Exhibit 99
Independence Air
For Immediate Release Contact: Rick DeLisi
February 25, 2005 Director, Corporate Communications
Page 1 of 8 (703) 650-6019
FLYi, Inc. Reports Preliminary Fourth Quarter and Year-End
2004
Financial and Operating Results
Dulles, VA, (February 25, 2005) - FLYi, Inc. (Nasdaq/NM:
FLYI), parent of low-fare airline Independence Air, today
reported a preliminary annual net loss of $192.2 million for
2004 (($4.24) per diluted share) compared to 2003 net income
of $82.8 million ($1.82 per diluted share) in accordance
with Generally Accepted Accounting Principles (GAAP). In
accordance with GAAP, the revenues and expenses directly
attributable to the Delta Connection operation have been
removed from operating income and reclassified as
discontinued operations on the Statement of Operations. The
company is in the process of analyzing the recoverability of
its long-lived assets as required by FASB 144 including the
impact of the recently completed restructuring of its
aircraft financing. Such analysis may result in the
recordation of a non-cash impairment charge which would
further increase the net loss for 2004 when the company
files its annual report on form 10K.
The company's GAAP net income for 2004 and 2003 also
included the following:
In 2004:
J-41 turboprop early retirement charges recorded to
reflect the removal from service of the remaining J-41s
concurrent with the cessation of flying for United
Maintenance expense credits resulting from the
termination of the company's previous CRJ engine power by
the hour agreement
Losses on the sale of four CRJ aircraft sold to improve
liquidity
The write-off of goodwill remaining from the original
formation of the company
Costs incurred in 2004 by the company related to the
recently completed restructuring of its aircraft financing
In 2003:
Credits from the reversal of the J-41 turboprop early
retirement charges recorded in prior years net of early
retirement charges for aircraft removed from service in the
fourth quarter of 2003
Costs related to the company's defense of a hostile
takeover bid
A reduction in a reserve taken in 2001 to correct
deficiencies of the company's 401(k) plan
Government compensation relating to the events of
September 11, 2001
Excluding these charges and credits and the discontinued
Delta Connection operation, the company would have reported
a net loss of $158.7 million (($3.50) per diluted share)
compared to net income of $54.3 million ($1.19 per diluted
share) for 2003. A reconciliation of results as reported in
accordance with GAAP to Non-GAAP financial results for 2004
and 2003 is included in the Pro-Forma Financial Results
table at the end of this press release.
FLYi 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 2 of 8
For the fourth quarter 2004, the company reported a
preliminary net loss of $86.0 million (($1.90) per diluted
share) compared to net income of $13.7 million (30 cents per
diluted share) in 2003. The results for the fourth quarters
of 2004 and 2003 include the following charges and credits
not related to normal operations:
In 2004:
Losses on the sale of four CRJ aircraft sold to improve
liquidity
The write-off of goodwill remaining from the original
formation of the company.
Costs related to the company's restructuring of its
aircraft financing
In 2003:
A reduction of the estimated effective tax rate for
2003 from 41% to 38.8%
Early retirement costs related to three J-41 turboprops
Costs related to the company's defense of a hostile
takeover bid
A reduction in a reserve taken in 2001 to correct
deficiencies of the company's 401(k) plan
Excluding these charges and credits and the discontinued
Delta Connection operation, the net loss would have been
$66.0 million (($1.45) per diluted share) compared to net
income of $15.8 million (35 cents per diluted share) for the
fourth quarter of 2003. A reconciliation of results as
reported in accordance with GAAP to Non-GAAP financial
results for both 2004 and 2003 is included at the end of
this press release in the table entitled "Pro-Forma
Financial Results".
Independence Air currently offers service to a total of 40
destinations. Flights to Las Vegas begin on March 1st, and
service to five West Coast destinations will start in April
and May (4/14: San Diego, 5/1: San Francisco, Los Angeles,
Seattle and San Jose). The Independence Air hub at
Washington Dulles is the largest low-fare hub in America in
terms of total departures. For more information about FLYi,
Inc. and Independence Air, please visit our website at
FLYi.com.
###
FLYi 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 3 of 8
This press release contains forward-looking statements and
is made as of February 25, 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 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 ability to
expand the company's customer base through third party
distribution services; the ability to successfully and
timely complete the acquisition of its Airbus aircraft, and
to successfully integrate these aircraft into its fleet; the
effects of high fuel prices on the company; the ongoing
deterioration in the industry's revenue environment; and
general economic and industry conditions; and other risk
factors that 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.
FLYi 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 4 of 8
Condensed Consolidated Financial Results
(in thousands, except per share amounts)
Year Ended December 31,
2004 2003 Pct.
Unaudited Audited Change
Operating revenues:
Passenger revenue $491,685 $713,724 (31.1%)
Other revenue 8,404 16,752 (49.8%)
Total operating revenues 500,089 730,476 (31.5%)
Operating expenses:
Salaries and related costs 185,225 180,848 2.4%
Aircraft fuel 139,858 114,117 22.6%
Aircraft maintenance
and materials 60,746 66,937 (9.2%)
Aircraft rentals 100,318 105,529 (4.9%)
Traffic commissions and
related fees 46,540 24,751 88.0%
Facility rents and
landing fees 50,355 45,130 11.6%
Depreciation and
amortization 32,937 24,605 33.9%
Other 86,089 84,784 1.5%
Aircraft early
retirement charge 48,512 (27,654) nmf
Total operating expenses 750,580 619,047 21.2%
Operating income (loss) (250,491) 111,429 nmf
Non-operating income
(expense) (26,932) (4,173) nmf
Government compensation - 1,520 nmf
compensation
Income (loss)from
continuing operations
before taxes (277,423) 108,776 nmf
Income tax provision
(benefit) (74,025) 42,185 nmf
Income from continuing
operations (203,398) 66,591 nmf
Discontinued operations
net of income taxes:
Earnings from Delta
Connection operation 11,225 16,207 (30.7%)
Net income (loss) $(192,173) $82,798 nmf
Net income (loss) per common and common
equivalent shares:
Basic $(4.24) $1.83
Diluted $(4.24) $1.82
Weighted average number of common
And common equivalent shares:
Basic 45,337 45,285
Diluted 45,337 45,398
Operating Statistics-Year Ended December 31,
2004 2003 Pct.
Change
Revenue passenger 2,274,048 2,871,266 (20.8%)
miles (000's)
Available seat 3,745,902 3,947,836 (5.1%)
miles (000's)
Load Factor 60.7% 72.7% (12.0pts.)
Passengers 5,619,482 6,642,578 (15.4%)
Revenue departures 196,197 209,076 (6.2%)
Revenue block hours 296,005 323,640 (8.5%)
Yield per RPM (cents) 21.6 24.9 (13.3%)
Passenger revenue per ASM 13.1 18.1 (27.6%)
(cents)
Operating cost per ASM 20.0 15.7 27.4%
(cents)
Operating cost per ASM
excluding aircraft early 18.7 16.4 14.0%
retirement charge (cents)
Operating cost per ASM
excluding fuel and 15.0 13.5 11.1%
aircraft early retirement
charge (cents)
Operating margin (50.1%) 15.3% (65.4pts.)
Operating margin excluding
aircraft early (40.1%) 11.5% (51.6pts.)
retirement charge
Average passenger trip 405 432 (6.3%)
length (miles)
Flyi, Inc. 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 5 of 8
Condensed Consolidated Financial Results
(in thousands, except per share amounts)
Unaudited
Fourth Quarter Ended
December 31,
2004 2003 Pct.
Change
Operating revenues:
Passenger revenue $91,063 $183,615 (50.4%)
Other revenue 3,069 3,979 (22.9%)
Total operating revenues 94,132 187,594 (49.8%)
Operating expenses:
Salaries and related costs 46,782 43,128 8.5%
Aircraft fuel 44,803 29,730 50.7%
Aircraft maintenance 16,439 17,670 (7.0%)
and materials
Aircraft rentals 25,200 26,427 (4.6%)
Sales and marketing 7,823 6,044 29.4%
Facility rents and 14,474 11,807 22.6%
landing fees
Depreciation and 8,194 6,563 24.9%
amortization
Other 21,880 26,680 (18.0%)
Aircraft early - 6,932 nmf
retirement charge
Total operating expenses 185,595 174,981 6.1%
Operating income (loss) (91,463) 12,613 nmf
Non-operating income (19,323) (1,276) nmf
(expense)
Income (loss)from (110,786) 11,337 nmf
continuing operations
before income taxes
Income tax provision (31,314) 2,780 nmf
(benefit)
Income (loss) from (79,472) 8,557 nmf
continuing operations
Discontinued operations
net of income taxes:
Earnings (loss) from (6,575) 5,179 nmf
Delta Connection
operation
Net income (loss) $(86,047) $13,736 nmf
Net income (loss) per common and common
equivalent shares:
Basic $(1.90) $0.30
Diluted $(1.90) $0.30
Weighted average number of common
and common equivalent shares
Basic 45,340 45,333
Diluted 45,340 45,648
Operating Statistics-Fourth Quarter
2004 2003 Pct.
Change
Revenue passenger 554,117 728,517 (23.9%)
miles (000's)
Available seat 1,042,548 1,037,791 0.5%
miles (000's)
Load Factor 53.2% 70.2% (17.0pts.)
Passengers 1,454,708 1,644,658 (11.5%)
Revenue departures 53,606 52,533 2.0%
Revenue block hours 77,621 82,358 (5.8%)
Yield per RPM (cents) 16.4 25.2 (34.9%)
Passenger revenue per ASM 8.7 17.7 (50.8%)
(cents)
Operating cost per ASM 17.8 16.9 5.3%
(cents)
Operating cost per ASM
excluding aircraft early 17.8 16.2 9.9%
retirement charge (cents)
Operating cost per ASM
excluding fuel and 13.5 13.3 1.5%
aircraft early retirement
charge (cents)
Operating margin (97.2%) 6.7% (103.9pts.)
Operating margin excluding
aircraft early (97.2%) 10.4% (107.6pts.)
retirement charge
Average passenger trip 381 443 (14.0%)
length (miles)
FLYi, Inc. 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 6 of 8
Selected Balance Sheet Data
(in thousands)
December 31, December 31,
2004 2003 Pct.
Unaudited Audited Change
Cash, cash equivalents and
short term investments $169,203 $297,934 (43.2%)
Restricted cash 39,642 14,829 167.3%
Aircraft deposits 72,434 46,990 54.1%
Stockholders' equity 167,135 359,414 (53.5%)
FLYi, Inc. 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 7 of 8
Pro-Forma Financial Results
(in thousands, except per share amounts)
Unaudited
Year Ended Loss Net Loss Discontinued Net Diluted
December 31, 2004 From From Operations Loss EPS
Continuing Continuing Net
Operations Operations of
Before Tax Tax
Income (loss) as
reported in accordance $(277,423) $(203,398) $11,225 $(192,173) $(4.24)
with GAAP
Discontinued Delta (11,225) (11,225) (0.25)
Connection operation
J-41 aircraft early 48,512 35,568 35,568 0.78
retirement charge
Reversal of prior (9,600) (7,038) (7,038) (0.16)
accrual for maintenance
and interest
Loss on sale of four 17,062 12,509 12,509 0.28
CRJs
Write-off of Goodwill 1,560 1,144 1,144 0.03
Costs related to 3,484 2,554 2,554 0.06
restructuring of
aircraft financing
Pro-forma YTD December
31, 2004 results $(216,405) $(158,661) $-0- $(158,661) $(3.50)
Year Ended December 31, Income Net Discontinued Net Diluted
2003 From Income Operations Income EPS
Continuing From Net of Tax
Operations Continuing
Before Tax Operations
Tax
Income as reported in
accordance with GAAP $108,776 $66,591 $16,207 $82,798 $1.82
Discontinued Delta (16,207) (16,207) (0.36)
Connection operation
Reversal of the J-41 (27,654) (16,930) (16,930) (0.37)
retirement charge (net)
Impairment charge from 739 452 452 0.01
the retirement of one
owned J-41
Costs incurred related 9,591 5,872 5,872 0.13
to defense of hostile
takeover bid
Reduction in reserve (1,200) (735) (735) (0.02)
for correction of 401K
plan
Government compensation (1,520) (931) (931) (0.02)
Pro-forma YTD December
31, 2003 results $88,732 $54,319 $ -0- $54,319 $1.19
Fourth Quarter Ended Loss Net Loss Discontinued Net Diluted
December 31, 2004 From From Operations Loss EPS
Continuing Continuing Net of Tax
Operations Operations
Before
Tax
Income as reported in
accordance with GAAP $(110,786) $(79,472) $(6,575) $(86,047) $(1.90)
Discontinued Delta 6,575 6,575 0.15
Connection operation
Loss on sale of four 17,062 12,239 12,239 0.27
CRJs
Write-off of Goodwill 1,560 1,119 1,119 0.02
Costs related to 3,484 2,499 2,499 0.06
restructuring of
aircraft
Rate settlement with (3,308) (2,373) (2,373) (0.05)
United
Pro-forma fourth
quarter 2004 results $(91,988) $(65,988) $ -0- $(65,988) $(1.45)
Fourth Quarter Ended Income Net Discontinued Net Diluted
December 31, 2003 From Income Operations Income EPS
Continuing From Net of Tax
Operations Continuing
Before Operations
Tax
Income as reported in
accordance with GAAP $11,337 $8,557 $5,179 $13,736 $0.30
Discontinued Delta (5,179) (5,179) (0.11)
Connection operation
Tax rate adjustment - (2,596) (2,596) (0.05)
related to 1st through
3rd quarters
Early retirement 6,932 4,244 4,244 0.09
charges for two leased
J-41s
Impairment charge from 739 452 452 0.01
the retirement of one
owned J-41
Costs incurred related 9,591 5,872 5,872 0.13
to defense of hostile
takeover bid
Reduction in reserve (1,200) (735) (735) (0.02)
for correction of 401K
Plan
Pro-forma fourth
quarter 2003 results $27,399 $15,794 $ -0- $15,794 $0.35
FLYi, Inc. 4th Quarter and Y-E 2004 Financial and Operating
Results
Page 8 of 8
Notes to Pro-Forma Financial Results:
The company's Pro-Forma Financial Results present non-GAAP
financial measures that the company uses for internal
managerial purposes, when publicly providing guidance on
possible future results, and as a means to evaluate period-
to-period comparisons. These non-GAAP financial measures are
used in addition to and in conjunction with results
presented in accordance with GAAP, and should not be relied
upon to the exclusion of GAAP financial measures. These non-
GAAP financial measures reflect an additional way of viewing
aspects of our operations that, when viewed with our GAAP
results and the accompanying reconciliations to
corresponding GAAP financial measures, provide a more
complete understanding of factors and trends affecting our
business. Management strongly encourages investors to review
the company's financial statements and publicly-filed
reports in their entirety and to not rely on any single
financial measure.
With respect to the specific matters addressed in the Non-
GAAP financial results, the company has excluded the effects
of discontinued operations to assist with comparisons of on-
going results and has adjusted the following items for the
reasons addressed below:
For 2004:
Charges and reversal of charges related to the early
retirement of the J-41 turboprop fleet have been excluded as
they are not indicative of ongoing operating costs
Costs related to the restructuring of the company's
aircraft lease and debt financing are considered out of the
ordinary and are excluded
The loss on the sale of four CRJs sold to improve
liquidity has been excluded as they are not indicative of
ongoing operations
The write-off of remaining goodwill resulting from the
original formation of the company has been excluded as it is
considered an out of the ordinary charge
For 2003:
Charges and reversal of charges related to the early
retirement of the J-41 turboprop fleet have been excluded as
they are not indicative of ongoing operating costs
Costs related to the company's defense of a hostile
takeover bid are considered out of the ordinary expenses and
are excluded
All compensation received from the U.S. government
related to the events of September 11th has been excluded as
the company does not anticipate receiving any further
amounts
Reversals of prior period accruals resulting from
changes and estimates which distort period-to-period
comparisons have been excluded
The fourth quarter 2003 pro forma results are adjusted
to reflect the estimated effective tax rate for the full
year