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Discount airline Independence Air crashed to earth Monday, announcing it would cease operations later in the week after failing to attract a buyer. The Dulles, Va.-based airline and its parent, FlyI Inc., had filed for Chapter 11 protection in November and initiated a court-assisted search for a merger partner or investor. Industry sources said that numerous airlines and other parties viewed FlyI’s financial statements, but most were more interested in bidding on assets than acquiring the entire company. Independence was formed in 2003 when regional jet operator Atlantic Coast Airlines Inc. abandoned its contracts to operate jets for larger carriers in favor of launching its own independent brand. But the company struggled out of the gate, a victim of high oil prices, competitive pressure and the inefficiencies of using smaller regional jets in a discount operation. Many in the airline industry had predicted in recent weeks that FlyI could not attract a buyer. Company CEO Kerry Skeen confirmed that in a statement released Monday. “To date there has not been a firm offer put forward that meets the financial criteria necessary to continue operations as is,” Skeen said. “Therefore we are voluntarily discontinuing scheduled service as of Thursday evening.” The closure will cost about 2,700 employees their jobs, with about 180 remaining past Thursday to help the airline complete an orderly shutdown. The airline said that it would seek court permission to refund the cost of tickets for travel after Thursday. While the announcement marks the end of Independence, it figures to spark what could be a spirited scramble by rivals for the airline’s most desirable assets. Among the assets that could attract multiple bidders are FlyI’s fleet of 12 relatively new Airbus aircraft, and its operations at Washington’s Dulles International Airport. Among the parties rumored to be interested in the assets are Mesa Air Group Inc., the Phoenix-based operator of small jets that made an unsolicited bid to acquire FlyI’s predecessor company in 2003, and UAL Corp.’s United Airlines Inc. Elk Grove Township, Ill.-based United, the one-time partner of Atlantic Coast Airlines, is now the largest airline operating out of Dulles. AirTran Airways Inc. of Orlando, Fla., and JetBlue Airways Corp. of New York are among the carriers believed to be interested in expanding their operations at Dulles as a result of Independence’s withdrawal. Virgin America, the startup discounter backed by Richard Branson, could also look to Dulles when it initiates service as soon as mid-2006. Independence’s shutdown should also provide some relief to other airlines operating extensively on the East Coast. Rivals, including AirTran and US Airways Group Inc., have complained in the past that Independence’s rock-bottom fares depressed the profitability of flying throughout the East. “This is a sad day for Independence employees, but a great day for the industry,” one executive at a rival airline said Monday. “We are removing an irrational competitor from the marketplace.” Copyright �2006 TDD, LLC. All rights reserved.

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