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Republic Airways Holdings Announces Third Quarter 2009 Results

Dépèche transmise le 4 novembre 2009 par Business Wire

Republic Airways Holdings Announces Third Quarter 2009 Results

Republic Airways Holdings Announces Third Quarter 2009 Results

INDIANAPOLIS--(BUSINESS WIRE)--Republic Airways Holdings Inc. (NASDAQ: RJET) today reported operating revenues of $359.6 million for the quarter ended September 30, 2009, a 6.7% decrease, compared to $385.2 million for the same period last year. The Company reported net income of $3.3 million for the quarter ended September 30, 2009, compared to $17.0 million reported in the prior year’s third quarter. The Company also reported earnings per diluted share of $0.09, compared to $0.50 for the same period last year. The third quarter 2009 results include August and September results for Midwest Airlines, which was acquired on July 31, 2009.

Third Quarter Financial Highlights

Total fixed-fee service revenues declined $99.7 million from prior year’s third quarter. However, excluding fuel reimbursement from our partners, fixed-fee service revenues decreased $17.6 million, or 6.2% for the third quarter of 2009 due to a reduction in block hour activity, which is the result of removing 22 aircraft from operations under our fixed-fee agreement with Continental. Seventeen of the aircraft removed were returned to the lessor, three were subleased offshore and two are expected to be subleased offshore in the first quarter of 2010. Income before taxes on the fixed-fee operations was $20.4 million for the quarter. Fixed-fee operating cost per ASM (CASM), including interest expense but excluding fuel, increased to 7.61¢ for the third quarter of 2009, from 7.57¢ for the same quarter of 2008.

Total revenues flown on our branded airlines were $73.9 million for the quarter. Load factor was 78.2% for the quarter and total revenue per ASM (TRASM) was 12.83¢. The branded operations posted a loss before taxes of $15.9 million for the third quarter. Operating cost per ASM (CASM), excluding fuel, was 10.64¢ for the third quarter of 2009.

During the quarter, the Company added five E190 and five E135 aircraft on short-term leases. These aircraft will be operated in the Company’s branded business replacing B717 and CRJ aircraft. At September 30, 2009, the Company’s fleet consisted of 228 aircraft, including six B717 aircraft that are expected to be returned to the lessor by the end of 2009.

Balance Sheet Information

At September 30, 2009 the Company had $148.7 million in cash, of which $63.2 million was restricted. This compares to $130.9 million in cash, of which $1.2 million was restricted as of December 31, 2008. The Company’s long-term debt decreased to $2.23 billion as of September 30, 2009, compared to $2.28 billion at December 31, 2008. As of September 30, 2009 all of the Company’s aircraft-related debt is at fixed interest rates and is secured by the aircraft. 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 sheets. At a 7.0% discount factor, the present value of these lease obligations was approximately $690 million as of September 30, 2009 compared to approximately $685 million reported as of December 31, 2008.

Business Developments

On July 31, 2009 the Company completed its acquisition of Milwaukee-based Midwest Airlines from TPG Capital, a Ft. Worth, Texas-based private equity firm. Republic paid TPG $6 million in cash and has issued a $25 million five-year, interest-only note, which may be converted to RJET stock at $10 per share.

On August 13, 2009 the Company announced that it had been declared the winning bidder in the auction to acquire Frontier Airlines. Pursuant to the investment agreement, Republic agreed to purchase 100% of the stock of Frontier Holdings upon its emergence from bankruptcy for $108.75 million. On October 1, 2009 the Company completed its acquisition of Frontier.

On October 14, 2009 the Company announced that it will acquire 10 Embraer 190AR jets from US Airways. Republic applied the full balance of its $35 million unsecured loan to US Airways toward the purchase of the aircraft and assumed the existing variable-rate debt on the aircraft. The aircraft are expected to enter into branded service between November 2009 and the second quarter of 2010.

On October 16, 2009 the Company entered into an agreement with Mesa Air Group, Inc. ("Mesa") to form Mo-Go, LLC, a new business partnership that will provide inter-island commercial airlines services in Hawaii. Pursuant to the Agreement, Mesa now owns 75% of Mo-Go and the former Mokulele shareholders own the remaining 25%. Additionally, the partners have agreed to capitalize the new business with up to $6.0 million, $1.5 million of which would be funded by Mokulele’s former shareholders. Republic, which was the majority shareholder of Mokulele, cancelled Mokulele’s $3.1 million outstanding debt to Republic, net of surrendered aircraft deposits. The Company expects to record a non-cash charge of approximately $5-$6 million in the 4th quarter to deconsolidate its investment in Mokulele.

Corporate Information

Republic Airways Holdings, based in Indianapolis, Indiana is an airline holding company that owns Chautauqua Airlines, Frontier Airlines, Lynx Aviation, Midwest Airlines, Republic Airlines and Shuttle America, collectively “the airlines.” The airlines offer scheduled passenger service on approximately 1,600 flights daily to 118 cities in 43 states, Canada, and Mexico under branded operations at Frontier and Midwest, and through fixed-fee airline services agreements with five major U.S. airlines. The fixed-fee flights are operated under an airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, United Express, and US Airways Express. The airlines currently employ over 11,000 aviation professionals and operate 286 aircraft.

The Company will conduct a telephone briefing to discuss its third quarter results tomorrow, November 5th, at 10:00 a.m. EST. For those wishing to participate please call 866-804-6925 and for international calls please dial 857-350-1671, the passcode is 76791934. A live Webcast of this briefing will also be available online at www.rjet.com - investor relations.

Additional Information

In addition to historical information, this release contains forward-looking statements. Republic Airways may, from time-to-time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass Republic Airways’ beliefs, expectations, hopes or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely" and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to Republic Airways as of such date. Republic Airways assumes no obligation to update any forward-looking statement. Actual results may vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others, the risks discussed in our Form 10-K and our other filings made with the Securities and Exchange Commission, which discussions are incorporated into this release by reference.

  REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars and Shares in Thousands, Except per Share Amounts)
(Unaudited)
           
 
Financial Highlights Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 Change 2009 2008 Change
OPERATING REVENUES
Fixed-fee service $ 281,415 $ 381,121 -26.2% $ 913,524 $ 1,127,681 -19.0%
Passenger service 64,876 - NM 70,388 - NM
Cargo and other   13,336     4,127   223.1%   20,982     12,823   63.6%
Total operating revenues 359,627 385,248 -6.7% 1,004,894 1,140,504 -11.9%
 
OPERATING EXPENSES
Wages and benefits 76,864 61,898 24.2% 207,446 190,627 8.8%
Aircraft fuel 39,477 97,613 -59.6% 100,179 279,974 -64.2%
Landing fees and airport rents 20,026 15,340 30.5% 55,434 45,085 23.0%
Aircraft and engine rent 33,592 33,422 0.5% 95,400 101,319 -5.8%
Maintenance and repair 58,852 45,630 29.0% 151,487 124,723 21.5%
Insurance and taxes 6,648 6,255 6.3% 19,930 18,295 8.9%
Depreciation and amortization 38,398 35,666 7.7% 112,002 99,149 13.0%
Promotion and sales 5,341 - NM 5,341 - NM
Goodwill Impairment - - 0.0% 13,335 - NM
Other   43,834     29,220   50.0%   109,340     89,553   22.1%
Total operating expenses   323,032     325,044   -0.6%   869,894     948,725   -8.3%
OPERATING INCOME 36,595 60,204 -39.2% 135,000 191,779 -29.6%
 
OTHER INCOME (EXPENSE)
Interest expense (34,862) (33,762) 3.3% (105,246) (96,572) 9.0%
Other income   2,779     1,280   117.1%   10,418     11,167   -6.7%
Total other income (expense) (32,083) (32,482) -1.2% (94,827) (85,405) 11.0%
 
INCOME BEFORE INCOME TAXES   4,512     27,722   -83.7%   40,172     106,374   -62.2%
 
INCOME TAX EXPENSE   1,864     10,715   -82.6%     23,894     40,786   -41.4%
 
NET INCOME (INCLUDING NONCONTROLLING INTERESTS) 2,648 17,007 -84.4% 16,278 65,588 -75.2%
 
Net loss (income) attributable to noncontrolling interest in MFSI   (623)     -   NM     (3,270)     -   NM
 
NET INCOME OF THE COMPANY   3,271     17,007   -80.8%     19,548     65,588   -70.2%
PER SHARE, BASIC $ 0.09 $ 0.50 -82.0% $ 0.57 $ 1.87 -69.5%
PER SHARE, DILUTED $ 0.09 $ 0.50 -82.0% $ 0.57 $ 1.86 -69.4%
Weighted Average Common Shares
Basic 34,449 34,169 0.8% 34,449 35,084 -1.8%
Diluted 34,529 34,169 1.1% 34,462 35,196 -2.1%
 
  Unaudited Operating Highlights          
 
Operating Highlights – Fixed Fee

Three Months Ended
September 30,

Nine Months Ended
September 30,

2009 2008 Change 2009 2008 Change
Fixed-fee service revenues, excluding fuel (000) $ 265,899 $ 283,508 -6.2% $ 839,473 $ 847,707 -1.0%
Passengers carried 4,881,571 4,884,439 -0.1% 14,365,238 14,418,453 -0.4%
Revenue passenger miles (000) 2,510,784 2,456,925 2.2% 7,359,971 7,394,022 -0.5%
Available seat miles (000) 3,242,019 3,290,132 -1.5% 9,930,228 9,957,376 -0.3%
Passenger load factor 77.4% 74.7% 2.7 pts 74.1% 74.3% -0.2 pts
Cost per available seat mile, including interest expense (cents) ¹ 8.09 10.54 -23.2% 8.55 10.26 -16.7%
Fuel cost per available seat mile (cents) 0.48 2.97

-83.8%

0.75 2.81 -73.3%
Cost per available seat mile, including interest and excluding fuel expense (cents) ¹ 7.61 7.57 0.5% 7.80 7.45 4.7%
Operating Aircraft at period end: ³
37-50 seat jets 79 101 -21.8% 79 101 -21.8%
70-86 seat jets 113 119 -5.0% 113 119 -5.0%
Block hours 165,779 183,293 -9.6% 518,255 565,208 -8.3%
Departures 97,897 107,072 -8.6% 304,905 321,268 -5.1%
Average daily utilization of each aircraft (hours) 9.4 10.0 -6.0% 9.8 10.2 -3.9%
Average length of aircraft flight (miles) 500 496 0.8% 495 508 -2.6%
Average seat density 66 62 6.5% 66 61 8.2%
 
  Operating Highlights – Branded ²  

Three Months
Ended
September 30,

 

Nine Months
Ended
September 30,

2009   2009
Total revenues 73,892 79,904
Passengers carried 669,901 757,933
Revenue passenger miles (000) 450,437 462,598
Available seat miles (000) 575,785 607,183
Passenger load factor 78.2% 76.2%
Total revenue per ASM (cents) 12.83 13.16
Passenger revenue per ASM (cents) 11.27 11.59
Cost per available seat mile (cents) ¹ 14.78 15.67
Fuel cost per available seat mile (cents) 4.14 4.26
Cost per available seat mile, excluding fuel expense (cents) ¹ 10.64 11.41
Operating Aircraft at period end: ³
37-50 seat jets (including ten aircraft operated by regional partner) 12 12
70-99 seat jets 25 25
Block hours 23,346 25,660
Departures 15,422 18,695
Average daily utilization of each aircraft (hours) 10.0 10.0
Average length of aircraft flight (miles) 551 476
Average seat density 68 68

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