Mesa Air Group Again Bidding for Flyi

Deal Could Return Independence Air to Its Roots as a Regional Feeder Carrier

Mesa Air Group Inc., the regional carrier that tried to acquire the parent of Independence Air two years ago, has emerged as a bidder for the struggling company, sources familiar with the situation said yesterday.

If Mesa is successful in acquiring Flyi Inc. -- which filed for Chapter 11 bankruptcy protection last month -- the Phoenix-based carrier could fold the airline into its overall operations, dissolving Independence's separate identity and thereby returning the Dulles-based carrier to its original form, that of a regional feeder for larger airlines.

Such a deal would also mean the Washington area would lose one of its biggest and most influential low-cost carriers. After Independence Air -- with its $29 and $39 fares -- launched in summer 2004, air fares from Dulles International Airport to various cities dropped as much as 30 to 65 percent, according to a September report by the Transportation Department.

News of Mesa's bid comes as Flyi continued to cut flights and cities from its already reduced schedule. The airline said that beginning Jan. 5, it no longer will fly between its Dulles hub and Chicago; Jacksonville, Fla.; Buffalo; and Manchester, N.H. After the cuts, Independence will operate no more than 170 daily flights to 33 cities, down from 600 flights to 47 cities in 2004. Fifty workers will lose their jobs, reducing Flyi's workforce to 2,700, down from more than 5,000 in 2004.

Independence spokesman Rick DeLisi said the company had identified some potential buyers and investors, but he declined to say if Mesa was one of them. DeLisi said Flyi had received bids from parties interested in purchasing the airline, investing in the carrier or purchasing part of the airline.

Mesa chief executive Jonathan G. Ornstein also declined comment.

But a source involved in the bid and speaking on the condition of anonymity because of the secret nature of the negotiations said Mesa plans to "do what it tried to do a long time ago" by returning Independence to its origins when it flew as a feeder carrier for 15 years under the name Atlantic Coast Airways, a move the source said could also protect a majority of Independence's jobs.

It's the second time Mesa has tried to acquire the airline in its effort to broaden its regional-jet reach. As part of a $512 million hostile takeover bid, Mesa tried to acquire the airline in 2003 before it launched as Independence. But Atlantic Coast executives, including chief executive Kerry B. Skeen, went to court to fight off the bid.

Flyi's fate is being overseen by the U.S. Bankruptcy Court in Wilmington, Del., which has approved an auction of the airline's assets. When it filed for bankruptcy protection, the airline set a Jan. 3 deadline to identify a bidder. But DeLisi said yesterday that the deadline was now "flexible."

As part of its downsizing, Flyi is cutting four daily nonstop flights from Dulles to Chicago O'Hare International Airport and three flights each to Buffalo, Jacksonville and Manchester.

Late yesterday afternoon, Flyi's Web site was showing all flights to the four cities as being "sold out" from Jan. 5 through the end of April.

"They are being shown as sellouts so they won't get sold," DeLisi said, adding that the flights would be removed from the Web site later in the day.