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Independence Confronts More Bleak Numbers

Flyi has been putting on a cheerful public face in recent weeks, rolling out rock-bottom fares and edgy promotions: limited-time fares as low as $29 one way to Tampa (Greyhound charges $59) and the promise of a refund -- credited toward a future ticket -- if a passenger's luggage doesn't arrive with the flight. "Happy Bags," Flyi calls the promotion.

"Life is a carousel," is how Flyi began an e-mail to its frequent fliers this week. " . . . Get Happy with Independence Air."

Independence Air has been putting a happy face on its cut-rate service, but financially, the carrier is doing badly. (Alex Wong -- Getty Images)

Behind the scenes, though, the company has been trying to convince skeptical investors and Wall Street analysts that happier days are ahead.

Baker titled his report last week "Flyi Shutdown Analysis." He wrote that United would benefit most if Flyi shuts down. "United serves all but 5 of Independence's Dulles destinations and offers substantially identical connecting opportunities," he wrote. A Flyi shutdown could mean a "direct benefit of $250 million" to the larger airline, according to Baker.

Merrill Lynch & Co. analyst Michael J. Linenberg wrote in a research note last week that he was discontinuing coverage of Flyi "due to lack of investor interest."

"The Independence model is not working," he wrote.

And, yesterday, analyst Raymond E. Neidl of Calyon Securities (USA) Inc. headlined his report "FLYI: Reports 1Q Results -- Too Cheap to Sell."

"The stock currently trades at what we believe are close to bankruptcy levels," Neidl wrote.

Skeen, in the interview yesterday, seemed unfazed.

"I think time will tell who's right," he said. "It's a rough environment, obviously, and I'm not saying it's a slam dunk for any airline now."

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