US airlines were badly hit by high fuel prices in 2005

Independence opted to close down after failing to find a buyer to rescue it from Chapter 11 bankruptcy protection.

The company has asked a court to approve plans to pay $3.2m (�1.83m) in bonuses to retain key workers as it winds down its business.

The firm, which employs 2,700 workers became the biggest Us airline to close down in 14 years.

Independence had operated 200 flights daily to 37 destinations before its final flight from New York to Washington at 7.26pm local time on 5 January.

Under bankruptcy proposals filed in court, Independence hopes to pay a total of $5.1m in salaries and bonuses to 180 key staff.

Most of those covered by the plan will lose their jobs within eight weeks.

Bonus plans

However, most of the $3.2m payout, including a reported $2.1m in bonuses, is expected to go to 22 executives.

In a court filing earlier this week, Independence said it hoped the proposals would encourage employees to complete the job of closing down the carrier's operations and bankruptcy case "properly, prudently and as efficiently as possible".

But flight attendants have filed a formal objection to the plan, claiming the payments for a "select group" are unfair when thousands of workers are set to lose their jobs.

Fuel woes

Independence filed for bankruptcy protection in November and parent company FLYi had been looking for a major investor or buyer.

US airlines have been battling against soaring fuel prices as crude prices hit new peaks after hurricanes battered US oil refineries in the Gulf of Mexico late last year.

Surging prices pushed two of the largest US airlines, Delta and Northwest, to recently seek bankruptcy protection.

With a hub at Washington Dulles International Airport, Independence Air competed against other discount airlines JetBlue, AirTran and Ted.

Passengers with outstanding tickets for flights on Independence will be able to fly standby on other airlines for a fee.