Manufacturing Industry

Independence Air fights for survival after third quarter loss

Airline Industry Information, Oct 28, 2004

Intense competition and high fuel costs mean that only four months after its launch in June 2004 the US-based low-cost carrier Independence Air is struggling to survive.

The airline's parent company FLYi Inc this week reported a loss of USD83m for the third quarter.

Independence Air said that it is to overhaul its ticket distribution system, cut capacity in some markets and will enter negotiations with its lenders to secure its cash flow. The airline, formerly known as Atlantic Coast Airlines, made a third quarter profit of USD23m in 2003 when it acted as a carrier for United Airlines and Delta Air Lines.

Independence Air believed that its low fares would generate enough demand to fill 600 daily services to east coast airports using 50-seat regional jets but the demand has not been as high as predicted. Analysts have now warned that the airline may file for bankruptcy in January 2005, leading to its stock dropping more than 50%.

A spokesperson for the airline said that it will now start selling tickets through traditional travel agents and not just its website and reservations number in an attempt to attract more business passengers, which it identified as its key market when it began, reports The Associated Press.

((Comments on this story may be sent to aii.feedback@m2.com))