WorldTraveler
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Ua Seeks Bids For Rj Service
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The Gopher
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Hey, any money they can squeeze out of AWAC is money they don't take from my check. Personally I'd love to see some carrier buy Flyi that is currently a UAL feeder.
Hypothetical:
Independence bids for this flying. Their rate is more than Air Whisky's (and others). However, UA goes with them to eliminate the low-fares and competition at IAD, figuring that the extra costs of their contract are outweighed by the benefits of eliminating 300 low-fare flights into one of their hubs.
Possible?
Independence bids for this flying. Their rate is more than Air Whisky's (and others). However, UA goes with them to eliminate the low-fares and competition at IAD, figuring that the extra costs of their contract are outweighed by the benefits of eliminating 300 low-fare flights into one of their hubs.
Possible?
It only gets stranger.
Upgrade Lifts FLYi From Low
By Ross Snel
TheStreet.com Staff Reporter
11/11/2004 12:35 PM EST
Shares of Independence Air parent FLYi Inc. (FLYI:Nasdaq - news - research) reversed some of Wednesday's steep loss after a Merrill Lynch analyst raised his rating on the stock from sell to neutral.
Independence Air is among the carriers United Airlines' parent UAL (UALAQ:OTC BB - news - research) has asked to bid on some of its regional United Express business, and that could prove positive for the stock, wrote Merrill Lynch analyst Michael Linenberg in a research note. (Merrill Lynch does and seeks to do business with companies covered in its research reports.)
The stock was up 18 cents, or 13.9%, at $1.48 Thursday. On Wednesday, Independence Air shares tumbled 61 cents, or 31.9%, to $1.30 after the company warned it could seek Chapter 11 bankruptcy protection if it can't reschedule aircraft lease payments that come due in January.
"At the last close of $1.30, the stock is clearly discounting a very high bankruptcy probability," Linenberg wrote. "However, we think the United announcement alters the risk/reward profile of the security. Hence, we are raising our rating on Independence Air from sell to neutral ... but stress that this is a name to be considered by only our most aggressive accounts."
Late Wednesday, United Airlines said it was seeking bids for regional flights currently flown by Air Wisconsin. Before FLYi began a new life as low-cost carrier Independence Air this year, it operated as Atlantic Coast Airlines, providing regional service under contracts with United and Delta Air Lines (DAL:NYSE - news - research).
Given recent challenges, such as hurricanes and high oil prices, FLYi's board must seriously consider the company's course and contemplate returning to regional-jet contracts before it runs out of cash, wrote Linenberg.
Upgrade Lifts FLYi From Low
By Ross Snel
TheStreet.com Staff Reporter
11/11/2004 12:35 PM EST
Shares of Independence Air parent FLYi Inc. (FLYI:Nasdaq - news - research) reversed some of Wednesday's steep loss after a Merrill Lynch analyst raised his rating on the stock from sell to neutral.
Independence Air is among the carriers United Airlines' parent UAL (UALAQ:OTC BB - news - research) has asked to bid on some of its regional United Express business, and that could prove positive for the stock, wrote Merrill Lynch analyst Michael Linenberg in a research note. (Merrill Lynch does and seeks to do business with companies covered in its research reports.)
The stock was up 18 cents, or 13.9%, at $1.48 Thursday. On Wednesday, Independence Air shares tumbled 61 cents, or 31.9%, to $1.30 after the company warned it could seek Chapter 11 bankruptcy protection if it can't reschedule aircraft lease payments that come due in January.
"At the last close of $1.30, the stock is clearly discounting a very high bankruptcy probability," Linenberg wrote. "However, we think the United announcement alters the risk/reward profile of the security. Hence, we are raising our rating on Independence Air from sell to neutral ... but stress that this is a name to be considered by only our most aggressive accounts."
Late Wednesday, United Airlines said it was seeking bids for regional flights currently flown by Air Wisconsin. Before FLYi began a new life as low-cost carrier Independence Air this year, it operated as Atlantic Coast Airlines, providing regional service under contracts with United and Delta Air Lines (DAL:NYSE - news - research).
Given recent challenges, such as hurricanes and high oil prices, FLYi's board must seriously consider the company's course and contemplate returning to regional-jet contracts before it runs out of cash, wrote Linenberg.
whlinder said:
Unnecessary. If UAL were afraid of this, they would have stuck with FlyI/ACA a year ago. Plus, FlyI is on the verge of collapse, IMO.
Fly I could re-bid, but I suspect their bid must be in line with other carriers, otherwise other carriers would get the business. If you view this as UAL vs. FlyI, UAL is in the drivers seat because FlyI will need the deal more than UAL will. UAL can always add to its SkyWest, Chautauqua, or Mesa deals...
The Gopher
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whlinder said:
FlyI is doing a grand job at eliminating itself from IAD all by themselves. Like buying deck chairs off the Titanic as she sinks. Might as well wait until they file, and have Mesa or Skywest swoop in and buy the pieces at fire sale prices.
WorldTraveler
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Make no mistake, UA is calling the shots now. For all involved, it would be better if DH goes into BK where they will be forced to reject leases on a number of RJs because no one is going to negotiate those leases down. Airbus will demand much more of the cost of their aircraft up front meaning that DH may never fly an Airbus aircraft, even if they could convince the FAA they are capable of doing so. The poor sucker employees at DH who just months ago were convinced to throw their support behind their CEO and his nutty plan surely wish they had walked away.
I'm curious what Air Wisconsin thinks about this. They are obviously being used as the pawn in this whole thing. Since UA is doing this to everyone it deals with, they may have a hard time finding business partners willing to work with them if they emerge from bankruptcy.
I'm curious what Air Wisconsin thinks about this. They are obviously being used as the pawn in this whole thing. Since UA is doing this to everyone it deals with, they may have a hard time finding business partners willing to work with them if they emerge from bankruptcy.
mrfish3726
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Worldtraveler,
That's how UAL runs business, threats and intimidation.
That's how UAL runs business, threats and intimidation.
L
luvn737s
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UA has put the screws to just about every commuter it's ever done business with, yet they always come back for more.WorldTraveler said:
AW will only get it if they drop their price.Rob said:
Doing a deal with Flyi is very tempting right now. There is no doubt in my mind that UA will win the battle at IAD with Flyi, but that could take another year to finish. In the meantime, UA is bleeding huge amounts of cash at IAD. Better to bring them back into the family (at a low rate contract), reduce capacity and let fares come out of the basement. UA is in bad enough financial shape that a move like this could help in getting out of BK.
I don't think FlyI/ACA/DH is any part of this. I think this is clearly a shot at AirWisconsin, who has 100% of flying for UAL and apparently the highest cost RJ provider for UAL. I suspect AW wins their own service back at lower rates. Its the most economical solution for UAL and AW (even if AW doesn't like it, which I am sure they don't).
IAir will likely fizzle out on their own. While I am sure they are a revenue drain for UAL, UAL can likely withstand it, even benefit from it in the very near future as FlyI's customers begin to book away, with more reports of impending doom (like the BK warning, actual filing, etc).
IAir will likely fizzle out on their own. While I am sure they are a revenue drain for UAL, UAL can likely withstand it, even benefit from it in the very near future as FlyI's customers begin to book away, with more reports of impending doom (like the BK warning, actual filing, etc).
