Republic Airways Holdings (Indianapolis) reported financial results for the first quarter of 2014. Key points include:
Republic’s pre-tax income from continuing operations was $22.8 million, or $0.42 per diluted share, an 18.1% increase over the March 2013 quarter. As of Dec. 31, 2013, Republic had a significant amount of federal net operating loss carry forwards and does not anticipate paying significant federal taxes for the next several years.
Republic’s net income for the March 2014 quarter was $14.0 million, or $0.26 per diluted share. This is a $13.7 million increase from the prior year. The March 2013 quarter was negatively impacted by $11.1 million of losses from discontinued operations at Frontier Airlines.
Republic canceled more than 12,400 flights during the first quarter of 2014, primarily because of severe weather in January and February of 2014. That was a 145% increase from the number of canceled flights compared to the first quarter of 2013. These cancellations negatively impacted the pre-tax financial results by about $7.0 million during the first quarter of 2014.
On February 11, 2014, Republic announced the early termination of its 44 to 50 seat fixed-fee agreements with United Airlines and American Airlines, which were scheduled to terminate in 2014. These agreements wind-down beginning in March 2014 through August 2014 and will result in the indefinite grounding of 27 small jet aircraft.
In the first quarter of 2014, Republic recorded an impairment of its owned Embraer ERJ 140 aircraft of $19.9 million and an $18.4 million gain on its Chautauqua restructuring asset. The Company also sold one Embraer ERJ 145 aircraft for a book gain of $1.8 million during the quarter. The net of these three items improved pre-tax earnings by $0.3 million.
On April 4, 2014, Republic announced that members of the International Brotherhood of Teamsters (IBT) Local 357 failed to ratify a proposed four-year pilot labor agreement. The agreement would have significantly improved pay and work rules for our pilots.
On April 7, 2014, Republic’s Board of Directors authorized management to utilize up to $75 million of unrestricted cash to buy back common shares and/or early retire convertible debt during the next 12 months. Under the $75 million authorization, Republic may repurchase up to $50 million of common shares and early retire up to $50 million of convertible notes, or any combination thereof.
On April 7, 2014, Republic redeemed a $22.3 million convertible note, leaving $52.7 million remaining on the share repurchase and convertible debt retirement authorization. This will reduce the Company’s dilutive share count by about 2.2 million shares going forward.
“I am pleased we were able to report improved first quarter financial results despite the most severe weather events in a single quarter I can recall in my 27 years of experience in the airline industry. Our results demonstrate the stability and strength within our core fixed-fee business,” said Republic Airways Holdings Chairman, President and CEO Bryan Bedford. “We are committed to our guiding principles and strengthening our brand reliability and product quality for our partners, shareholders and employees,” Bedford said.
Republic Airways Holdings, based in Indianapolis, Indiana, is an airline holding company that owns Chautauqua Airlines, Republic Airlines (2nd) and Shuttle America.
Copyright Photo: Bruce Drum/AirlinersGallery.com. Embraer ERJ 170-100SU N806MD (msn 170000019), as a spare aircraft, completes its Republic Airlines (2nd) flight into Charlotte.
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