Wednesday, May 4, 2011

Republic Airways Reports 1st quarter results

Frontier A319-111 (c/n 2019) N923FR "Rudy" the Raccoon arrives in Orange County (SNA/KSNA) from Denver (DEN/KDEN) on May 2, 2011.
(Photo by Michael Carter) 

Republic Airways Holdings reduced its loss for the first quarter ended March 31, but its branded flying under the Frontier Airlines banner continued to be a drag on earnings as the parent of Republic, Chautauqua, Shuttle America, Frontier and Lynx posted a loss of $22.4 million, improved from a deficit of $36.5 million in the year-ago period.

"While the results of our first quarter are disappointing, it is certainly not from a lack of effort from our employees," Chairman and CEO Bryan Bedford said during a conference call with analysts available via webcast, citing "soaring fuel costs," and severe winter weather for the result.

Total operating revenues rose 8.3% to $659.1 million while operating expenses, paced by a 25.5% rise in fuel costs, rose 4.9% to $659.7 million, resulting in an operating loss of $0.6 million, narrowed dramatically from last year's operating loss of $20 million.

Fixed-fee flying under capacity purchase agreements with major airlines produced revenue of $236.7 million, virtually unchanged from the year-ago period. It generated pre-tax income of $17.6 million, up 23% over 2010. Excluding special items, current period pre-tax income rose 7.1% to $19.6 million.

Republic's challenges continue to center on Frontier. Although revenues rose 12.2% to $395.4 million, branded flying had a pre-tax loss of $55.2 million, reduced from $70.4 million last year. Excluding special items, the 2011 pre-tax loss was $51.2 million, widened from $42.3 million in 2010.

Midwest (Republic Airways) ERJ-190-100IGW (c/n 19000191) N170HQ taxiies at Fort Lauderdale (FLL/KFLL) towards a mid-morning departure on January 13, 2011.
(Photo by Michael Carter)

In April, Republic announced it would transfer six Embraer E-170s from Frontier to CPA flying with Delta Air Lines in addition to eight E-170s announced in January. All 14 will be flying for DL as of Oct. 1. Frontier's last three E-170s will be transferred to other CPA flying by yearend. Frontier will also accelerate the removal of the remaining four Airbus A318s in its fleet. They will be returned to lessors by the end of the third quarter. It is also adding to two seats to each of its A319s, from 136 seats to 138 seats. Capacity guidance will be flat for the year, reduced from the previously planned 4%-5% increase.

Bedford said Frontier needs to improve its performance by $100 million. The fleet changes and corresponding capacity reductions "get us 20% towards our goal," he said. "Over the next few months we are going to be engaging with all of our business partners, distribution, leasing, maintenance, MRO, and our employees to achieve meaningful expense savings … to all facets of the operation," he said.

(Perry Flint - ATWOnline News)

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