SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 7, 2005
FLYi, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21976 13-3621051
State or Other Commission File IRS Employer
Jurisdiction of Number Identification No.
Incorporation
45200 Business Court, Dulles, VA 20166
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (703) 650-6000
N/A
(Former Name or Former Address, if Changed Since Last Report)
Item 1.01. Entry into a Material Definitive Agreement
On January 7, 2005, the Company entered into an agreement with GE
Commercial Aviation Services, Inc. and certain of its affiliates
("GECAS") to provide for the early termination of leases on ten
regional jet aircraft during the first quarter of 2005. The
agreement relieves the Company of all future rent obligations
from the date of termination on each of these ten leases and will
not require the Company to pay any early termination fees so long
as the aircraft meet specified physical inspection criteria upon
return.
The Company also entered into a memorandum of understanding
("MOU") with GECAS that, subject to satisfaction of a number of
conditions, provides for GECAS to extend the Company a 5-year
term loan in the amount of $19.5 million secured by CRJ spare
engines and parts, and addresses the restructuring of obligations
with respect to 27 additional regional jets as to which GECAS has
provided financing. Specifically, with respect to these regional
jets, the MOU provides for the early termination of leases for
between six and ten additional regional jet aircraft during the
second quarter of 2005 under terms similar to the first ten
aircraft and, provides that GECAS will consent to the
restructuring of rentals to defer a significant portion of the
payments due through April 30, 2006. The MOU is subject to a
number of conditions, including the approval of the remaining
financing parties in the 27 aircraft to restructure payments
which are due to them, and including the requirement that the
Company reach similar agreements with the lenders and lessors on
other aircraft. The MOU also includes certain financial
milestones which, if not met, will provide GECAS with the ability
to terminate additional CRJ leases.
The Company's flight schedule currently available for sale
includes changes effective February 1 that reflect the removal of
these ten aircraft from its fleet in addition to four aircraft
that were sold in December 2004. As a result of the early lease
terminations, the Company will record a charge to write off
remaining prepaid rents, offset in part by unamortized deferred
purchase credits related to these aircraft. Assuming twenty
aircraft are returned to GECAS, the net amount of the charge,
which would be taken during the first and second quarters of
2005, is estimated at $9.0 million.
The Company views the agreement and MOU with GECAS as an
important step in the Company's efforts to restructure its
obligations with its aircraft lenders and lessors. The Company
is continuing to engage in discussions and negotiations with
those parties. However, there is no assurance that the
conditions in the MOU with GECAS will be satisfied, including the
condition that other aircraft financing parties agree to defer or
restructure the Company's obligations on similar terms, or that
the Company otherwise will be able to address and resolve its
liquidity issues.
This filing on Form 8-K contains forward-looking statements and
is are made as of January 10, 2005, and the Company undertakes no
obligation to update its disclosures, whether as a result of
developments in its efforts, or as a result of any other new
information, future events, changed expectations or otherwise,
prior to its next required filing with the Securities and
Exchange Commission. Such forward-looking statements are subject
to risks, uncertainties, assumptions and other factors that may
cause the actual results of the Company to be materially
different from those reflected in such forward-looking
statements. Such risks and uncertainties include, among others:
the ability of the Company to successfully complete negotiations
with its various lessors and lenders to reduce and/or defer its
aircraft lease and loan payments; the ability of the Company to
effectively implement its low-fare business strategy utilizing
regional jets and Airbus aircraft, and to compete effectively as
a low-fare carrier, including passenger response to the Company's
new service, and the response of competitors with respect to
service levels and fares in markets served by the Company; the
effects of high fuel prices on the Company; the ability to
successfully and timely resolve its obligations with respect to
its aircraft that are not used for Independence Air operations;
and other risk factors are more fully disclosed under
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Company's Form 10-K for the year
ended December 31, 2003, its Quarterly Report Form 10-Q for the
period ended September 30, 2004 and in subsequently filed Forms 8-
K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this current report to be signed
on its behalf by the undersigned hereunto duly authorized.
FLYi, Inc.
Date: January 10, 2005 By: /S/ David W. Asai
David W. Asai
Vice President, Controller
and Chief Accounting Officer