Category Archives: Shuttle America

Republic Airways Holdings disputes Delta’s complaint

Republic Airways Holdings (Shuttle America) (Indianapolis) has issued this statement disputing a reported lawsuit by Delta Air Lines (Atlanta) claiming the carrier failed to fly its full contracted schedule according to the Indianapolis Business Journal:

Republic Airways Holdings logo

Republic Airways Holdings Inc. has been made aware of a complaint filed by Delta. The Company has not been served and has not received the full complaint and therefore cannot comment further on the matter at this time. Republic can confirm that the Company is not in breach of any of its capacity purchase agreements with any of its mainline partners, including both Delta Connection Agreements.

Republic Airways Holdings Inc., based in Indianapolis, Indiana, is an airline holding company that owns Republic Airlines and Shuttle America, collectively called “the airlines.” The airlines operate a combined fleet of about 240 aircraft and offer scheduled passenger service with approximately 1,250 flights daily to about 100 cities in the U.S., Canada and the Caribbean through fixed-fee flights operated under our major airline partner brands of American Eagle, Delta Connection, United Express and US Airways Express. The airlines currently employ about 6,500 aviation professionals.

Copyright Photo: Keith Burton/AirlinersGallery.com. Shuttle America Embraer ERJ 170-200LR (ERJ 175) N202JQ (msn 17000240) in Delta Connection colors climbs away from Boston’s Logan International Airport.

Delta Connection-Shuttle America aircraft slide show: AG Airline Slide Show

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Republic Airways Holdings presents its “Last, Best and Final Offer” to its pilots

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Republic Airways Holdings Inc. (Indianapolis) has presented its “Last, Best and Final Offer” to the International Brotherhood of Teamsters Local 357 representing its almost 2,100 pilots.

The Company posted the full text of the proposed three-year agreement, along with supporting material, to a dedicated website, www.myrjetcontract.com.

“Our Pilots deserve an industry-leading contract and this proposal meets that standard,” said Matt Koscal, Republic vice president for Human Resources. “It provides our Pilots improved job protection, compensation and quality of life for them and their families. It starts us on the path back to our tradition of operational excellence and a competitive position in the marketplace. We’re asking the Union to put this contract to a vote and asking our Pilots to read it. It’s time to move forward.”

Republic Airways Holdings’ second quarter net income drops to $4.3 million due to “operational reliability”

Republic Airways Holdings Inc. (Republic Airlines and Shuttle America) (Indianapolis) reported its financial and operational results for the second quarter of 2015.

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Republic’s pre-tax income for the second quarter of 2015 was $9.1 million, compared to $33.3 million for the prior year’s second quarter. Republic’s net income for the second quarter of 2015 was $4.3 million, or $0.08 per diluted share compared to prior year net income of $20.1 million or $0.38 per diluted share. The effective tax rate of 52.7% for the quarter was higher than the normalized tax rate, primarily due to the impact of miscellaneous non-deductible expenses.

The second quarter 2015 financial results were negatively impacted by a significant reduction in operational reliability. The Company’s controllable completion factor and operating revenues were significantly lower than expected due to a high number of pilot related cancellations as a result of the growing national pilot labor shortage and our on-going labor dispute with International Brotherhood of Teamsters (IBT).

The second quarter results were also negatively impacted by fleet transition costs and idled aircraft costs totaling $10.8 million associated with our removal of E190 and Q400 aircraft and surplus E145 aircraft.

Recent Business Developments

On July 9, 2015, the IBT, representing Republic’s pilots, filed suit against the Company alleging that the Company unilaterally increased compensation for pilots and new hires in violation of the Railway Labor Act. We believe the suit is without merit, and the Company has filed a motion to dismiss. The motion is currently pending.

On July 24, 2015, the Company announced the engagement of Seabury Group as its advisor to restructure the Company’s operational and financial commitments and explore all options to maintain the Company’s enterprise value. The Company has initiated discussions with its CPA partners to further reduce flying schedules during the second half of 2015 and 2016. In light of the anticipated fleet reductions, the Company rescinded all previously issued financial and operational guidance on July 24, 2015.

On August 6, 2015, the Company received notice from the National Mediation Board scheduling the next mediated session on August 20, 2015, with the IBT National Airline Division, IBT Local 357, and the Company.

Concerning fleet news, Republic reported:

Operating aircraft at period end:

44-50 seats  *1                        41 in service on June 30, 2015 versus 45  a year ago (8.9% drop)
69-99 seats  *2                     201 in service on June 30, 2015 versus 192 a year ago  (4.7% increase)

*1 Excludes 11 owned E140 aircraft that were abandoned and four leased E140 aircraft that were permanently parked, seven owned and nine leased E145 aircraft that were temporarily parked, and one owned E135 aircraft and eight owned E145 aircraft that are leased to other operators, as of June 30, 2015. Excludes 11 owned E140 aircraft that were abandoned, 11 leased E145 aircraft and two owned E145 aircraft that were temporarily parked as of June 30, 2014.

*2 Excludes five leased Q400 aircraft, of which; three were temporarily parked and two that were transitioned to Flybe and three owned E170 aircraft that are leased to other operators, as of June 30, 2015. Excludes two temporarily parked E190 aircraft as of June 30, 2014.

Read the full report: CLICK HERE

Copyright Photo: Ken Petersen/AirlinersGallery.com. The Bombardier DHC-8-402s (Q400s) operated by Republic Airlines (2nd) as an United Express carrier are gradually being phased out. The last of the type is expected to be removed from the United CPA contract in September 2016. However this come sooner with the on-going pilot dispute and the shortage of pilots. The company is discussing ways it can mitigate the shortage. DHC-8-402 (Q400) N336NG (msn 4336) arrives at Raleigh-Durham.

United Express-Republic aircraft slide show: AG Airline Slide Show

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Republic Airways Holdings reports preliminary 2Q results, will reduce contract flying

Republic Airways Holdings Inc. (Republic Airlines 2nd and Shuttle America) (Indianapolis) has announced its preliminary second quarter 2015 financial results. The company also gave guidance from its perspective on the on-going contract negotiations with its pilots, represented by the IBT. The company also warned of possible operational disruptions (see below – the highlights are mine)

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Preliminary Second Quarter 2015 Results

The Company expects to report second quarter net income of $4.0 to $5.0 million or $0.08 to $0.10 per diluted share, and pretax margins of 2.5% to 3.0% on operating revenues of $338 to $340 million. The second quarter results were negatively impacted by, among other factors, an operation that produced approximately 4% fewer block hours than forecasted due to the ongoing operational disruption caused by regulatory changes and further intensified by our ongoing pilot labor dispute.

National Pilot Shortage and Labor Dispute Continue to Disrupt Operations

The Airline Safety and Federal Aviation Administration (FAA) Extension Act of 2010 directed the FAA to enact significant regulatory changes. The law had several elements, one of which was a change to pilot qualification standards that became effective on August 1, 2013, adding new requirements for first officers to hold an Airline Transport Pilot (ATP) certificate, requiring additional training and a minimum 1,500 hours total flight time as a pilot. Previously, first officers were required to have only a commercial pilot certificate, which required 250 hours of flight time before beginning an FAA approved commercial airline training program. Another element of the law required the FAA to implement more restrictive limits on pilot flight and duty times. The new limits became effective on January 1, 2014 and immediately had the effect of reducing pilot productivity 5-7%, further exacerbating the growing pilot shortage.

The Company’s ongoing labor dispute with the International Brotherhood of Teamsters (IBT), the union which represents the bargaining rights of all Republic pilots, is further amplifying our pilot staffing challenges. The IBT and the Company are currently negotiating under the supervision of the National Mediation Board for an amended collective bargaining agreement. Since April 2015, limited progress has been made in the negotiations due to the IBT’s unrealistic and unsustainable demands. The Company has presented a comprehensive proposal to the IBT that would place our pilots ahead of their peers in the regional airline industry for both compensation and work rules. The lack of a new agreement for our pilots requires the Company to maintain its below market contract and is contributing to increased levels of attrition and an inability for the Company to attract new pilots.

Due to the IBT’s unrealistic bargaining position, the Company cannot predict with any certainty a timeline for resolution. As a result, the Company anticipates continued operational disruption related to the ongoing labor dispute and the growing national pilot labor shortage. The Company has initiated discussions with our mainline partners to take the necessary actions to both temporarily and permanently reduce scheduled flying commitments for the remainder of 2015 and the first half of 2016.

Republic's partners

In light of the anticipated fleet reductions, the Company is rescinding all previously issued financial and operational guidance.

On July 9, 2015, the IBT filed suit against the Company alleging that the Company unilaterally increased compensation for its pilots and new hire pilots in violation of the Railway Labor Act. We believe the suit is completely without merit, and the Company will take appropriate steps to respond.

The Company is exploring all of its options to mitigate any adverse impact from these matters and restore its operational and financial performance to normal levels. The Company has engaged Seabury Group as an advisor to assist in these efforts.

Copyright Photo: Brian McDonough/AirlinersGallery.com. From this statement, it is unclear which mainline partner contracts could be reduced creating opportunities for other carriers. In the case of Shuttle America, it flies Embraer aircraft for both Delta and United. Shuttle America’s Embraer ERJ 170-200LR (ERJ 175) N209JQ (msn 17000258) approaches the runway at Washington’s Reagan National Airport (DCA) in Delta Connection colors.

Delta Connection-Shuttle America aircraft slide show: AG Airline Slide Show

Current Combined Route Map (click to expand):

Republic 7.2015 Route Map

Republic Airways Holdings reports first quarter net income of $6.4 million

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Republic Airways Holdings Inc. (Republic Airlines 2nd and Shuttle America) (Indianapolis) reported its financial results for the first quarter of 2015.

Republic’s pre-tax income for the first quarter of 2015 was $11.2 million, compared to $22.8 million for the prior year’s first quarter. Republic’s net income for the first quarter of 2015 was $6.4 million, or $0.13 per diluted share. The Company incurred approximately $8.0 million, or $0.09 per diluted share, for charges related to fleet transition expenses and employee severance costs, which are included in other operating expense.

The first quarter of 2015 results also were negatively affected by a reduction in operational reliability. Republic’s operating performance, as measured in block hours, departures and available seat miles was approximately 4 percent lower than planned.

Since March 31, 2014, the Company added 23 E-Jet aircraft and removed 25 ERJ aircraft.

The Company took delivery of the final six E-Jet aircraft for its American Airlines E-Jet agreement, which now totals 47 aircraft. The Company expects to take delivery of 15 additional new E-Jet aircraft in the second half of 2015, which it will operate under its United E-Jet agreement. As of March 31, 2015, the Company operated 41 aircraft with 44-50 seats and 201 aircraft with 69-99 seats under its fixed-fee code-share and charter agreements.

During the first quarter of 2015, Delta Air Lines exercised its right to extend 24 aircraft under the Shuttle America ERJ code-share agreement from May 2016 to May 2021. The Company currently operates 41 aircraft under the agreement with Delta, of which 17 can be removed by Delta with 90 days prior written notice.

Copyright Photo: Brian McDonough/AirlinersGallery.com. Shuttle America will continue to operate for Delta as a Delta Connection carrier until at least May 2021. Embraer ERJ 170-200LR (ERJ 175) N213JQ (msn 17000265) completes its final approach to the runway at Washington’s Reagan National Airport (DCA).

Republic Airways aircraft slide show: AG Airline Slide Show

Delta Connection-Shuttle America aircraft slide show: AG Airline Slide Show

Combined Route Map:

Republic-Shuttle America 5.2015 Route Map

Republic Airways Holdings reports net income of $64.3 million for 2014

Republic Airways Holdings Inc. (Republic Airlines and Shuttle America) (Indianapolis) has reported its financial results for the fourth quarter and full year ended December 31, 2014. The company reported net income of $64.3 million for 2014, a significant increase from its  net income of $26.7 million in 2013.

As planned, Chautauqua Airlines ended operations on December 31, 2014 and was rolled into Shuttle America as previously reported.

The company issued this report:

Republic Airways Holdings logo

Republic’s pre-tax income excluding special items, for the fourth quarter of 2014 was $32.1 million, an 8.4 percent increase over the fourth quarter or 2013. Republic’s adjusted income from continuing operations for the fourth quarter of 2014 was $19.8 million, or $0.39 per diluted share, and its adjusted pre-tax margin was 9.3 percent.

For the full year of 2014, Republic’s pre-tax income, excluding special items, was $120.2 million, a $17.7 million increase over 2013. Republic’s adjusted income from continuing operations for 2014 was $73.4 million, or $1.40 per diluted share, with an adjusted pre-tax margin of 8.7 percent.

On a GAAP basis, including special items, Republic’s fourth quarter 2014 pre-tax loss was $1.4 million, pre-tax margin was -0.4 percent and income from continuing operations was $11.7 million, or $0.23 per diluted share. On a GAAP basis, including special items, Republic’s 2014 pre-tax income was $85.2 million, pre-tax margin was 6.2 percent and income from continuing operations was $64.3 million, or $1.24 per diluted share.

On January 1, 2015, Republic completed its consolidation of all Chautauqua Airlines operations onto the Shuttle America operating certificate. All operating aircraft and related employees are now transferred to Shuttle America’s operation. Republic hopes to sell the remaining Chautauqua Airlines entity and related assets during the first half of 2015.

During the fourth quarter of 2014, Republic extended the service terms of aircraft under its fixed-fee capacity purchase agreements with US Airways, Inc. and Delta Air Lines, Inc. Republic also agreed to operate an additional nine E170 aircraft for Delta Air Lines, Inc.

“We took some significant steps in 2014 in our effort to simplify and streamline our business,” said Republic Airways Holdings Chairman, President and CEO Bryan Bedford. “While this simplification strategy results in near-term transition expenses, such as the fleet impairment charge we took this quarter, the actions that we’ve taken in 2014 and that we intend to take in 2015 are key to the future success of our airline.”

The impairment and other charges in 2014 were due to impairment and other charges on owned E140 aircraft which were abandoned of $19.9 million; owned E190 aircraft which are in the process of being sold of $14.4 million; owned Q400 aircraft which are scheduled to come out of service in the third quarter of 2016 of $13.3 million, and a loss on sale of E190 aircraft of $5.8 million. The 2013 impairment charges of $21.2 million related to owned E190 aircraft and the write-off of maintenance deposits on leased E190 aircraft.

Fleet Highlights

During 2014, our operational fleet decreased from 258 to 244. The company took delivery of 22 E175 aircraft, permanently parked 15 E140 aircraft, temporarily parked 13 E145 aircraft, sold two E190 aircraft and leased three E145 aircraft and three E190 aircraft.

During 2014, we took delivery of 22 E175 aircraft and removed 28 small regional jets.

In December 2014, we completed the sale of two E190 aircraft and executed an agreement to sell three other E190 aircraft. The sale of these five aircraft will leave us with two owned E190 aircraft and three leased E190 aircraft that are expected to be removed from fixed-fee charter service in August of 2015. We expect to return the three leased aircraft to the lessor in 2015 and the remaining two aircraft are under a firm sales agreement.

Balance Sheet and Liquidity

The Company’s total cash balance decreased $55.1 million to $245.6 million as of Dec. 31, 2014, compared to Dec. 31, 2013. Restricted cash decreased $2.3 million, to $21.7 million, from Dec. 31, 2013, due to the escrow requirements under our fixed-fee charter agreements. The Company’s unrestricted cash balance decreased $52.8 million, to $223.9 million, from Dec. 31, 2013, due primarily to equity investments in new aircraft and the redemption of the $22.3 million and $26.5 million convertible notes on April 7, 2014, and Oct. 28, 2014, respectively. The Company also purchased 212,881 shares of its common stock on the open market, during the third quarter of 2014 for total consideration of $2.1 million. A consolidated balance sheet and summary cash flow statement have been included in the tables section of this release.

The Company’s debt increased to $2.34 billion as of Dec. 31, 2014, compared to $2.17 billion at Dec. 31, 2013, primarily related to the financing of 22, new E175 aircraft purchased for our American Airlines fixed-fee agreement. As of Dec. 31, 2014, approximately 98 percent of our debt is at a fixed interest rate. The Company has significant long-term lease obligations for aircraft that are classified as operating leases and are not reflected as liabilities on the Company’s consolidated balance sheet. At a 6 percent discount factor, the present value of these lease obligations was approximately $0.48 billion and $0.59 billion as of Dec. 31, 2014, and Dec. 31, 2013, respectively.

Corporate Information

Republic Airways Holdings Inc., based in Indianapolis, Indiana, is an airline holding company that owns Republic Airlines, Shuttle America and Chautauqua Airlines, collectively “the airlines.” As of Dec. 31, 2014, the airlines operated a combined fleet of about 245 aircraft and offered scheduled passenger service on more than 1,300 flights daily to approximately 100 cities in the U.S., Canada and the Caribbean through fixed-fee flights operated under our major airline partner brands, including American Eagle, Delta Connection, United Express, and US Airways Express. The Company currently employs about 6,500 aviation professionals.

Copyright Photo: Brian McDonough/AirlinersGallery.com. During 2014 Republic took delivery of 22 Embraer E175 aircraft. Republic Airlines’ Embraer ERJ 170-200LR (ERJ 175) N415YX (msn 17000378) arrives in Washington (Reagan National).

American Eagle-Republic Airlines: AG Airline Slide Show

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The end of the line for Chautauqua Airlines, aircraft, personnel and operations shifted to Shuttle America

Chautauqua Airlines (Indianapolis), as planned, ended operations yesterday at midnight (December 31). The Embraer ERJ 145s, operated as a Delta Connection carrier, were shifted to sister airline Shuttle America (Indianapolis) starting today (January 1).

The aircraft will now operate under the “Mercury” call-sign. The certificate is currently retained by parent company, Republic Airways Holdings, and is being considered for sale to an undisclosed company. Chautauqua aircraft and employees have been transferred to the new certificate.

Chautauqua Airlines was established on May 3, 1973 in Jamestown, Chautauqua County, New York (hence the name) and started operations on August 1, 1974 using two 15-passenger Beechcraft 99 aircraft.

Chautauqua Airlines has also operated as American West Express, American Connection, Continental Express, Frontier Airlines (2nd), Midwest Connect, Trans World Express, United Express, US Airways Express and USAir Express.

The ERJ 145s are being phased out from the Delta Connection contract agreement. Previously on December 11, 2014 parent Republic Airways Holdings Inc. announced it had reached an amendment to its Capacity Purchase Agreement with Delta Air Lines to operate nine additional 69-seat ERJ 170 aircraft. The aircraft are scheduled to be placed into service between the 3rd quarter of 2015 and the 2nd quarter of 2016 and will operate for a term of six years per aircraft. In addition, the Company and Delta have agreed to extend the term of the agreement for the existing 14 ERJ 170 aircraft by four years, or through October 2021, and the existing 16 ERJ 175 aircraft by approximately five years, or through February 2024.

The nine additional ERJ 170 aircraft will either be sourced internally by the Company or with used aircraft available in the open market.

Copyright Photo: Chautauqua Airlines started operations in 1974 as an Allegheny Commuter airline from Chautauqua County in western New York State.