December 29, 2005
Independence Air is putting on a happy face and accepting advance passenger bookings as far out as April 2006. But in a letter mailed to its unionized workers, it warns them that unless it is able to raise "significant external investment," it will stop flying January 7, The Washington Post reported.
The failing carrier's labor agreements require it to serve notice of intent to furlough its workers. The Dulles-based discount airline employs about 2,800 people. It filed for bankruptcy protection in November.
Airline analysts say that Independence, which has never shown a profit, is unlikely to attract outside investment funds and cautioned consumers to think twice about relying on it for transportation.
However, if the struggling airline folds, travelers holding tickets could redeem them on competing airlines for a fee of $50 each way through next Nov. 30, under a law passed by Congress after the Sept. 11, 2001, terrorist attacks.
"This is basically a cadaver they're trying to breathe life into," analyst Michael J. Boyd told the Post.
Rather than attracting investors, Independence has been attracting tire kickers interested in acquiring its assets at rock-bottom prices. Both United Airlines and Mesa Air Group of Phoenix have expressed interest in bidding on the carrier's airplanes, gates and equipment.
Independence Air was launched with great fanfare less than two years ago after operating profitably for years as Atlantic Coast Airlines, a regional feeder airline for United and Delta. The airline won praise from some passengers, but didn't attract enough of them to justify its rock-bottom fares.
Airline analysts had predicted a short flight since Day One.
"It was always a bad concept and never made sense," Vaughn Cordle, CEO of Airline Forecasts Inc., said. "None of the big carriers would give up seat capacity. They matched them on every route. Even with their own bankruptcy problems, all three major airlines had more financial resources than tiny Independence."
