Independence Air Files For Bankruptcy Protection

Independence Air parent FlyI today filed for voluntary Chapter 11 reorganization. As it seeks to restructure aircraft leases and other financial obligations, the Dulles, Va.-based company said it would continue normal flight operations, honor existing reservations and preserve its frequent flyer program.

It plans to request a bankruptcy-court-supervised, 60-day auction process in which interested parties would bid on all or part of the company's assets. "If there is no interest expressed during this process, the final step could be to discontinue operations," the airline warned on its Web site.

Independence Air started new low-fare service from Washington Dulles International Airport in June 2004 after transitioning from serving Delta and United airlines as feeder carrier Atlantic Coast Airlines. Independence Air launched with aspirations to build a leading coast-to-coast low-fare alternative, but in recent months has scaled back operations. It currently operates 220 daily flights to 36 destinations and said it has no plans to enact additional network or schedule reductions.

When it launched, Independence Air shunned global distribution system participation in favor of direct Internet booking channels. Influenced by corporate travel manager requests, it later reversed that strategy and eventually listed fares and inventory in all four primary GDSs. However, Independence Air also now promotes a corporate booking portal on its direct Web site.

The company said it would cut salaried employee pay and seek concessions from labor unions. New tentative agreements with the Association of Flight Attendants and the Aircraft Mechanics Fraternal Association are expected "shortly."

FlyI said its unrestricted cash balance is down to $24 million, though it expects its financial resources to be sufficient to fund its obligations during the bidding process.