DULLES, Va. (AP) -- Independence Air parent Flyi Inc. announced first-quarter losses Thursday of $105 million, evidence that the former regional airline is still struggling to transform itself into a low-fare carrier.
Analysts believe the company may eventually be forced to file for bankruptcy.
Still, Flyi's chief executive said Independence Air is making strides in its conversion from a regional carrier for UAL Corp.'s United Airlines and Delta Air Lines Inc., and said the now independent carrier could turn a profit by the second quarter of 2006.
The net loss of $105 million, or $2.28 per share, compares to a profit of $3.6 million, or 8 cents per share, in the year-ago quarter, when the company was named Atlantic Coast Airlines and used its fleet of regional jets as a contract carrier.
The company reported first-quarter revenue of $91 million, a 49 percent drop from the year-ago quarterly revenue of $177 million.
Excluding one-time charges, the losses would have been $87 million, or $1.88 per share. Analysts surveyed by Thomson Financial had predicted losses of $1.33 a share.
Shares dropped 9 cents to 83 cents Thursday on the Nasdaq Stock Market. Shares have traded in a range 59 cents to $6.90 over the last year.
''The stock currently trades at what we believe are close to bankruptcy levels,'' airline analyst Ray Neidl of Calyon Securities said.
''Even though we continue to have grave doubts as to the viability of the new business model, we believe that management, through its recent restructuring, has bought a couple of quarters to continue trying,'' Neidl added in a report issued after the company announced its quarterly results.
Flyi changed its business model last year after bankrupt United sought to rework its contract with the carrier on terms much less favorable to Flyi.
The company instead embarked on a risky strategy, seeking to use its fleet of small regional jets as the backbone of a new, low-fare carrier with a hub at Washington's Dulles International Airport.
The company initially struggled, with its planes half empty despite one-way fares in some markets as low as $29.
In recent months, the company's bookings have improved as it has added a small fleet of Airbus jets to complement its regional jets, offering flights to Las Vegas and the West Coast. In March, the company reached a 70 percent load factor for the first time. The load factor dropped slightly in April, to 69 percent. Chief executive Kerry Skeen predicted that May's load factor will exceed March and April.
While Skeen acknowledged the company performed poorly in the first quarter, he said the numbers were largely what the company expected back in February, when it announced a restructuring that provided financing and allowed the airline to shrink its fleet of regional jets.
The company has warned previously that bankruptcy is a possibility, but Skeen said Thursday, ''We feel we have liquidity needed to reach profitability'' and that the February restructuring gave it needed breathing room.
The company expects to cut costs significantly between now and July, as it retires excess aircraft and cuts its work force. Skeen said the employee base of 4,700 as of July 2004 will be down to about 3,700 this July.
The company also expects to add to its fleet of 10 Airbus jets, which would allow more of the West Coast flying the airline says is crucial to a successful business model. It expects two more jets by the end of June plus six more in early 2006.
Meanwhile it is trimming its fleet of 87 regional jets down to 68.
Skeen said in a phone interview Thursday that the projections for a profit on the first half of 2006 are based on realistic assumptions, including relatively high oil costs of $47 a barrel.
On the revenue side, the projections call on Flyi to continue the progress it has made in filling its planes and capitalizing on the recent West Coast additions to its network, he said.
''We need to continue to grow the brand,'' Skeen said. ''We need to continue the trend line we're on now.''
