Independence Air parent

FLYi

(FLYI)

continued its tailspin Thursday, reporting a large first-quarter loss and a perilous cash position.

The company, which last year transformed from regional carrier to a hip discount airline, said it lost $105 million, or $2.28 a share. A year earlier, it posted a profit of $3.6 million, or 8 cents a share.

Excluding aircraft retirement and restructuring charges, FLYi reported an adjusted loss of $87 million, or $1.88 a share, much wider than the average Wall Street estimate for a loss of $1.33 a share.

FLYi continued to bleed money and reported a cash position of $106.9 million at the end of the first quarter, down from $169.2 million at the end of December. The results are preliminary, as FLYi is wrapping up its accounting for an extensive debt restructuring conducted during the quarter.

Shares fell 9 cents to 83 cents.

Things may only get worse, though. In its earnings release, FLYi said an analysis of its accounting for the restructuring "may result in changes which could further increase the net loss and reduce shareholder equity for first quarter 2005 when the company files its first-quarter report on form 10-Q."

First-quarter revenue plummeted 50.5% to $86.3 million from $174.3 million a year before.

FLYi used to make regional flights under contracts with big network airlines. But when United Airlines' bankrupt parent

UAL

(UALAQ)

tried to negotiate a new contract with less favorable terms, FLYi decided to go it alone as low-fare carrier Independence Air. Its maiden flight last June couldn't have been more poorly timed, however, as high fuel prices and fierce price competition have battered the industry.

Despite the bleak financial situation, FLYi reported some operating progress. The percentage of seats filled on its planes, or load factor, rose steadily throughout the quarter. In March, the load factor was 70.7% vs. 45.7% in January.