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Independence Air

 
Gale Directory of Company Histories:

Atlantic Coast Airlines Holdings, Inc.

Type: Public Company
Address: 45200 Business Court, Dulles, Virginia 20166, U.S.A.
Telephone: (703) 650-6000
Fax: (703) 650-6299
Web: http://www.atlanticcoast.com
Employees: 3,992
Sales: $760.52 million (2002)
Stock Exchanges: NASDAQ
Ticker Symbol: ACAI
Incorporated: 1991 as Atlantic Coast Airlines, Inc.
NAIC: 481111 Scheduled Passenger Air Transportation; 488190 Other Support Activities for Air Transportation

Atlantic Coast Airlines Holdings, Inc. (ACAI) is the parent company for the regional airline that shares its name. Atlantic Coast Airlines (ACA) operates feeder routes for major airlines. Much of its growth has come from its role as the United Express affiliate operating from Chicago's O'Hare Airport and Dulles Airport in Washington, D.C. ACA also flies as under the Delta Connection banner from La Guardia in New York and Logan in Boston.

The story of Atlantic Coast Airlines begins with WestAir Commuter Airlines Inc., the United Airlines Inc. regional partner operating in California and the Pacific Northwest in the late 1980s. According to the Washington Times, Fresno-based WestAir was the country's largest regional airline holding company.

In December 1989, United asked WestAir to hastily put together a new operation on the other side of the country to replace a partner that suddenly went out of business, four-year-old Presidential Airways. The new WestAir unit would be using the United Express name, which had been sullied in the East by the flight cancellations and other disruptions that attended Presidential's bankruptcy.

The Atlantic Coast division's first day of operations was December 15, 1989, just 11 days after the call from United. Company lore recalls tales of the mostly Californian staffers stepping into one of the D.C. area's coldest winters. After a couple of weeks at a Holiday Inn, a two-room office was set up in Sterling, Virginia. The company had 50 employees at the time.

The division started with six Brasilian-made turboprop aircraft on six routes. By the end of 1990, it was carrying 480 passengers a day; the fleet of 23 aircraft connected 23 cities.

High tech companies in the Dulles corridor provided a lot of demand for ACA flights linking smaller communities, notes the Washington Post. One important early route was to Jacksonville, Florida, where AOL maintained a training center. Columbus, Ohio, became an important destination after AOL acquired CompuServe Inc. Raleigh, in the heart of North Carolina's Research Triangle, was another important destination for techies.

In 1991, WestAir Holdings Inc. faced its own set of financial troubles and in October sold off the fledgling Atlantic Coast division to a group of investors lead by C. Edward Acker, a veteran of Pan Am World Airways Inc., Branniff, and Air Florida. Acker's group paid $22.7 million for ACA. Kerry B. Skeen, a senior vice-president at WestAir, was named president in 1992 and became CEO three years later. A native of Georgia, Skeen had started his aviation career with a seven-month stint as a janitor for Delta Air Lines Inc.

ACA went public on the NASDAQ exchange in 1993. While United Airlines lost nearly a billion dollars in 1992, ACA, like most regionals, had not been affected to the same degree as the majors by the post-Gulf War recession. Ever expanding, ACA began originating flights at Newark and Orlando (following United's expansion into Florida) as well as Dulles, where it had more daily departures than any other airline, including the majors.

Employment at ACA doubled in 1993 alone, as ACA took over many north-south flights that United abandoned that February. United also sold ACA the Dulles-based operations of its Air Wisconsin subsidiary, another feeder line that it had acquired one year earlier. There were also discussions between United and its unions over the possibility of United buying ACA.

The next year was a particularly difficult one for the carrier. On January 7, one of its planes crashed in Ohio, killing five people. A particularly nasty winter caused ACA to cancel 18 percent of its flights in the first seven weeks of 1994. The company spent the next few months coping with the effect of the winter on revenues and the strain of growing so quickly the previous year. It made some layoffs and simplified its fleet by returning its 12 Embraer Brasilia turboprops to Mesa Airlines in exchange for a dozen British Aerospace (BAe) Jetstream 31 aircraft. BAe also provided a $20 million capital infusion. The new hubs at Orlando and Newark, where ACA faced a fare war with the short-lived Continental Lite, were all but abandoned. Nevertheless, ACA posted a $25 million loss for the year, though a turnaround was well in evidence by mid-1995.

By 1996, ACA was operating 52 planes. The airline's first jets began to arrive in 1997, soon after ACA placed an order for a dozen of Bombardier's Canadair Regional Jet (CRJ). United lagged behind its competitors in having its regional partners switch to regional jets. ACA's first CRJ arrived before United and its pilots' union had formally approved it for the United Express program, and so was delivered in ACA's own blue and white livery.

The new jets powered rapid expansion. ACA had 2,000 employees in 1998; staff had quadrupled in just six years. The company celebrated the opening of its new $10 million maintenance hangar at Washington-Dulles (IAD), the hub of its route network. A regional concourse opened at IAD the next year. ACA had established a second regional jet hub at United's own home base of Chicago O'Hare (ORD), where an entire concourse was eventually dedicated just to ACA's United Express operations. Another major construction project was the company's new headquarters in Dulles, Virginia. ACA earned $30.4 million on revenue of $289.9 million in 1998.

Yet another exciting development was announced in October 1999: the beginning of ACA's partnership with Delta. ACA Delta Connection was launched using small Fairchild-Dornier 328JET aircraft rather than the Canadair jets.

Skeen succeeded Ed Ackers as chairman upon his retirement in 2000 as Tom Moore became president. The Delta operations were known as Atlantic Coast Jet during their first year. The first flights originated at New York LaGuardia before routes from Boston and Cincinnati were added.

There was still more expansion on the United Express side. In November 2000, ACA announced it was tripling these operations and confirmed a conditional order for 27 Canadair regional jets worth $594 million. Just a couple of months later, ACA ordered 145 Fairchild Dornier 328JETs for its Delta Connection operations, a commitment worth $1.75 billion. However, ACA cancelled this order in February 2002 after Fairchild went insolvent and gave Bombardier another $870 million worth of business.

In March 2001, United offered to sell ACA Allegheny, Piedmont, and PSA as part of its acquisition of US Airways. The US Airways buy was scuttled by antitrust regulators, but ACA still reached an arrangement to operate these regionals.

A new ten-year contract signed with United in 2001 gave ACA a fixed fee for every United Express flight it operated, rather than ACA having to share revenue with United. As a result, ACA was much less affected by the effects of 9/11 than was United. ACA's net income was $34 million for 2001, and the company was expanding even as United scaled back its own operations by a fifth.

United Airlines accounted for 85 percent of ACA's revenues; UAL's bankruptcy had the potential to greatly affect ACA's fortunes. ACA and Air Wisconsin, both of which had many new planes on order, asked the bankruptcy court to force United to decide on renewing their contracts by February 28, 2003, but this request was denied. UAL's recovery depended on regional jets, and ACA's financial health was dependent on UAL staying in business. ACA could lose a great deal of business were UAL's planes to be grounded by a strike or financial reasons.

ACA's 100th regional jet was delivered in 2002 as the carrier grew to a total fleet of 130 planes. Employment had more than doubled, to 4,800, in four years, as ACA carried 22,000 people a day on 600 daily flights to 68 destinations. The company expected to have an all-jet fleet of 154 aircraft by 2004.

ACA posted a profit of $34.3 million on revenues of $583 million in 2001. These figures rose to $39.3 million and $760.5 million in 2002. Although ACA weathered the post-9/11 industry turmoil well, concern over the war in Iraq in early 2003 caused Wall Street to abandon ACAI along with all the other airline stocks, observed the Washington Post. Concern over UAL's future was another factor.

Principal Operating Units

ACA/Delta Connection; ACA/United Express.

Principal Competitors

AirTran Holdings, Inc.; American Eagle; Comair, Inc.; US Airways Group, Inc.

Further Reading

"Atlantic Coast Airlines," Investors Chronicle, May 3, 2002.

Bary, Andrew, "Signs of Turbulence," Barron's, April 8, 2002, p. 17.

Behr, Peter, "Atlantic Coast Airlines to Fly Jets from Dulles," Washington Post, November 19, 1997, p. C10.

------, "Atlantic Coast to Build Facility at Dulles," Washington Post, April 18, 1997, p. G1.

Craver, Richard, "US Airways-United Merger May Bring Winston-Salem, N.C.-Based Airline New Owner," High Point Enterprise (North Carolina), March 5, 2001.

De Lollis, Barbara, "United Partner Atlantic Coast Soars," USA Today, February 18, 2002, p. B5.

Field, David, "Atlantic Coast Airlines Takes Over Flights Shed by United at Dulles," Washington Times, October 21, 1992, p. C3.

------, "'Feeders' Continue to Expand at Dulles," Washington Times, January 11, 1993, p. B4.

------, "Troubled Atlantic Coast Sees Savings in Smaller Planes," Washington Times, July 19, 1994, p. B7.

Hassler, David, "Bombardier Jet Buyer May Stall on Deliveries: Atlantic Coast Says Partner United's Woes Must Be Solved," National Post (Toronto), March 4, 2003, p. FP8.

Hinden, Stan, "Regional Airline Ready to Land Its Stock," Washington Post, July 12, 1993, p. F29.

Knight, Jerry, "Small Airline Has Chance to Soar Again," Washington Post, February 10, 2003, p. E1.

Levere, Jane L., "Delta and US Airways Will Soon Face Competition in the New York-Washington Air Shuttle Market," New York Times, July 16, 1997, p. D5.

Merrion, Paul, "Small Jet Firms Go on Rough UAL Ride," Crain's Chicago Business, February 17, 2003, p. 3.

Phillips, Don, "Airline Plans Second Hub at O'Hare," Washington Post, December 18, 1997, p. E1.

Sauder, Rick, "Airline to Expand Commuter Service," Richmond Times-Dispatch, March 31, 1993, Bus. Sec.

Silcoff, Sean, "Bombardier Wins $870M Order: Closer Look at Fairchild," National Post (Toronto), June 5, 2002, p. FP4.

------, "U.S. Airline to Get EDC Cash to Buy Bombardier Planes," National Post (Toronto), October 24, 2002, p. FP5.

Stoughton, Stephanie, "Dulles Carrier Taking Off, But Not on Ego Trip," Washington Post, January 1, 1998, p. V5.

Swoboda, Frank, "Atlantic Coast May Use Own Name on Jets," Washington Post, June 4, 1997, p. C13.

Swoboda, Frank, and Sarah Schafer, "From Dulles: A New High-Tech Link," Washington Post, November 1, 1999.

Tomesco, Frédéric, "Bombardier Bags Order for 27 Jets: Atlantic Move Follows Its Deal with UAL," Gazette (Montreal), November 30, 2000, p. E3.

Weintraub, Richard M., "Atlantic Coast Airlines Strains Under the Weather," Washington Post, February 22, 1994, p. E1.

------, "Local Airline Reports Wider Quarterly Loss," Washington Post, April 27, 1994, p. F2.

------, "Va. Airline Takes Steps to Cut Costs," Washington Post, July 19, 1994, p. C1.

— Frederick C. Ingram


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Independence Air

Top
Independence Air
IATA
DH
ICAO
IDE
Callsign
INDEPENDENCE
Founded 1989 (as Atlantic Coast Airlines)
Ceased operations January 5, 2006
Operating bases Washington Dulles International Airport
Hubs Washington Dulles International Airport
Frequent-flyer program iCLUB
Fleet size 85
Destinations 37
Company slogan Go your own way
Parent company FLYi, Inc.
Headquarters Loudoun County, Virginia
Key people Kerry Skeen (CEO)
Website www.flyi.com

Independence Air was a low-cost airline, owned by FLYi, Inc., headquartered in the Loudoun Gateway Corporate Center in Dulles, unincorporated Loudoun County, Virginia, United States (near Washington, D.C.) that operated from 1989 until 2006. Its route network focused on the East Coast of the United States, but it also extended to the West Coast. The route network was based at Washington Dulles International Airport.

It ceased all operations at 8:24 p.m. UTC-5 on January 5, 2006. The airline had been in Chapter 11 Bankruptcy since November 7, 2005,[1] and there had been discussion of a last-minute deal that could save the airline, but that did not happen.

Contents

History

A regional jet operated by Independence Air, seen through terminal windows

Independence Air started life as Atlantic Coast Airlines on December 15, 1989, operating feeder services as United Express for United Airlines and Delta Connection for Delta Air Lines.[2] After United withdrew the contract when the ACA labor and management would not agree to the concessions it requested, Atlantic Coast reinvented itself as low-cost carrier Independence Air.[3] It was announced on November 19, 2003, and operations as Independence Air began on June 16, 2004. At its inception, it was unique among low-cost carriers in that its fleet mainly consisted of 50-seat regional jets, although the airline later introduced larger Airbus A319 equipment. It was based at Washington Dulles International Airport (IAD) and contributed to Dulles's substantial increase in passenger use, bringing one million new customers to the airport in its first three months of operation.[4] The airline was also credited with helping to reduce fares to and from the airport.[3]

Criticism

From the beginning, the airline faced criticism. Some[who?] believed that it expanded too quickly, had a poor fleet mix[5] and did not have the resources to compete with the legacy airlines, who despite their own financial troubles, would match the fares offered by Independence.[3][6] Further, industry experts believed that the reasons behind the airline's failure were not problems with the low-cost strategy, but miscues on the part of airline management.[7] Atlantic Coast's / Independence Air's former partner at Dulles, United Airlines, responded vigorously to Independence Air's emergence as a stand-alone carrier by leveraging Washington area passenger loyalty to the United Mileage Plus frequent flyer program. United offered its Mileage Plus members substantial bonuses, including free trips around the world on United and other Star Alliance carriers; these proved effective in maintaining United's grip on the lucrative business travel market, and Independence Air was unable to respond to United's promotional onslaught. (United's primary offer for free flights based on a sliding scale of flight segments to/from a Washington airport - IAD, DCA, BWI. 24 segments yielded a United coach ticket, 48 segments yielded a Star Alliance round-the-world business class ticket.) Problems, including flights flying far below capacity, were identified in October 2004,[8] less than six months following the airline's launch as the parent company attempted to avoid bankruptcy.[9]

Promotional activities

Independence Air employment center in Sterling

On May 20, 2004, even prior to its inaugural flight, Independence Air signed a deal[10] with the Washington Redskins to become the official airline sponsor of the team for three years.[11] In the summer of 2005, the airline offered the GLiDE Summer Travel Pass for college students.[12] Upon paying $250, the customer would be able to fly at no cost (after paying taxes & airport fees) from May 1-Aug 31, on Tuesdays, Wednesdays & Saturdays. This move was meant not to bring in revenue, but to try to fill seats that otherwise would have flown empty. This promotional tool was not enough to prevent trouble, due in part to the airline losing almost $150 million in its two years of operation.[6]

Independence Air became quickly known for the humorous touches it added to the flying experience, such as replacing the flight attendant safety announcements with prerecorded versions of the warnings by celebrities such as James Carville and Mary Matalin.[13] They also attracted attention from their partnership with the Laugh Factory[14] and the use of former baggage handler Dave George as "the Flyi Guy" — the airline's resident comedian.[15]

Independence Air also invested in a fleet of 20 promotional vehicles, dubbed "Jet Trucks". Modified pickup trucks were painted in the airline's livery and featured an aircraft tail attached to the truck's bed. Jet Trucks were featured at all promotional events and activities, where employees would handout information and branded giveaways. Rather than having these vehicles sit in the headquarters office parking lot between events, 10 trucks were allocated for employee use to increase public exposure.[citation needed]

Corporate affairs

Headquarters

Independence Air had its headquarters in Loudoun Gateway III in the Loudoun Gateway Corporate Center in Dulles, unincorporated Loudoun County, Virginia.[16][17] The facility is located at the intersection of Virginia Route 28 and Virginia Route 606, 1 mile (1.6 km) north of the Dulles Toll Road and near Washington Dulles International Airport. The three-story, 76,557 square feet (7,112.4 m2) building has an about 25,000 RSF floor plate. The entire Loudoun Gateway Corporate Center has about 38.6 acres (15.6 ha) of space.[17] Grubb & Ellis had originally leased 76,982 square feet (7,151.9 m2) of the building to Atlantic Coast Airlines.[18]

Fleet

Independence Air Airbus A319 in 2005.

From the airline's beginning, its fleet mix was cited as one of the causes of its financial troubles.[5] Independence Air's fleet ebbed and flowed in an attempt to stay in business.[19] In February 2005, the airline canceled the lease on more than 20 Bombardier CRJ200 jets and British Aerospace Jetstream 41 turbo-prop planes.[20]

Decline

After its emergence as an independent brand name, Independence Air became known for offering very low airfares: as little as $29 one-way to Florida from Washington Dulles International Airport.[21] However, the company never overcame a series of financial problems during its transition, and its decline started only six months after its launch.

In February 2005, one of its aircraft was repossessed after the company missed a lease payment,[22] after trying and failing to restructure the lease.[9] Later that year, three more aircraft were sold or repossessed and in November 2005, FLYi, Inc., their parent company, declared bankruptcy.[23] The company cited rising-costs in the airline industry as the reason its low-cost strategy did not succeed.[6]

In the intervening months between FLY I's declaration of bankruptcy and Independence Air's cessation of operations, a number of airlines expressed an interest in acquiring the airline's assets including: Mesa Air Group, United Airlines and Richard Branson.[24]

Not finding a suitable buyer in time to keep the planes flying, Independence Air announced on January 2, 2006, that it would cease operations at 7:26 p.m. UTC-5 on January 5, 2006 following a flight from Westchester County Airport in New York.[25] When the airline ceased operations, it employed more than 2,500 staff, [23] many of whom had been with the airline since its inception as Atlantic Coast Airlines.[21] Over its 18 months of operation, Independence carried more than 8 million passengers.[21]

On March 10, 2006, Northwest Airlines bought the operating certificate of Independence Air for $2 million to establish a new regional airline. On March 29, 2006, Northwest reported that Independence Air would be renamed Compass Airlines. The first flight route would be a twice daily service between Washington Dulles International Airport and Minneapolis-Saint Paul International Airport beginning in early June 2006.[26]

Destinations

At the time of its shutdown on January 5, 2006, Independence operated 200 daily departures to 37 destinations throughout the United States,[27] up from 78 flights at its launch.[28]

References

  1. ^ "Fact Sheet re 2/98 Cessation of Ops". Office of Aviation Enforcement and Proceedings. 2006-02-21. http://airconsumer.ost.dot.gov/cessations/IndependenceAir6.DOC. Retrieved 2008-02-20. 
  2. ^ Matthew French (2004-11-15). "Despite Industry woes, Independence Air Sees Strong Market in Charleston". Charleston Regional Business Journal. Archived from the original on 2007-11-14. http://web.archive.org/web/20071114111757/http://www.charlestonbusiness.com/pub/10_25/news/3984-1.html. Retrieved 2008-02-20. 
  3. ^ a b c Joe Sharkey (2006-01-10). "Independence Air Ends: No Bang, Some Whimpers". The New York Times. http://www.nytimes.com/2006/01/10/business/10road.html. Retrieved 2008-02-20. 
  4. ^ Sara Kehaulani (2004-09-30). "Dulles Among Busiest Airports". Washington Post. http://www.washingtonpost.com/wp-dyn/articles/A60742-2004Sep29.html. Retrieved 2008-02-20. 
  5. ^ a b Keith L. Alexander (2006-01-03). "Despite Persistent Criticism, Airline Chief Stayed His Course". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2006/01/02/AR2006010201685.html. Retrieved 2008-02-20. 
  6. ^ a b c "Independence Air is Banktupt". Consumer Affairs. 2005-11-08. http://www.consumeraffairs.com/news04/2005/independence_bankrupt.html. Retrieved 2008-02-20. 
  7. ^ Peter J. Howe (2006-01-03). "Independence Air to Shut Down". The Boston Globe. http://www.boston.com/business/articles/2006/01/03/independence_air_to_shut_down/. Retrieved 2008-02-20. 
  8. ^ "Delta Flight Plan May Include Bankruptcy". consumeraffairs.com. 2005-10-25. http://www.consumeraffairs.com/news04/delta.html. Retrieved 2008-02-20. 
  9. ^ a b "Flyi's Share Price Continues to Fall". The Washington Post. 2004-11-11. http://www.washingtonpost.com/wp-dyn/articles/A41423-2004Nov10.html. Retrieved 2008-02-20. 
  10. ^ Clabaugh, Jeff (2004-05-21). "Independence Air scores Redskins sponsorship". http://www.bizjournals.com/baltimore/stories/2004/05/17/daily42.html. 
  11. ^ Jeff Clabaugh (2004-05-21). "Independence Air Scores Redskins Sponsorship". Baltimore Business Journal. http://www.bizjournals.com/baltimore/stories/2004/05/17/daily42.html. Retrieved 2008-02-20. 
  12. ^ Sascha Segan (2005-04-22). "Swap That Hall Pass for an Air Pass & Flit About the US from $249 All Summer". Frommer's. http://www.frommers.com/articles/2774.html. Retrieved 2008-02-20. 
  13. ^ "RDU Welcomes Independence Air". RDU Update. Raleigh-Durham International Airport. 2004. http://www.rdu.com/news/pdf/UpdateFall04.pdf. Retrieved 2008-02-20. 
  14. ^ Joe Sharkey (2005-08-16). "What Flies Coast to Coast and Isn't Very Funny?". The New York Times. http://www.nytimes.com/2005/08/16/business/16road.html?8hpib. Retrieved 2008-02-20. 
  15. ^ Jayne Clark (2005-08-18). "I Just Flew in from Cleveland...and, Boy, are My Wings Tired!". USA Today. http://www.usatoday.com/travel/flights/2005-08-18-airline-humor_x.htm. Retrieved 2008-02-20. 
  16. ^ "ANNUAL REPORT TO STOCKHOLDERS For the fiscal year ended December 31, 2004." Independence Air. Retrieved on January 31, 2011. "45200 Business Court, Dulles, Virginia (Address of principal executive offices)"
  17. ^ a b "Loudoun Gateway III." The Alter Group. Retrieved on January 31, 2011. "Loudoun Gateway III 45200 Business Court Loudoun Gateway Corporate Center Dulles, VA."
  18. ^ "FCC delays decision on who can wire buildings." The Washington Times. September 18, 2000. Retrieved on January 31, 2011. "Grubb & Ellis has leased 76982 square feet of office space to Atlantic Coast Airlines Holdings Inc in the Loudoun Gateway III complex in Dulles[...]"
  19. ^ "Independence Air Cuts Fleet to Stay Airborne". consumeraffairs.com. 2005-02-23. http://www.consumeraffairs.com/news04/2005/independence_cutbacks.html. Retrieved 2008-02-20. 
  20. ^ Jeff Clabaugh (2005-02-22). "Independence Air Pares Fleet". The Business Review (Albany). http://albany.bizjournals.com/albany/stories/2005/02/21/daily11.html. Retrieved 2008-02-20. 
  21. ^ a b c Bill Brubaker (2006-01-06). "Foggy Morning, Misty Eyes Usher Out Independence". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2006/01/05/AR2006010502200.html. Retrieved 2008-02-20. 
  22. ^ "Repo Man Visits Independence Air". consumeraffairs.com. 2005-02-13. http://www.consumeraffairs.com/news04/2005/flyi_repo.html. Retrieved 2008-02-20. 
  23. ^ a b "Last Run for Independence Air". msnbc.com. 2006-01-05. http://www.msnbc.msn.com/id/10729047/. Retrieved 2008-02-20. 
  24. ^ Bill Brubaker (2005-12-23). "United Seeks Piece of Independence Air". The Washington Post. http://www.washingtonpost.com/wp-dyn/content/article/2005/12/22/AR2005122202319.html. Retrieved 2008-02-20. 
  25. ^ "Final Boarding Call for Independence Air". consumeraffairs.com. 2006-01-02. http://www.consumeraffairs.com/news04/2006/01/ia_folds.html. Retrieved 2008-02-20. 
  26. ^ Jewel Gopwani (2006-03-30). "NWA Plans June Start for Carrier". USA Today. http://www.usatoday.com/travel/flights/2006-03-30-nwa-carrier_x.htm. Retrieved 2008-02-20. 
  27. ^ "Low-fare Airline to Shut Down Thursday". St. Petersburg Times. 2006-01-03. http://www.sptimes.com/2006/01/03/Business/Low_fare_airline_to_s.shtml. Retrieved 2008-02-20. 
  28. ^ Bill Brubaker (2004-06-17). "Independence Air is Off the Ground at Last". The Washington Post. http://www.washingtonpost.com/wp-dyn/articles/A47881-2004Jun16.html. Retrieved 2008-02-20. 

External links


 
 

 

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