May 6, 2005
Independence Air, the struggling Dulles-based low-fare carrier, will report first quarter losses of $105 million, the Washington Post reported. The company says it's on its way to profitability but analysts say the carrier will run out of cash by year's end.
It's been rough going for Independence Air, which declared its independence ten months ago, when it stopped operating as a feeder carrier for Delta and United and decided to try to make it on its own by offering low fares on regional routes.
The strategy worked fine except for three things -- not enough passengers, brutal fare competition from entrenched carriers and a spike in fuel costs.
It's hard to say why passengers haven't flocked to the airline, which is offering fares even cheaper than Greyhound to some destinations. One reason may be that many of its airplanes are the relatively small variety normally associated with commuter airlines -- the kind you can't stand up in. Another may simply be lack of name recognition.
In February, the carrier gave back 24 of its leased regional jets, about one-third of its fleet, hoping to avoid a bankruptcy filing. It is using larger aircraft on a series of new cross-country routes to West Coast cities but the competition it faces on those routes is even fiercer than on its East Coast turf.
Load factors have improved recently, hovering near 70 percent, which is still below the industry average.
While passengers may be a little more willing to give Independence a chance, finiancial analysts have given up on it and advising investors to stay away. Its stock has been trading around 73 cents, putting it in jeopardy of being delisted from the Nasdaq, which normally has a $1 minimum share price.
