Independence Air Likely to Halt Operations

Washington -- The low-fare airline, Independence Air, will go out of business next month unless it can find a major investor willing to sustain operations--an unlikely possibility.

In a letter to its unionized employees, the airline said it would stop flying on Jan. 7 and start laying off all workers unless it obtains "significant external investment," according to a report in yesterday's Washington Post.

Independence Air parent Flyi Inc. filed for Chapter 11 federal bankruptcy protection in November. The airline is based at Dulles International Airport in suburban Virginia.

At least one airline analyst doubted that any new investor would keep the airline operating rather than acquiring the assets for other purposes.

"There is no future when you send a letter like this out to your employees," Michael Boyd, of the Boyd Group, was quoted as saying. "This is basically a cadaver they're trying to breathe life into. Travelers should use caution in buying tickets on the carrier, at least until the airline announces its plans."

Independence Air continues to accept reservations into next year. If the airline folds, customers can redeem their tickets at other domestic airlines for a $50 fee each way until Nov. 30.

Two other passenger air carriers, United Airlines parent UAL Corp. and Mesa Air Group, are seen as potential bidders for Independence Air.

Flyi served as a feeder airline for United from 1989 to 2004 under the name, Atlantic Coast Airlines Holding Company, but the two airlines parted ways as a result of United's own financial troubles. UAL filed Chapter 11 bankruptcy in 2002 and continues to operate under bankruptcy protection.