Republic Airways Holdings

Republic Airways Holdings, Inc. is an American airline holding corporation based in Indianapolis, Indiana,^[1][2] that owns two American regional airlines operating in the Midwestern United States: Republic Airlines and Shuttle America.

Republic Airlines operates a fleet of Embraer E-Jet family 170, and 175 aircraft, and Shuttle America operates the Embraer ERJ 145, E-Jet 170 and 175.

History

Forming the holding company

The company traces its roots to Chautauqua Airlines, founded in 1973 in Jamestown, New York, by Joel and Gloria Hall. Joel had been a pilot for Mohawk Airlines. Chautauqua was one of the first airlines to fly under code shares, initially with Allegheny Airlines which later became USAirways. ^[3]

In 1988, an affiliate of Guarantee Security Life Insurance Company bought the airline. Three years later, the Florida Department of Insurance took over the insurance company and its airline subsidiary after the insurance company was declared insolvent.^[3]

In 1994, Chautauqua swapped routes with Jetstream International which had been owned by USAir. Chautauqua then moved its headquarters to Indianapolis.^[3]

In 1998, the company formally organized as a holding company,^[4] with Chautauqua as its only subsidiary. The holding company capitalized on the name Republic from Republic Airlines of the 1980s because it had better national recognition than Chautauqua. However, the earlier Republic Airlines has no historic ties to the new company other than the name.

Wexford Management of Greenwich, Connecticut, an investment company, bought the holding company on May 15, 1998. Wexford had already owned National Airlines ^[3] and was also invested heavily in Midwest Airlines. Wexford’s interest in distressed airline firms dates back to 1995 when the assets of MarkAir were purchased in a bankruptcy auction.

Republic Airways Holdings incorporated a new subsidiary, "Republic Airline, Inc." (sic), in 1999,^[5] but the subsidiary was left as a "shell" company until 2004.

On May 26, 2004, an IPO was launched on NASDAQ under the ticker symbol RJET with Wexford Capital remaining the majority shareholder.^[6]

Bankruptcy

On February 25, 2016, Republic Airways Holdings Inc filed for bankruptcy protection because of plunging profits, a pilot shortage,^[7][8] and a loss of revenue during the past several quarters associated with grounding aircraft.^[9]

Scope clauses

In 2004, the holding company activated Republic Airline in reaction to a pilots' suit against American Airlines. American had awarded the flying of 44-seat regional jets to Chautauqua, then the main operating subsidiary of Republic Airways Holdings. However, Chautauqua later started to operate 70-seat regional jets on behalf of another major airline, and this caused American to be in violation of its pilot union scope clause, which prevented another airline from operating on behalf of American if that airline was operating jet aircraft of more than 50 seats, even if such aircraft were operating on behalf of a carrier other than American. To repair the situation, Republic Airways Holdings activated Republic Airline, and upon Part 121 certification in 2005 ^[10] allowing Republic Airlines to operate commercial service. Republic Airways Holdings then transferred the offending 70-seat regional jets from Chautauqua to Republic Airlines. American was thereby no longer in violation of its pilot union scope clause. Republic Airways Holdings paid US$6.6 million to the Allied Pilots Association to settle the issue.^[11]

To sidestep yet another scope clause issue in 2005, Republic Airways Holdings bought Shuttle America from Wexford affiliate Shuttle Acquisition LLC.^[6] To avoid further liability, all Embraer 170 aircraft were transferred to Shuttle America, which previously only operated Saab 340 turboprops. Subsequently, American Airlines and its pilots changed the scope agreement as part of the bankruptcy and merger with US Airways to allow more regional airlines, other than wholly owned American Airlines subsidiary American Eagle (now Envoy Air), to fly larger regional airliners under the American Eagle brand. Republic Airlines began flying the first of 47 Embraer 175 aircraft under the American Eagle brand in July 2013.

Further acquisitions

In September 2005, Republic purchased 113 slots at Ronald Reagan Washington National Airport, 24 slots at LaGuardia Airport, and ten Embraer 170 aircraft from US Airways with an agreement to lease those assets back to US Airways. The deal was necessary for US Airways to emerge from bankruptcy protection.

In July 2009, Republic acquired 89 percent of Mokulele Airlines^[12] and financially troubled Midwest Airlines.^[6] In October 2009, the company acquired Frontier Airlines which was being reorganized along with Frontier Airlines Holdings' Lynx Aviation in Chapter 11 bankruptcy.^[6] On April 13, 2010, Republic announced that Midwest and Frontier would combine into a single airline, keeping the Frontier Airlines name.^[13]

On October 23, 2009, Republic announced a joint venture with Mesa Air Group in which Embraer E170 routes operated by Shuttle America were transitioned to smaller Bombardier CRJ200 regional jet aircraft provided by Mesa Airlines.^[6]

In the fourth quarter of 2011, Republic announced that it would spin off Frontier as a separate company.^[14] On December 2, 2013, Frontier was sold in its entirety to an affiliate of Indigo Partners. As part of the agreement, Republic Airlines removed the remaining Frontier branded Embraer 190 jets in "pro-rated" service with Frontier Airlines.

On July 28, 2014, Republic Airways Holdings announced that Chautauqua Airlines will be absorbed into Shuttle America "by year-end" to reduce costs. Chautauqua's only remaining aircraft, 41 ERJ-145s, will be transferred to the Shuttle America operating certificate.^[15] This will leave only two subsidiaries, Republic Airlines and Shuttle America, flying under Republic Airways Holdings.

In 2015, it was announced that Republic Airways Holdings will begin to merge existing subsidiaries Shuttle America and Republic Airlines, with the merger expected to be completed by December 1, 2016. As 2015 ended, subsidiary Shuttle America began to transfer aircraft, flight attendants, and pilots over to the Republic Airlines certificate. As part of the merger process, Republic Airways Holdings also announced that it would be seeking a single aircraft type, and began to phase out the E-145 aircraft from the Shuttle Certificate with the final flight to take place on September 30, 2016. Additionally, Republic Airways Holdings also announced it would begin to phase out the Q-400 flying on the Republic Airlines certificate, with the final Q-400 flight taking place on March 31, 2016.

Subsidiary timeline

Codeshare agreements

Following is a breakdown of traffic upon all Republic Airways Holdings airlines as of December 31, 2013.^[16]

Fleet overview

As at October 2016, Republic Airways Holdings' airlines operate 229 regional aircraft.

In February 2010, Republic Airways Holdings became the first North American customer for the Bombardier CSeries regional jet.^[17] In 2014, following delays in the CS300 program, Republic expressed doubts in keeping their CS300 order, but announcement that a final decision would be put off.^[18] In September 2014 Republic confirmed that their order for 40 Cseries aircraft was still in place, despite ongoing technical issues.^[19] As of September 2014, Republic Airways Holdings has still not indicated which airline subsidiary unit they would be placed with when delivered. As part of the 2016 bankruptcy proceedings agreement was reached with Bombardier to amend is order for its CSeries aircraft in terms of deferral of payments and deliveries.^[20]

On September 17, 2014, Republic Airways Holdings announced it would stop flying Bombardier Q400 turboprops in 2016. The last Q400 was retired in March 2016. The company ordered E-175s that Republic Airlines will operate for United Express.^[21]

On December 1, 2016, all remaining aircraft operating under the Shuttle America certificate will be transferred to Republic Airlines as Shuttle America ceases operations as part of the final step in the merger process.

Further reading

• Sandra Arnoult, "Three Heads are better than One," Air Transport World January 2006, p. 60.

References

External links

• Republic Airways Holdings