Independence Air

[Ch. 12]

I'm assuming you are attempting to relate the Independance Air situation to your political point of view? And if that is the case, then you should check what you say, as pride is something that we all need, and should have for our country. It cannot "only hurt", as you say.

Yes...I did digress and I am sorry for that. I guess that your tagline seems to be fishing for political response. To qualify my remarks, pride and ignorance combined are bad and yes...to survive on pride alone is never good. Too much pride leads to ignorance because vital opinions of others are ignored. I tie this in to indy because they are burning cash to try to force a CONNECTING RJ hub to work. They should be able to reassess their plan and be flexible enough to alter it...EXPECIALLY if they have all of this extra cash that you speak of. Better to change when you have the cash then when you don't (look at US Air for the perfect example).

 

[USAir757]

Yes...I did digress and I am sorry for that. I guess that your tagline seems to be fishing for political response. To qualify my remarks, pride and ignorance combined are bad and yes...to survive on pride alone is never good. Too much pride leads to ignorance because vital opinions of others are ignored. I tie this in to indy because they are burning cash to try to force a CONNECTING RJ hub to work. They should be able to reassess their plan and be flexible enough to alter it...EXPECIALLY if they have all of this extra cash that you speak of. Better to change when you have the cash then when you don't (look at US Air for the perfect example).

Thanks for addressing that... we all digress at one point or another, just look at the politics forum!

I think Indy is too new to be making any changes at this point... they built their platform with a plan. True, they will need to remain flexible in this ever changing industry, but it is dangerous to make significant changes when all in all the airline is still taking root. ACA is a thing of the past now, and they will need to create something before they can change it. It sounds like fluff talk, but it's true. US waited years too long to even begin their "reorganization"... and yes, you're right, they are next to hopeless for recovery. But Indy is stronger, yet with more cash at risk. They're like a poker player that just moved up to the high-roller table with a pocket full... will they establish fast enough before the sharks come up to eat them? Maybe.... but they have to play smart.

 

[iflyjetz]

Well, Indy's got a ton of cash, so they can easily weather this. It's clear that the legacy airlines, particularly Delta, aren't going to make it easy for Indy. But by next summer, I think they'll be pretty close to break even, or maybe even profitable. Could be much sooner if US Airways stops flying (which I think could happen after the holidays).

[post="181673"][/post]​

Motnot, Indy had ~$300 mil cash at the end of the last quarter. FLYI tapped additional credit lines to bump up the amount of cash on hand; there are ~$100 mil in lease payments due in Jan 05. I'd be willing to bet that FLYI will have difficulties getting any more credit; their balance sheet is looking no less ugly than UAIR, UAL, and DAL.
If they get stuck with the DoJets (highly likely at this point; DAL has little incentive to not have FLYI eat the DoJets), that'll drain $25 mil/quarter.
Analysts estimate FLYI's losses for the next 6 quarters to be ~$185 mil.
I'll assume that FLYI has some of that $300 mil in restricted cash, so I'd say that FLYI will be toast (chap 7) sometime before 2006.
I'd wait until after 1Q2005 before making a statement that FLYI has a ton of cash. My bet is that they'll be dangerously close to zero unrestricted cash by the end of 1Q2005, and there's few assets left at FLYI that haven't been pledged against loans.

 

[funguy2]

If they get stuck with the DoJets (highly likely at this point; DAL has little incentive to not have FLYI eat the DoJets), that'll drain $25 mil/quarter.

[post="184134"][/post]​

I believe DAL cannot "stick" IAir with the DoJets. I beleive their contract says that if DAL cancels the contract, then IAir can make DAL liable for the jets. In other words, IAir can transfer the DoJet leases to DAL or whomever DAL instructs them to. In the meantime, IAir is presumably operating the DoJets at a profit for DAL... So the DoJet operation and delay is probably helping IAir at this point, not hurting.

If DAL were to place the IAir DoJets at Midwest Connect tomorrow, as has long been the speculation, IAir would be immediately released from the lease payments, but would also lose the DAL revenue, which on a "pay-per-departure" basis should be guaranteed profit.

 

[iflyjetz]

I believe DAL cannot "stick" IAir with the DoJets. I beleive their contract says that if DAL cancels the contract, then IAir can make DAL liable for the jets.

[post="184145"][/post]​

I suggest that you read the fine print in the DAL/ACAI contract ... when DAL's credit rating falls below a certain level, they are no longer liable for the DoJets. DAL's credit rating is now, and has been for a while, below the threshold in the contract that triggers that clause.
While DAL was (operative word here) liable for the DoJets when they gave 180 days' notice to cancel the contract without cause, their credit rating has deteriorated to the point where they are no longer legally responsible for the DoJets; ACAI, however, remains on the hook for them.
This is why Skeen has indicated in filings that FLYI expects to be stuck with the DoJets. Needless to say, they also bury that little gem in the fine print.

 

[funguy2]

Very interesting iflyjetz... Thanks for the correction.

 

[USAir757]

Yes, quite interesting indeed. To take the positive cash flow operation that is helping sustain flyi and turn it into hefty lease payments and excess capacity... that would definitely throw a wrench in their already unstable plans. What is the time frame for the airline in terms of finding out whether they'll lose the DL contract and bring over the Dorniers? And can't the airline sublet the aircraft out to help absorb the costs?

 

[iflyjetz]

Yes, quite interesting indeed. To take the positive cash flow operation that is helping sustain flyi and turn it into hefty lease payments and excess capacity... that would definitely throw a wrench in their already unstable plans. What is the time frame for the airline in terms of finding out whether they'll lose the DL contract and bring over the Dorniers? And can't the airline sublet the aircraft out to help absorb the costs?

[post="184385"][/post]​

DAL gave 180 days' notice back in the spring. The contract is already in the process of being phased out. Don't quote me on these figures, because I don't have them memorized, and it'd take me a while to dig them out.
To start, FLYI has 33 Dornier 328s in their fleet; DAL is on the hook for 30 of them (I don't recall what the other 3 are used for). IIRC, 3 of the 30 were phased out of DAL connection service on 1 Aug, and another 7 phased out in steps prior to the final phasing out of the last 20 sometime in Oct.
Yes, FLYI can probably sublet them to help absorb costs, but the Dornier 328 is an orphan jet that, to be kind, is a POS (from what I've read).
If there had been any question on whether or not DAL was going to work with FLYI on placing the DoJets with another one of DAL's regional partners, I think that FLYI sealed their fate when they decided to expand operations out of MCI in direct competition with DAL.

 

[USFlyer]

As of right now, yes. But that should be changing.

[post="183064"][/post]​

Southwest and jetBlue also do not publish their flights in res systems. When did Independence Air decide to change?

 

[funguy2]

To start, FLYI has 33 Dornier 328s in their fleet; DAL is on the hook for 30 of them (I don't recall what the other 3 are used for).

[post="184528"][/post]​

I'm not sure how they ended up with 3 extra, but I have seen pictures on airlines.net of ACA Do328JETs in "Corporate Charter" color schemes... I wonder how much business they do as charter? I am sure its not enough for 33 of them.

 

[whlinder]

Southwest and jetBlue also do not publish their flights in res systems. When did Independence Air decide to change?

[post="185507"][/post]​

When they had those sub-50% load factors for an entire month.
I've seen FlyI show up on Travelocity with their fares, but it is not bookable yet.
WN shows up on ITN.net, however.