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LatAmFlyer
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:01 pm

I guess the new pilot contract didn't solve everything?

http://www.businesswire.com/news/home/20160225006706/en/
 
INFINITI329
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:06 pm

I thought without a pilot contract this would have happened. Preemptive strike to protect themselves from the majors from breach of contract(s)?
 
flyDTW1992
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:06 pm

Didn't see that coming. All indications to me were that the new contract had pretty well set them back on the right path. That said, I think they are in a position to come out the other side of this safe and sound; financially they're able to hang on, and hiring has been turned around, so maybe a leaner, restructured corporate entity will leave them in a position to succeed in the future.

We shall see.
Now you're flying smart
 
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EA CO AS
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:18 pm

Republic Air To Reorganize



Into Galactic Empire Air?
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
SWALUV
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:20 pm

Hate to say, I saw this coming. There was talk that they wouldn't be able to afford the pilot contract with the current income from the majors. Hopefully they'll be able to get everything worked out.

Best of luck to everyone over there. I feel this is the first of the consolidation we'll see in the regional industry.
 
Mir
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:44 pm

Quoting LatAmFlyer (Thread starter):
I guess the new pilot contract didn't solve everything?

It came too late. Pilots don't just appear - they have to go through a training process which takes, on average, 2.5 to 3 months. So if you wait until you're in a real staffing crisis to start enticing people (which RP did), it's going to be a bit before you can get the people actually working and making money for you. And being in Chapter 11 won't help get people in the door now when there are plenty of alternatives out there on more solid footing.

However, if a bankruptcy judge wipes out the new contractual gains, you can pretty much say goodbye to the airline, as they will face a mass exodus of pilots for greener pastures and won't be able to staff anything. This is going to be very interesting to watch.

I have some friends who are there, though, and I don't envy their position now. I hope they come out the other end okay.

-Mir
7 billion, one nation, imagination...it's a beautiful day
 
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LAXintl
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:47 pm

Sounds to me this is very much part of plan of exiting the 50-seater game which if not for DL would have been accomplished already and provide ability to finally merge into single certificate and shed excess and duplicate cost.
I'm sure some of the debt especially that secured by these 50-seaters will also get haircut.



Letter from Bedford:

I’m sorry to write with news that our company filed for Chapter 11 bankruptcy protection. This is a disappointing and unwelcome day, but it also represents our best opportunity to stabilize our airline, restore our operational reliability and to secure a brighter future for our associates, codeshare partners, and other key stakeholders.

This filing does not change our strategic goals and it should have little, if any, impact on your day-to-day routines or your relationship to the company. Under the protection of the Court, you can be assured that we will continue to:

o Deliver a safe, clean and reliable product for our customers;
o Provide wages, healthcare and other benefits without interruption;
o Fund our 401(k) contributions on schedule;
o Honor and retain our collective bargaining agreements, and;
o Pay our suppliers and vendors for the goods and services we receive in the ordinary course of business throughout the restructuring process.

While daily routines may not change, this filing is significant for our company. As such, you deserve to know how we got here, what’s next and the goals we’re working towards.

How We Got Here

Everyone reading this letter knows that the regional airline industry is undergoing profound changes, especially in response to the national pilot shortage. We have been forced to ground aircraft, reduce scheduled flying and our financial health has suffered. Although our new pilot contract is a achieving its desired effect and is an important asset of the company, we still need to restructure our codeshare partnership agreements and eliminate the burden of idled, out-of-favor aircraft

Those forces have effectively split our company in two: On the one hand, we are a thriving airline with a fleet of nearly 200 highly desirable EJET aircraft. That airline represents Republic’s future. On the other hand, we also are an airline with over 100 out-of-favor small jet and turboprop aircraft…out-of-favor with pilots and passengers alike. More and more of these unwanted, out-of-favor aircraft are sitting idle yet they are costing us approximately $10 million a month and earning us nothing.

This situation is unsustainable. As successful as our EJET fleet may be, it cannot continue to carry the dead weight of our idled aircraft. Similarly, we must negotiate additional revenue from our codeshare partners that recognizes the true cost of the product, that reflects our value in the marketplace and the value we provide our partners.

We have worked for months with our stakeholders to attempt to restructure the obligations of our out-of-favor aircraft and to increase our codeshare revenues; it has increasingly become clear that this process has come to an impasse and that we can no longer afford to waste our valuable resources. Combined with our loss of revenue during the past several quarters and a decline in our liquidity, we could not allow a stalled negotiating effort to put our core business at risk.

What’s Next?

Chapter 11 is not an end, but is instead a beginning. It will stem the drain on our finances and provide us with both the time and an orderly framework to conclude our restructuring successfully. Our board, the management team and our independent advisors firmly believe that the airline, our associates, partners, passengers, creditors, shareholders and our other stakeholders – including the communities we serve – will be best served by an orderly, court-supervised restructuring. We have entered this process with a strong core business and the liquidity necessary to carry out our restructuring plan. The result will position Republic as the world’s largest – and preferred – operator of EJETs. Along with our 6,000 dedicated aviation professionals, we believe this plan will restore us to our historic place atop the regional airline industry.

It’s difficult to know with certainty how long this process will take, but there are reasons to be optimistic on this point. First, unlike others who have filed in our industry, we have no interest in seeking labor concessions or rejecting any collective bargaining agreements. Second, we have entered Chapter 11 with clear, attainable goals already defined. Finally, some of our largest stakeholders in this case are our codeshare partners who should have every interest in seeing us emerge as quickly – and as strongly – as possible.

Our Goals

Several months ago, we identified four objectives for a consensual, out-of-court restructuring including:

o Amended agreements with our codeshare partners that reflect the true costs of our product and that allow the orderly restoration and transition of our fleet;
o An early return of out-of-favor aircraft (Q400 and ERJ-145 with reasonable and fair compensation);
o Streamlined operations around a single aircraft type (EJET) under a single operating certificate, and;
o Additional liquidity to fund long-term opportunities.

These remain our objectives and we will work with our external stakeholders to effect this plan. It will simply be an in-court plan vs. an out-of-court plan.

While Chapter 11 provides a process and a degree of predictability to our restructuring, it would be disingenuous to say it will be easy. In truth, we need to be more united than ever, to support each other more than ever and to deliver – more than ever – safe, clean, and reliable service to our codeshare partners every day. Now more than ever, we need to show our value to our codeshare partners and to the flying public. The people of Republic are among the best in the business; I know that each of us will stay focused on providing exceptional service and safety as we navigate this process together.

Many of you know I lean heavily on my faith, especially in times like these. I have been greatly comforted these days by the words James the Just wrote to scattered tribes: “Consider it all joy, my brothers, when you encounter various trials. For you know that the testing of your faith produces perseverance.”

Surely, James must have foreseen the creation of the airline industry.

I’ve been in this business for nearly 30 years. During that time, I’ve seen lots of airlines go through bankruptcy (including each of our flying partners), but this is the first time I’ve been inside the process. Like you, I’m deeply disappointed. Along with every member of our management team, I fervently wish we could have found a viable solution outside of the courthouse. Now that we are here, however, we will make full use of the process in order to secure the future viability of our airline. Our faith may be tested but our perseverance is limitless. I believe this with all my heart.

As we move forward, please remain focused on safety, reliability and delivering outstanding customer service to our guests and to one another.

God Bless,

Bryan


=
From the desert to the sea, to all of Southern California
 
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coronado
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:49 pm

I see this is a way to: reject leases on smaller aircraft and cancel contracts for purchasing C series without being liable for cancellation penalties.
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
jbs2886
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:49 pm

Quoting LAXintl (Reply 6):
Streamlined operations around a single aircraft type (EJET) under a single operating certificate, and;

I think we can read they have no plan to operate the C Series. Whether the order is transferred or cancelled remains to be seen.
 
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OzarkD9S
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 10:58 pm

Quoting jbs2886 (Reply 8):


I think we can read they have no plan to operate the C Series. Whether the order is transferred or cancelled remains to be seen.

You're probably right. But a savvy airline will make out nicely on a C Series order transfer. DL springs to mind.
"True, I talk of dreams,
Which are the children of an idle brain." -Mercutio
 
DC8FanJet
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:02 pm

Quoting Coronado (Reply 7):
cancel contracts for purchasing C series without being liable for cancellation penalties.

I would think this is a major factor, there isn't any chance the scope clauses with the majors will allow them to operate these.
 
bmibaby737
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:27 pm

Quoting LAXintl (Reply 6):
An early return of out-of-favor aircraft (Q400 and ERJ-145 with reasonable and fair compensation)

If the company rejects the leases on the Q400s, weren't most of these (24) being leased to UK airline, Flybe? Could that have any effect on Flybe?

How many E145s are on the books, is it just the 41(?) assigned to Delta?

[Edited 2016-02-25 15:28:10]
 
Sparrow787
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:35 pm

News around the company is that Bedford also sold his home in Indiana and bought a new home in Dallas....
 
flightsimer
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:36 pm

Quoting bmibaby737 (Reply 11):
If the company rejects the leases on the Q400s, weren't most of these (24) being leased to UK airline, Flybe? Could that have any effect on Flybe?

How many E145s are on the books, is it just the 41(?) assigned to Delta?

Republic's Q400 flying will be done before summer. That more or less is already a done deal. Remember United owned or leased the plane and subleased them to Republic. FlyBe should not be affected.

The 145's are on the Shuttle America side and are strictly Delta.
Commercial / Airline Pilot
 
dc10lover
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:46 pm

"I see this is a way to: reject leases on smaller aircraft and cancel contracts for purchasing C series without being liable for cancellation penalties"

Maybe this was the whole point of filing chapter11.
Why endure the nightmare and congestion of LAX when BUR, LGB, ONT & SNA is so much easier to fly in and out of. Same with OAK & SJC when it comes to SFO.
 
crazytoaster
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:50 pm

Quoting DC10LOVER (Reply 14):
"I see this is a way to: reject leases on smaller aircraft and cancel contracts for purchasing C series without being liable for cancellation penalties"

Maybe this was the whole point of filing chapter11.

Sure sounds like it based on the tone of that letter.

Living here in IND I hope they emerge from bankruptcy a stronger regional airline.
DEN homebase. Frequent traveler to IND and RNO.
 
EnviroTO
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Republic Air To Reorganize Via Bankruptcy

Thu Feb 25, 2016 11:53 pm

They never cancelled the order for CSeries and it seemed like there was no way that the CSeries could fit into their operating model. Then on the eve of delivery there is restructuring which can go in any direction. There are scope clauses that really limit the amount of flying they can do for other airlines, and recent United purchases don't seek to increase the flying they can do, so what will a restructured company look like? Will a company exist when this is all done? Will it be a company that is flying only 70+ seat aircraft but seriously limited in ability to grow and with a limited availability to find pilots with tight profit margins at the rates the majors are willing to pay? Or will it be a company looking to see how far it can go on its own?
 
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exunited
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 12:22 am

Quoting LAXintl (Reply 6):
First, unlike others who have filed in our industry, we have no interest in seeking labor concessions or rejecting any collective bargaining agreements.

There is not a single airline that has filed bankruptcy that has not made this claim. As a public company, they are bound to try and get back every single penny from every single place possible - the debtors will demand they do that. Look for them to come with their hands out to the employees very soon.

Don't think this will be any different, the lawyers and debtors committee and judge run the company now not the current mgt team, they have very minimal control now.
 
threeifbyair
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 12:43 am

Quoting exunited (Reply 17):
There is not a single airline that has filed bankruptcy that has not made this claim. As a public company, they are bound to try and get back every single penny from every single place possible - the debtors will demand they do that. Look for them to come with their hands out to the employees very soon.

Don't think this will be any different, the lawyers and debtors committee and judge run the company now not the current mgt team, they have very minimal control now.

Except that if you raid the pilots for money, they will just quit. And then Republic is going to be in Chapter 7.

The creditors will understand that and take their medicine. They took a risk and it didn't work out. Ruining the viable part of the airline by driving away the pilots is just stupid.
 
airtran737
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 1:01 am

You'd be a dope if you didn't see it coming. They just gave a huge raise to their pilots, have a large C Series order and nowhere to place the a/c nor will they try to do branded flying, massive debt load from all of their aircraft, not even close to enough crews to fly their a/c so they can't be awarded new flying. It was inevitable. But hey, at least they rented out a football stadium a few weeks ago to throw a big party... This is an attempt to reject leases and lower the pilot pay. Best of luck to all of my friends there.
Nice Trip Report!!! Great Pics, thanks for posting!!!! B747Forever
 
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exunited
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 1:01 am

Quoting threeifbyair (Reply 18):
Except that if you raid the pilots for money, they will just quit. And then Republic is going to be in Chapter 7.

The creditors will understand that and take their medicine. They took a risk and it didn't work out. Ruining the viable part of the airline by driving away the pilots is just stupid.

Remember that once they ditch the E145 and Q400s for good they don't need anywhere near as many pilots, flight attendants, mechanics etc etc so if some leave, that will be expected. Senior people are not going to start over at the bottom of another regional and lose their Capt seat for $10 or $20 or even $30 an hr pay cut. Not going to happen and the company knows this. Ask any mainline pilot about how the company won't risk them leaving if they decimate pay and benefits and you will find the answer - the employees have zero leverage and enough will stay to operate the much smaller operation. They will certainly be unhappy but won't leave. History proves that over and over. Sucks but is true.
 
Sparrow787
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 1:29 am

Quoting EA CO AS (Reply 3):

Hahaha probably the best post I've seen in a long time hahaha
 
INFINITI329
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 1:33 am

Quoting exunited (Reply 20):
Remember that once they ditch the E145 and Q400s for good they don't need anywhere near as many pilots, flight attendants, mechanics etc etc so if some leave, that will be expected. Senior people are not going to start over at the bottom of another regional and lose their Capt seat for $10 or $20 or even $30 an hr pay cut. Not going to happen and the company knows this. Ask any mainline pilot about how the company won't risk them leaving if they decimate pay and benefits and you will find the answer - the employees have zero leverage and enough will stay to operate the much smaller operation. They will certainly be unhappy but won't leave. History proves that over and over. Sucks but is true.

Unless QOL is chosen over money, there will be mass exodus of FO's. The highest pay rate at YX is $50. At most of the majors/lcc one WILL surpass that by your second year, if not already surpassed at year 1. Remember its pilots market, there are more jobs than pilots. As we speak there YX pilots tweaking their resumes right now.

[Edited 2016-02-25 17:38:59]

[Edited 2016-02-25 17:40:56]
 
DiamondFlyer
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:51 am

I would expect to see both Skywest and Endeavor asked to add CRJ2's to replace the ERJ-145 flying/

-DiamondFlyer
From my cold, dead hands
 
doug_or
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:33 am

Quoting DiamondFlyer (Reply 23):
I would expect to see both Skywest and Endeavor asked to add CRJ2's to replace the ERJ-145 flying/

SkyWest is already covering the CR2 flying that Endeavor can't staff. Delta would have sued them too, if they didn't already own them.
When in doubt, one B pump off
 
DiamondFlyer
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:40 am

Quoting doug_or (Reply 24):
SkyWest is already covering the CR2 flying that Endeavor can't staff. Delta would have sued them too, if they didn't already own them.

Not sure where you are getting info from, but you may want to check it. 9E has been constantly bringing 200s out of storage for the past months, adding more and more flying, while staffing it at a level of performance that is unparalleled in the DCI fleet. Skywest is not covering for 9E
From my cold, dead hands
 
OMNI435
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:22 am

Quoting DiamondFlyer (Reply 25):
Not sure where you are getting info from, but you may want to check it. 9E has been constantly bringing 200s out of storage for the past months, adding more and more flying, while staffing it at a level of performance that is unparalleled in the DCI fleet. Skywest is not covering for 9E

Well I am not sure you know either because OO did takeover 14 CRJ2's from 9E at the end of 2014 in DTW, and then recently took over an additional 2 lines of ex 9E flying at the end of 2015 in DTW as well. I am not saying 9E is having staffing issues but they definitely have given up some of their CRJ2 flying to OO.
 
Nwafan20
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:34 am

Back in 2014 a few CRJs were transferred, but that has no bearing today. Today Endeavor is covering other airline flying every day (spoiler alert: I personally live it) including OO's flying. Lines transfer between operators every month FYI.

Endeavor is pulling planes out of the desert as fast as we can. We have no staffing issues at all, and are the best performing Delta regional at this time. You can hear this right out of the horses mouth at the recent Delta managers conference where the COO and ops director named Endeavor by name as the "model carrier" for all the connection carriers.

So no, Delta wouldn't want to sue Endeavor. Get your facts straight next time.
 
INFINITI329
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Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 8:28 am

Quoting Nwafan20 (Reply 27):
So no, Delta wouldn't want to sue Endeavor. Get your facts straight next time.

Why would you sue yourself, lol. DL is showing that having a well managed regional can work wonders. AS has showed this as well. With YX in disarray I wouldn't be surprised if DL has a plan to add the Ejet to 9E fleet in a worst case scenario
 
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enilria
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 12:14 pm

Quoting DiamondFlyer (Reply 23):

I would expect to see both Skywest and Endeavor asked to add CRJ2's to replace the ERJ-145 flying/

-DiamondFlyer

In the DL FEB schedule, 15% of DL* 50 seater flying is on Shuttle America. That number is 10% in MAR forward. Both numbers are way below what 41 aircraft should produce. It seems more like 10-20 are actually flying.
 
durangomac
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 2:53 pm

Quoting Nwafan20 (Reply 27):
Back in 2014 a few CRJs were transferred, but that has no bearing today. Today Endeavor is covering other airline flying every day (spoiler alert: I personally live it) including OO's flying. Lines transfer between operators every month FYI.

This goes both directions, OO is covering flights daily for 9E, I see the reports and can confirm that. there are 14 lines of flying that OO has that are covering 9E and EV has 2-4 lines of flying to cover 9E's staffing issues from last year. I'm not sure 9E has fully recovered from that situation, not enough to take back 16 lines of flying.
 
DiamondFlyer
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 2:58 pm

Quoting durangomac (Reply 30):
This goes both directions, OO is covering flights daily for 9E, I see the reports and can confirm that. there are 14 lines of flying that OO has that are covering 9E and EV has 2-4 lines of flying to cover 9E's staffing issues from last year. I'm not sure 9E has fully recovered from that situation, not enough to take back 16 lines of flying.

There is no way that 9E would be bringing airplanes into the fleet to staff, if they couldn't already staff what they are obligated to fly. Perhaps the koolaide is strong out there in Utah, but just because OO management feeds you a line of crap, doesn't mean its true.

-DiamondFlyer
From my cold, dead hands
 
toltommy
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 3:09 pm

Quoting infiniti329 (Reply 28):
I wouldn't be surprised if DL has a plan to add the Ejet to 9E fleet in a worst case scenario

Best case scenario would be 6 months to certify the aircraft and add it to the certificate. Best case. Republic owns most of it's fleet, the planes DL could move wouldn't be that many. IIRC the only other DC carrier who could quickly fly the plane would be OO. I don't think anyone could absorb any of the E-170/E-175 quickly.
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coronado
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 3:32 pm

Quoting DC10LOVER (Reply 14):
"I see this is a way to: reject leases on smaller aircraft and cancel contracts for purchasing C series without being liable for cancellation penalties"

Hey DC10Lover, when quoting please credit original poster. See my original post #7 above.

But yes the main purpose of this exercise in my opinion is to cancel leases on the small aircraft without penalties, cancel the C Series order with the judge throwing out any cancellation penalties that may be stipulated in the purchase agreements. Additionally it is likely that one or more of their current small jet lift contracts (Delta?) is priced underwater, or at least at a rate where they cannot afford the flight crews and the lease payments to fulfill the contract. So I will not be surprised if they ask judge for an early cancellation of such contract(s), as prejudicial to Republic's financial well being.
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
EMBQA
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 3:57 pm

Quoting LAXintl (Reply 6):
but this is the first time I’ve been inside the process

..??.. Wasn't he at Business Express when they went into Bankruptcy..?
"It's not the size of the dog in the fight, but the size of the fight in the dog"
 
VictorKilo
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:14 pm

Quoting infiniti329 (Reply 28):
With YX in disarray I wouldn't be surprised if DL has a plan to add the Ejet to 9E fleet in a worst case scenario

I don't see this happening...but I could see a scenario similar to how 9E ended up being owned by DL play out in this case.

DL settles pending litigation with RAH with a large post-petition claim.

The 38 E-170 fleet flying for UA is transferred from the S5 cert to the YX cert.

DL swaps its claim in favor of S5, which is a 28 plane strong E-170/E-175 carrier. Perhaps DL will provide some cash as a part of the deal which helps to "re-capitalize" RAH.

RAH either moves the E145 as a part of the S5 transaction or else DL agrees to drop the flying and RAH exits those leases as a part of bankruptcy.

RAH could sell the 5 E190's operating as charters to DL.

RAH could cancel the CS order in bankruptcy - or if it makes sense for DL, DL assumes those orders as a part of the deal.
 
jbs2886
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:33 pm

Quoting VictorKilo (Reply 35):
I don't see this happening...but I could see a scenario similar to how 9E ended up being owned by DL play out in this case.

I was just thinking this as well; although more wholly-owned and then merged with Endeavor. Basically RAH rids itself of all of the aircraft it won't need under a revised plan. The E190s go to DL and maybe the C Series order (I think it would be a great plane for mid-country and east coast routes from SEA and LAX and west coast from JFK). But just speculation/dreaming.
 
ScottB
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RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:39 pm

Quoting flightsimer (Reply 13):
Republic's Q400 flying will be done before summer. That more or less is already a done deal. Remember United owned or leased the plane and subleased them to Republic. FlyBe should not be affected.

I don't believe that's quite correct. Looking through UAL's SEC filing, the Q400s are classified as being owned or leased by the regional carrier, not by United (and this is in contrast to the UAX E145/135 fleet which is nearly entirely owned or leased by UAL). It's very possible that FlyBe was getting a below-market rate to sublease or purchase the Q400s from RAH, so they might well be impacted by higher costs.

Quoting Coronado (Reply 33):
Additionally it is likely that one or more of their current small jet lift contracts (Delta?) is priced underwater, or at least at a rate where they cannot afford the flight crews and the lease payments to fulfill the contract. So I will not be surprised if they ask judge for an early cancellation of such contract(s), as prejudicial to Republic's financial well being.

I think it's almost certain that Republic will try to terminate the Delta Connection E145 flying as quickly as practicable. One of the key reasons why Republic got itself into this mess was because DL unexpectedly extended the agreement for the E145s to May 2016 and apparently also has chosen to exercise an additional extension to May 2021 which Republic disputes. The letter from Bedford basically spells this out:

Quoting LAXintl (Reply 6):
Those forces have effectively split our company in two: On the one hand, we are a thriving airline with a fleet of nearly 200 highly desirable EJET aircraft. That airline represents Republic’s future. On the other hand, we also are an airline with over 100 out-of-favor small jet and turboprop aircraft…out-of-favor with pilots and passengers alike. More and more of these unwanted, out-of-favor aircraft are sitting idle yet they are costing us approximately $10 million a month and earning us nothing.

But... the company also disclosed the following in its most recent quarterly filing with the SEC:

Quote:
On February 26, 2015, Delta Air Lines purported to exercise a right to extend aircraft under the E145 code-share agreement from May 2016 to May 2021. The Company disputes the validity of the purported extension, which is contrary to the parties' previous communications and understanding. As the agreement does not contain any terms for an extension period, any such purported extension would be subject to mutual agreement on rates, terms, and conditions. No such mutual agreement has been reached and the Company believes that Delta has not made any good-faith efforts to engage in such discussions. Absent such an agreement it would expire by its terms on May 31, 2016.

Even though Bedford claims harm from small jets sitting idle, the company apparently wants out of the E145 flying done for Delta Connection. No doubt the problems are poor/negative margins on the 50-seat flying and the need for pilots to effectuate the Ejet flying as well. And I expect counsel probably informed RJET management that they wouldn't be able to wiggle out of Delta's 50-seat extension.

Quoting Mir (Reply 5):
Pilots don't just appear - they have to go through a training process which takes, on average, 2.5 to 3 months. So if you wait until you're in a real staffing crisis to start enticing people (which RP did), it's going to be a bit before you can get the people actually working and making money for you.

RJET management played a lot of games with their pilot group over the years: "Deactivating" a seat on the E190s so they'd be 99-seat aircraft instead of 100-seaters and subject to new contract terms. Playing ownership shenanigans with F9 to appease the F9 pilots and avoid seniority integration with the YX/S5/RP pilots. Delaying negotiations on a new contract until it became clear that they were uncompetitive with their peers in a time of pilot scarcity. And even tying improved pay rates in the new contract to fairly expensive health insurance changes for certain pilots.

Quoting exunited (Reply 17):
There is not a single airline that has filed bankruptcy that has not made this claim. As a public company, they are bound to try and get back every single penny from every single place possible - the debtors will demand they do that. Look for them to come with their hands out to the employees very soon.

That was true in the past but not applicable when pretty much EVERYONE ELSE in the industry is hiring. Going after pilot pay will make them about as attractive as Great Lakes for pilot hiring. Republic's problems stem in part from not being able to draw enough pilots to execute the flying for which they've committed.
 
User avatar
enilria
Posts: 9658
Joined: Fri Feb 22, 2008 7:15 pm

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:53 pm

To me this happened because of three factors:

1) Delta contract extension of the 50 seaters which are not economic for Republic to staff with pilots
2) The pilot shortage which exacerbates #1
3) The purchase of F9.

Ironically, buying F9 was done to help with #2 by providing flow through to mainline pilot rates thus helping retention/recruiting and reduce their exposure to #1 by making the 50 seaters a much smaller part of the company and therefore more manageable...as well as a place to utilize unwanted cast-off aircraft The end result, however, was that the complexity of the F9 purchase made the relationship with the pilots much worse, further worsening #2; and sucked their financial reserves away, by funding F9 losses, which made underwriting the losses of #1 even more impossible.

4) would probably be poor management decisions leading to filing Ch11 in the era of greatest industry profits in the history of aviation.
 
toxtethogrady
Posts: 1861
Joined: Sat Dec 23, 2000 12:33 pm

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 4:59 pm

Quoting infiniti329 (Reply 1):
Preemptive strike to protect themselves from the majors from breach of contract(s)?

The majors need to get the message that contract flying to get cheap crews is as consigned to the history as using private security firms hiring low-wage employers to check IDs at the gate area. Pilots have options in a full-employment economy.
 
bennett123
Posts: 8976
Joined: Sun Aug 15, 2004 12:49 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:24 pm

So Republic signed contracts with customers, staff and suppliers.

They did it so badly that they could not make money.

Answer, take Chapter 11 and walk away from the mess.
 
ScottB
Posts: 6666
Joined: Fri Jul 28, 2000 1:25 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:26 pm

Quoting enilria (Reply 38):
Ironically, buying F9 was done to help with #2 by providing flow through to mainline pilot rates thus helping retention/recruiting and reduce their exposure to #1 by making the 50 seaters a much smaller part of the company

I don't think the F9 purchase really had anything to do with the pilot shortage which has really only manifested itself in the past couple of years with stricter duty/rest time rules coming at the same time as the resumption of retirements at the majors (which had been staved off by the extension of the mandatory retirement age to 65).

Rather, it was more about finding a place for some of the aircraft (mostly ERJs and E170s) which had been cast off by the major legacy carriers as they shifted to the E175 and guaranteeing that flying with an internal customer (the merged F9-YX). They got a great deal on some E190s that US was desperate to dump at the time as well.

Quoting enilria (Reply 38):
4) would probably be poor management decisions leading to filing Ch11 in the era of greatest industry profits in the history of aviation.

Honestly, the judge and creditors should be extremely critical in examining whether Republic truly is bankrupt. They showed positive pre-tax income for the third quarter as well as the first nine months of 2015 (the most recently-reported figures), and their cash flow was positive for the first nine months of 2015.

If the issue is the C-Series orders then there is a very serious issue in failing to disclose risk involved with that order.
 
bahadir
Posts: 1335
Joined: Wed Oct 03, 2001 4:57 pm

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:36 pm

Quoting VictorKilo (Reply 35):
RAH could sell the 5 E190's operating as charters to DL.

That operationg ended in August 2015
Earthbound misfit I
 
deltal1011man
Posts: 5332
Joined: Mon Sep 19, 2005 9:17 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 5:52 pm

Quoting exunited (Reply 20):
Remember that once they ditch the E145 and Q400s for good they don't need anywhere near as many pilots, flight attendants, mechanics etc etc so if some leave, that will be expected. Senior people are not going to start over at the bottom of another regional and lose their Capt seat for $10 or $20 or even $30 an hr pay cut. Not going to happen and the company knows this. Ask any mainline pilot about how the company won't risk them leaving if they decimate pay and benefits and you will find the answer - the employees have zero leverage and enough will stay to operate the much smaller operation. They will certainly be unhappy but won't leave. History proves that over and over. Sucks but is true.

No history doesn't prove that at all. The bankruptcies of legacy carriers are not apples to apples. Very few employees(period, not just pilots) plan on a life at a regional. The general plan is to get some time at an airline so the big 4 (plus AS/HA/B6) will hire you.
So yes, people are going to leave for a 10 an hour pay cut.

Ask MQ, they went from a senior work force to a pretty junior work force between BK and the extra cuts Parker wanted them to take.

Quoting enilria (Reply 38):

4) would probably be poor management decisions leading to filing Ch11 in the era of greatest industry profits in the history of aviation.

It hasn't been great profits on the regional side. Profits yes, but not anything (margins) like the big airlines are seeing.
Lower fuel prices or not, a lot of the industry signs contracts that will have tight margins in the best of times. This plus 117 is going to cause the regional industry to change. (my guess is more wholly owned with better pay. Simple fleets.)
 
floridaflyboy
Posts: 1591
Joined: Sat Jun 03, 2006 3:26 pm

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:03 pm

Quoting flightsimer (Reply 13):
That more or less is already a done deal. Remember United owned or leased the plane and subleased them to Republic.

RAH leased them directly.

Quoting exunited (Reply 17):
the debtors will demand they do that.
Quoting exunited (Reply 17):
debtors committee

Creditors. Republic is the debtor.

Quoting VictorKilo (Reply 35):
RAH could sell the 5 E190's operating as charters to DL.

Those aircraft are long gone.

I've heard the idea mentioned before that DL could buy S5. Just not sure how that would work with the pilots and FAs from both certificates on a single seniority list.
Good goes around!
 
VictorKilo
Posts: 237
Joined: Wed Jul 05, 2006 7:39 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:07 pm

Quoting bahadir (Reply 42):
That operationg ended in August 2015

True, but per the most recent 10-Q, those planes were still on the RAH books.
 
UsAir737
Posts: 222
Joined: Mon Mar 23, 2015 1:26 pm

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:17 pm

Quoting VictorKilo (Reply 45):

I believe they were leased to another carrier
Long live US/ HP the airline that took over the world!
 
azjubilee
Posts: 3708
Joined: Sat Apr 29, 2000 5:26 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:29 pm

Newsflash.... there isn't a pilot shortage per se, there is a shortage of pilots willing to work for the crap pay at the US regional fee for departure carriers (FFD). Finally, pilots are on the right side of the supply and demand curve. As such, the FFD's are being forced to pay up in various forms, like better starting pay, signing bonuses, retention bonuses, interview guarantees at a mainline partner etc... The problem for these FFD's however, is that their mainline partners are in the drivers seat with respect to what they pay their regional partner. This concept is nothing new. Since it's the responsibility of the FFD to maintain its costs and attempt a profit margin, paying their employees more puts them in a pickle, one we see Republic in today. The new pay and benefits required to keep pilots and other work groups employed, requires more pay from Republic's mainline partners. Since something has to give, with DL and the others probably not willing to sweeten the deal, Republic's only alternative is to seek CH11 and get those contracts canceled or renegotiated to support its new cost structure. Of course, it's not all about labor, but this is a glimpse into how the tide is finally turning.

I'm not surprised it has come to this. I predicted that the FFD carriers would have to pay up, forcing in some manner, the mainline carriers to finally pay their FFD partners what it takes to support the new labor cost reality. Mainline will react by bringing more flying inhouse, will be forced through the courts to pay up or simply stop doing business with that FFD partner. This is a bold and risky move by Republic, but again, something has to give.

[Edited 2016-02-26 10:34:29]
 
superjeff
Posts: 1267
Joined: Fri Feb 05, 2010 2:14 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:31 pm

Quoting ScottB (Reply 41):
Honestly, the judge and creditors should be extremely critical in examining whether Republic truly is bankrupt. They showed positive pre-tax income for the third quarter as well as the first nine months of 2015 (the most recently-reported figures), and their cash flow was positive for the first nine months of 2015.

I'm not at all sure that many on this group understand what Chapter 11 is. A company does not simply file Chapter 11 and escape all its liabilities. The company's fate can be totally in the hands of its creditors, who may be able to put a Receiver in charge of the company and throw out management. Shareholders get wiped out. It is not something done easily.

In this case, if the company does not have the ability to honor its obligations, the management/ownership/Directors may feel there is no alternative. Republic probably came to the conclusion that they would (1) be liable to Delta for damages due to their inability to fully perform their contract (same thing with their contracts with American and United as well), couldn't get out of lease obligations on ERJ's and CR2's, etc., obligations on the DH4's, etc. They will likely get about 6 months to exclusively propose a Plan of Reorganization (which might get extended if they are showing that they are making progress), and the (and only then) the creditors will vote on whether to accept the plan. They can always reject it and cause a liquidation if they believe it is a better recovery (see what happened with Eastern or Pan Am back in 1991, for example - Pan Am wasn't able to come up with an acceptable reorganization plan and with Eastern, the stakeholders (creditors) were able to throw out existing management and put a Receiver (Martin Shugrue) to run the company. For what its worth, in the case of Eastern, the liquidation actually made a profit and the creditors received a significant dividend on the liquidation.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

RE: Republic Air To Reorganize Via Bankruptcy

Fri Feb 26, 2016 6:42 pm

Quoting LAXintl (Reply 6):
Sounds to me this is very much part of plan of exiting the 50-seater game which if not for DL would have been accomplished already and provide ability to finally merge into single certificate and shed excess and duplicate cost.
I'm sure some of the debt especially that secured by these 50-seaters will also get haircut.

  

Judging by both the internal and external messaging, it does, indeed, appear that this is as much about the CPAs on the Q400/EMB145 fleets as anything else.

Quoting azjubilee (Reply 47):
Finally, pilots are on the right side of the supply and demand curve. As such, the FFD's are being forced to pay up in various forms, like better starting pay, signing bonuses, retention bonuses, interview guarantees at a mainline partner etc.

... or simply shrinking altogether, which is also what's happening. The post-Colgan pilot regulations exacerbated the problem, but indeed the biggest issue is simply that the market for commercial aviation pilot labor has finally worked through the massive surplus of supply post-9/11, and now pilots are, indeed, in more demand than their is supply to satisfy that demand. Part of the issue is airlines being unwilling to pay what pilots demand, but part of the issue is that said airlines - the regional operators - in many cases genuinely cannot afford to pay these pilots what they demand, as the higher wages would render the entire economic equation non-viable for the airline. And thus precisely why we are seeing the ongoing consolidation - either through mergers/acquisitions, or liquidations - of regional airlines in the U.S. Through a mix of higher wages and diminished demand from shrinking regional fleets, supply and demand will once again return to something approach equilibrium.

[Edited 2016-02-26 10:56:04]

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