- The Washington Times - Tuesday, January 3, 2006

Independence Air will ground itself Thursday night because it hasn’t found a buyer or investor, marking the sudden death of the low-cost carrier that made a rapid descent into insolvency.

The demise of the airline, which began flying less than two years ago and filed for Chapter 11 bankruptcy protection from creditors two months ago, will leave passengers scrambling to change travel plans.

Independence Air, based at Washington Dulles International Airport, has canceled all scheduled flights that take off after Thursday evening. The airline’s final flight is scheduled to be a 7:26 p.m. departure from White Plains, N.Y., to Washington.

Airline officials said yesterday that they are trying to contact passengers whose return flights are scheduled for after Thursday to book them on earlier flights, and the company will seek court approval to refund consumers who booked flights beyond its final day of operations.

The shutdown will leave a gaping hole at Dulles, where Independence Air has 36 gates. United Airlines will be the airport’s dominant carrier, with 478 flights a day. Independence Air was the airport’s second-leading carrier.

Every line at the Independence Air ticket counters at Dulles, including self-serve kiosks, overflowed with passengers yesterday.

Eliana Whittington, a stay-at-home mother of three, said she hoped to get a refund and find a flight on another airline for her mother, who is booked on an Independence Air flight from Charleston, W.Va., later this month.

“They have been very affordable; that’s why we have done it,” she said, referring to her family’s frequent trips on Independence Air.

Airline spokesman Rick DeLisi said it is not clear how many tickets have been sold for flights beyond Thursday.

Passengers do have safeguards. Airlines flying the same routes as Independence Air must make standby seats available to its customers who have unrefunded tickets, said Terry Trippler, airline analyst with Cheapseats.com. Airlines can charge $50 each for the standby seats.

Congress passed the law after the September 11, 2001, terrorist attacks.

The shutdown leaves thousands of employees without jobs.

“We got the news this morning. It was very tough for us to hear that. We’re like a family, very close to each other,” said Kim Teng, a customer service specialist with the airline. The 55-year-old said she had not started looking for another job because she thought Independence would continue operating despite its bankruptcy filing.

“Look at all the customers coming to us,” a teary Ms. Teng said. “Whatever the difficulty, I thought Independence Air would survive it and I would stay with them.”

Independence Air has about 2,700 workers, 85 percent of whom work at Dulles Airport, and more than 200 flights a day to 37 cities. At its peak, the airline had 5,000 employees and 600 flights a day to 46 cities.

It filed for bankruptcy protection Nov. 7, listing assets of $378.5 million and debts of $455.4 million. The company had $24 million in unrestricted cash when it filed for bankruptcy, and it hoped to find a buyer before it ran out of money. The airline said then that it had enough cash to operate for 60 days. Mr. DeLisi yesterday declined to say how much money the airline has or when it will run out of cash.

“We thought somebody would step up and buy the airline, but unfortunately no one did,” said Marc Gendron, union representative for the airline’s 160 members of the Aircraft Mechanics Fraternal Association.

About 180 workers will remain on the payroll after Thursday as the airline ceases operations. The so-called wind-down team will be led by Independence Air President Tom Moore. Thursday will be the last day at the airline for Kerry Skeen, the airline’s chairman and chief executive.

Airline officials said yesterday that the decision to stop flying was unavoidable. Flyi Inc., which operates Independence Air, had hoped to sell the airline in a court-sanctioned auction, but a lack of interest in the business foiled plans to salvage the carrier.

“To date, there has not been a firm offer put forward that meets the financial criteria necessary to continue operations as is,” Mr. Skeen said.

Independence Air’s assets could be sold off in bankruptcy court, but the wind-down team and committee of creditors has yet to decide on how to divest the airline’s assets.

Independence Air began service in June 2004 after a rebranding. It had been known as Atlantic Coast Airlines and began flying in December 1989 as a regional carrier for United Airlines.

The company warned employees last week that it may shutter operations, but workers said they hoped for a miracle.

“I was hopeful up until [yesterday],” said Fred Pedone, vice president of Council 50 of the Association of Flight Attendants, which represents about 330 workers.

Independence Air made a splash with its inexpensive fares, but its business model didn’t prove sustainable.

“They gave it the old college try, but they had too many obstacles. Mistakes were made,” said Tom Parsons, chief executive of Bestfares.com, based in Arlington, Texas.

One significant mistake was flying costly regional jets, Mr. Parsons said. Fuel costs are partly responsible for the bleak financial picture. Before Independence Air began flying, airline executives assumed jet fuel would cost 90 cents a gallon. The airline paid $3.10 a gallon late last year.

Mr. Trippler said Independence Air’s demise will help other carriers. With fewer seats available to consumers, airlines will have more flexibility to raise fares, he said.

The disappearance of Independence Air will mark the end of another carrier’s presence in the Washington area. US Airways left the region after America West bought it last year, and the combined airline has its headquarters in Tempe, Ariz.

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