« Southwest and American Posturing in Dallas | Main | Taking Too Long to Post Points »

February 23, 2005

Good News at USAirways and Independence Air

USAirways says it needs $250 million to emerge from Chapter 11 bankruptcy, which strikes me as too low.

Air Wisconsin has proposed investing $125 million. Air Wisconsin operates primarily as a regional feeder for United.

USAirways has been extremely successful reducing its labor costs, but it remains unclear how their business model can return them to profitability. Still, any indication of interest in providing exit financing is a strong positive sign for the airline.

Meanwhile, Independence Air says that it has successfully renegotiated its aircraft leases.

After almost four months of negotiations, Flyi said it will be allowed to terminate leases on 24 of its regional jets -- about one-third of its fleet. Those concessions will help cut its aircraft lease payments by $94.5 million over the next two years. Creditors are also allowing the company to defer another $70 million in lease payments over the same period. Flyi also said it was given a five-year, $16.1 million loan from GE Capital Aviation Services Inc. In exchange for the concessions from its creditors, which Flyi did not name, the airline agreed to issue them about 8.3 million shares of stock.

Still, things are far from rosy. They recently had an aircraft repossessed. One of the commenters on this website claims their phones were turned off briefly at Tampa for failure to pay the bill. They're going to announce fourth quarter earnings shortly and all they can say is that results were "slightly better" than the $82.7 million they lost in the third quarter. So it remains to be seen whether they can make their business model work. But bankruptcy may have been put off for awhile.

Posted by gleff at February 23, 2005 5:44 PM

Comments

Post a comment