Source: Company Press Release
 
Dulles, VA – FLYi, Inc., parent of low-fare airline Independence Air, today announced that FLYi, Inc. and its subsidiaries (the “company”) including Independence Air, have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to restructure the company’s aircraft leases and other obligations to achieve necessary cost savings. 
 
The company also announced it will request court approval to engage in a formal court-supervised auction process to seek outside investor(s) or purchaser(s) it needs to continue its operations.  If the process is successful, it is expected to be concluded within the next sixty days. Those who have expressed interest during previous discussions, as well as new parties, will be invited to present their bids.  Bidders will be permitted to demonstrate their interest in investing in the company, or to bid on all or portions of the company’s assets.  The company currently anticipates that it has the financial resources to fund its obligations—including the payment of employee wages and benefits—during the process.
 
As it undertakes the auction process, Independence Air plans to continue serving customers, and to continue its flight schedules in the ordinary course of business.  The company plans to honor reservations and tickets on Independence Air and to allow its 1,000,000+ iCLUBSM members to continue to accrue and redeem points on the airline with no restrictions. The company has no plans to make any additional changes to its operating schedule or route map of destinations at this time. Independence Air now offers approximately 220 daily departures to 36 destinations.
 
“After careful consideration, we have concluded that a court-supervised restructuring will allow us to complete our cost-savings initiatives while seeking outside investors or purchasers, and represents the best solution for Independence Air, our customers, employees, creditors and the communities we serve,” said Kerry Skeen, Chairman and CEO of FLYi, Inc.
 
He added, “Since the launch of Independence Air almost 18 months ago, our employees have helped us achieve a remarkable degree of customer service success and brand recognition while operating in what has been described as the most challenging economic environment in airline industry history, including record high fuel prices and extreme revenue weakness. These circumstances have prevented us—and virtually all U.S. airlines—from meeting financial goals. We have already reduced operating costs by undertaking a comprehensive operational restructuring.  We will continue that effort and move quickly to use the tools of the Chapter 11 process to implement other changes that will allow us to achieve an even more competitive cost structure to make us more attractive to potential investors or purchasers.”
 
As part of this cost-cutting effort, the company has announced it is undertaking a process aimed at company-wide wage reductions.  Taking a leadership role, CEO Kerry Skeen has agreed to an immediate 25% salary reduction on top of a 15% cut earlier this year.  President and Chief Operating Officer Tom Moore will take a 20% cut, on top of an earlier 10% reduction.  Management and other salaried employees will be subject to an immediate 5% pay reduction. The company has been engaging the leaders of its unionized work groups—pilots, flight attendants and mechanics—in an effort to enact changes to wage rates and work rules. It is anticipated that an announcement on a tentative agreement with both the flight attendants (AFA) and mechanics (AMFA) will be released shortly.
 
Mr. Skeen concluded, “We want to once again offer our sincere thanks to the seven million passengers who have flown with us so far. Since we launched last summer, we have built a brand that truly stands for something—a very different style of service—and our customers have been more than generous in their praise of our people.  As we work behind the scenes to address the company’s financial situation, we thank you for your continued support of Independence Air at Washington Dulles and in all the communities we serve. ” 
 
In conjunction with today’s filing, Independence Air filed a variety of “first day motions” to help ensure a smooth transition into the Chapter 11 reorganization case. During the auction process, vendors, suppliers and other business partners will be paid under normal terms for goods and services provided during the reorganization. 
 
The company filed its petitions in the U.S. Bankruptcy Court for the District of Delaware. The company's petitions listed assets of approximately $378.5 million and liabilities of approximately $455.4 million as of September 30, 2005.  Unrestricted cash as of the day of filing is $24.0 million.
 
Miller Buckfire and Co., LLC and ENA Advisors have been retained as the company’s financial advisors and Jones Day has been retained as restructuring counsel.  Gibson Dunn & Crutcher LLP serves as the company’s corporate counsel.
 
All FLYi, Inc. shareholders are advised that the likely outcome of the company’s Chapter 11 case is the cancellation of the company’s existing common stock without consideration, in which case FLYi stock would have no value. FLYi stock is highly speculative and the company urges investors to use extreme caution in decisions about the stock.
 
Independence Air began low-fare service from its hub at Washington Dulles International Airport on June 16, 2004, and has served over seven million passengers to date. The company first began commercial air service on December 15, 1989, and operated previously as Atlantic Coast Airlines.