United Airlines Bids to Buy FLYi Assets

[a320av8r]

AP
WASHINGTON (Dec. 23) -- United Airlines Inc. submitted a bid to buy an unspecified chunk of the assets of FLYi Inc., a former United regional carrier whose attempt to reinvent itself as discount airline Independence Air ended in failure last month.


United, the world's second-largest airline, asked a judge to authorize it to purchase FLYi assets at an auction that could occur as early as Jan. 3.


It said it submitted a bid for the assets on Dec. 16, making the bid subject to approval from the U.S. Bankruptcy Court in Chicago.


United, a unit of UAL Corp., didn't disclose details of the bid, which was filed under seal in the bankruptcy court.


After United filed for bankruptcy in 2002, it severed its ties to Atlantic Coast Airlines, which renamed itself FLYi and launched a standalone airline called Independence Air.


FLYi stayed aloft for scarcely a year. In November, the Dulles, Va., company sought Chapter 11 protection, listing debts of $489 million.


In court papers, FLYi has said it intends to auction its assets on Jan. 3 unless it can secure an investment that will allow it to continue operations or find a single buyer for all its assets.


FLYi has contended that United's decision to break the relationship with Atlantic Coast cost the smaller airline $1.3 billion in damages.


Atlantic Coast sought to recover that amount from United, but Bankruptcy Judge Eugene Wedoff recently reduced the claim to $500 million and said FLYi would have to wait in line with other unsecured creditors for repayment.


United has told those creditors they can expect to recover no more than 8 cents of every dollar they're owed.


UAL is based in Elk Grove Township, Ill.

 

[WorldTraveler]

very interesting but I guess not totally a surprise if UA can make it work.

it also says that airlines in bankruptcy can certainly participate in industry restructuring. While FlyI's assets are relatively cheap for UA, UA's creditors have to be pretty convinced their interests are not jeopardized by the transaction. My guess is they would not be by this transaction.

It is rather certain that if UA buys off Indy, they will face another LCC at IAD in the not-too-distant future. JetBlue and AirTran are both ready to pounce. UA could end up wasting money on buying FlyI's assets only to have to deal w/ someone else.

 

[GuppyPup]

UA could end up wasting money on buying FlyI's assets only to have to deal w/ someone else.

The assets are most likely gates and other fixed assests at IAD. The rest of the stuff, like the Operating certificate, might be valuable to another airline (Virgin USA perhaps).

 

[767jetz]

The assets are most likely gates and other fixed assests at IAD. The rest of the stuff, like the Operating certificate, might be valuable to another airline (Virgin USA perhaps).

Agreed. I Think this is a smart move. The assets (gates, etc.) will be put to good use and prevent them from being used by someone else. FlyI's assets are relatively few and will not come at a huge cost, especially on the auction block.

 

[767jetz]

Oh... one more thought...

Too bad USA320pilot is MIA. (Although I'm sure he still lurks around to see what people are saying. ) I guess UA trying to buy FlyI assets really makes his idea of UA selling Ted sound more ridiculous!

So in case you're reading this 320, let me be the first to say "I told you so."

But seriously,
Merry Christmas to all!

 

[spacewaitress]

...UA could end up wasting money...

UA loves to waste OUR money. It's the one thing they do very well, that is, after stealing it from the grunts in the first place and then rewarding themselves exhorbitantly.

 

[herkav8r]

Space,
It is time for you to quite worrying about the past and think of the future. If you are going to be so negative, you should go work with Fish and you guys can start a "Down with United Management" club at Frontier.

 

[spacewaitress]

Just stating facts, not negativity...pertaining to the present, not the past...the future is anybody's guess, and from about 65K different perspectives.

 

[WorldTraveler]

I'm sure the assets do involve IAD gates. They really don't have much current cash value since they are leases but they could be used to lock out competitors. The government and potentially even Metro Washington Airports Auth could block the deal if it results in too many gates going into one airlines hands. Not saying they will but no airport wants to be in a position of having no expansion gates for new carriers or those other than the dominant airline that want to expand.

 

[whlinder]

Don't know precisely what the facts are, but doesn't FLYI have a claim against the UA bankruptcy? It is one of FLYI's 'assets' and I think it would turn into UA stock when UA emerges. Perhaps UA is also trying to purchase this claim for pennies on the dollar.

 

[dc3fanatic]

Don't know precisely what the facts are, but doesn't FLYI have a claim against the UA bankruptcy? It is one of FLYI's 'assets' and I think it would turn into UA stock when UA emerges. Perhaps UA is also trying to purchase this claim for pennies on the dollar.

It would be pennies on the dollar regardless, I doubt that is the driver. I bet it's gates.

 

[whlinder]

I'm sure it is gates too, but also figured they might be trying to purchase the pennies on the dollar claim for "pennies on the pennies". (Pesos on the pennies?)

 

[dc3fanatic]

I'm sure it is gates too, but also figured they might be trying to purchase the pennies on the dollar claim for "pennies on the pennies". (Pesos on the pennies?)

I think it's those 50 seaters! Everyone wants 50 seaters now-adays. (note sarcasm).

 

[robbedagain]

I thought that while in CH11 the company cant bid for assestts of another airline?

 

[BigRed1]

From Independence Air's MEC today to all the FLYi Pilots.
----------------------------------

Like every other pilot the MEC officers of Independence Air received their furlough letters in the mail today. While this development is not unexpected it does represent the first time that the company has put out some kind of notice "i.e." furlough, reduction in force and the like, and not given a courtesy call to the MEC letting us know. Unfortunate as this development is at least the company has done the pilot group the courtesy of not suddenly and without notice ceasing operations which is what usually happens.

While the details of the bids submitted remain confidential a reading of the furlough notice cannot help but shed some light on where we stand. Clearly the company does not believe that it will be able to continue flight operations after January 7th which tells us that it has not received an acceptable bid to operate the company as a going concern.

We are going to solicit all carriers to help distressed Independence pilots through jump seat and employment opportunities. The track record to date has been excellent for pilots seeking employment at other carriers like Jet Blue, MaxJet, Atlas, Continental, and the fractionals, just to name a few. We still are being paid, so we still have a job to do. One sure way not to get paid is not to come to work. I have been told that all work performed will be paid on the normal pay schedule, even after the shutdown. We can only hope that this is true.

While the future does seem dark I know that the men and women of Independence Air are a special group. Never in my life have I been as proud to be associated with a group of people as I have been to be associated with this pilot group. No matter what happens in the future you will be able to look back on your days at ACA/Independence Air with your head held high in the knowledge that you did a difficult job and did it well. This pilot group has done everything that could be asked of it through out the years and sadly barring some miracle we will now join the ranks of Eastern, Pan-Am, TWA and others as a once proud airline that was mismanaged into obscurity.

I encourage everyone to stay focused on finishing strong, on carrying out the sacred trust of transporting our passengers safely to their destinations until that last day arrives and the planes fall silent for the last time. On being true professionals in every sense of the word. And in these dark times don't forget to stay focused on the things that truly matter in life. For I know that the men and women that sit in our cockpits are people of quality and people that can look forward to brighter days ahead.