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Independence Numbers Fall

Despite Holiday Travel, Fewer Seats Filled in November

By Bill Brubaker
Washington Post Staff Writer
Tuesday, December 7, 2004; Page E05

Financially ailing Independence Air continues to struggle selling tickets.

The Dulles-based low-fare carrier filled 52 percent of its seats in November, compared with 52.8 percent in October, the airline's parent, Flyi Inc., reported yesterday.

Dulles-based Independence flew with almost half its seats empty last month, parent Flyi Inc. said. (Lawrence Jackson -- AP)

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The average U.S. carrier sells about 70 percent of its seats.

Flyi spokesman Rick DeLisi predicted in an interview Nov. 24 that "November will come in ahead of October" for ticket sales. He based that forecast, at least in part, on what he called a "huge influx of customers traveling with us during the holiday season."

Yesterday, DeLisi said that while Thanksgiving holiday sales were "excellent, the beginning of the month was a little bit softer."

Flyi reported an $82.7 million loss in the third quarter of this year, partly because it did not sell enough tickets. The company recently said it will file for Chapter 11 bankruptcy protection if it cannot renegotiate $83 million in aircraft lease payments, due in January. Unrelated to those payments, Flyi said it has renegotiated contracts with aircraft manufacturers Airbus and Bombardier.

Some Wall Street analysts have said Flyi can't survive if it doesn't raise its load factor -- industry jargon for the percentage of seats an airline sells.

Yesterday, analyst Raymond Neidl of Calyon Securities Inc., a New York-based investment bank, gave Flyi's stock a "sell" rating.

"We think the possibility of a bankruptcy filing by January is high," Neidl wrote in a research report. ". . . Under bankruptcy, the company could reject a number of leases on its fleet and try to continue with its current business plan but on a smaller, more cautious, basis. However, in bankruptcy, the current stockholders probably would ultimately be wiped out as equity is usually cancelled in an airline bankruptcy."

Asked about Neidl's prediction of a January bankruptcy filing, DeLisi said: "We continue to move forward, addressing our liquidity issues. That's part of the daily work of our senior management team."

Flyi shares closed yesterday at $1.76, down 9.7 percent, or 19 cents, on the Nasdaq Stock Market.

© 2004 The Washington Post Company