No one ever said independence was easy. It's a fact fledgling airline operator FLYi
Since transforming itself from a provider of regional services for airline giants United Airlines and Delta Air Lines
On Tuesday, FLYi announced that it had sealed more deals that will grant it significantly more breathing room. The company was able to cancel leases on 24 50-seat jets and 21 nonoperating turboprop planes for a savings of $94.5 million. The firm also secured a deferral of $70 million in rent payments for small jets. At the same time, the company will continue to beef up its fleet, but with six much larger planes, specifically the 132-seat Airbus 319.
So, for the moment, FLYi is not in imminent danger of liquidation. The company still has some major challenges, though. First and foremost among these will be filling its planes. In January, the firm's load factor was just 45.7%. Utilizing as much capacity as possible is, of course, one of the keys to profitability in the business. Compare FLYi's figure to JetBlue's
Fortunately, FLYi is making some progress on the cost front. The firm will have cut staff by 22% by May. Marketing and advertising are on the chopping block, and new initiatives are projected to save on fuel. All told, the firm hopes to cut $62 million in annual expenses in addition to what it will save from the lease changes.
In sum, FLYi is not out of the woods. Load factors are still too low, and throttling back on marketing when the firm needs to add passengers may not be the best idea. Still, the shift in its fleet to larger aircraft that can fly longer routes and the company's concern with efficiency are positive signs. In the months ahead, investors should keep a close watch on FLYi's load factor to see whether the air carrier can stay aloft.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.