Struggling Independence Air is to reduce its Bombardier CRJ200 fleet to 58, but continue to expand with Airbus A319s, following completion of restructuring negotiations with lessors. Parent company Flyi has reached agreements to terminate leases on 24 CRJs, the majority to be returned in the first and second quarters.
Chairman and chief executive Kerry Skeen says the restructuring will reduce expenses associated with Independence's controversial transition from regional feeder to low-cost carrier, with unit costs dropping further as the airline takes delivery of more A319s. Skeen says he sees "light at the end of the transition tunnel".
Flyi says CRJ lease terminations will reduce payments between January 2005 and February 2007 by $81 million. In addition, the company has deferred $70 million in CRJ lease payments, and will restart monthly payments in May next year.
Excluding the savings on CRJ lease payments, Skeen says annual costs have been reduced by $82 million, partly through a 22% reduction in workforce. He predicts the airline's cost per available seat mile will fall from 18¢ to 12¢.
Flyi has also reached agreement to terminate leases on 21 of its 30 BAe Jetstream 41s, which have been retired by Independence, reducing payments between January 2005 and February 2007 by $13.5 million. Additionally, Independence has reached agreement to assign back to Delta Air Lines the leases on all 30 Dornier 328Jets it previously operated.
Skeen says reducing the CRJ fleet from 87 to 58 will benefit load factors. Previously estimated at between 55% and 60%, loads this month will reach "the mid-to-high 60% range, maybe the low 70% range", he says, adding that break-even is in the low 70% range. "We expect to be an efficient carrier by the start of quarter," he says.
KERRY EZARD / WASHINGTON DC
Source: Flight International
