attitude, and in the case of the gate agent in Columbus who met me at security (when I was a "runner") so she could carry my stuff to help me get to the gate faster, service way above and beyond the call. It was amazing to me that these were the same people I'd encounter on UX/ACA flights.
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