RAH Makes Big Money - Low Crew to Plane Ratio
Another great quarter for RAH. Down a little from last year, but given the market and the competitors performance, they are still doing great. This says they have 223 aircraft and yet this site says they only have 1958 active pilots (154 on furlough). That only gives them 4.35 crews per airplane. That seems incredibly low. I think all of the aircraft are either in service or will be soon. I would think they are going to have to call back some of the furloughed pilots soon.
Republic Airways Holdings Announces Third Quarter 2008 Results
INDIANAPOLIS, Oct 29, 2008 (BUSINESS WIRE) -- Republic Airways Holdings Inc. (NASDAQ: RJET) today reported operating revenues of $385.2 million for the quarter ended September 30, 2008, a 16.7% increase, compared to $330.1 million for the same period last year. The Company reported net income of $17.0 million compared to $20.2 million reported in the prior year's third quarter and earnings per diluted share was $0.50, compared to $0.49 for the same period last year.
Third Quarter Highlights
Excluding reimbursement for fuel expense, which is a pass-through cost to our partners, regional airline service revenues increased 11.5% for the third quarter of 2008. This increase was primarily a result of an 8.2% increase in available seat miles (ASMs) and a 3.8% increase in block hours. The Company also recognized approximately $7.9 million of deferred revenue related to the removal of the E135 fleet from Delta.
Total operating expenses for the third quarter of 2008, including interest expense but excluding fuel charges (which are reimbursable by the Company's major partners), of $261.2 million, increased approximately 14.6% from $227.9 million for the same quarter of 2007. Operating cost per ASM (CASM), including interest expense but excluding fuel was 7.94c for the third quarter of 2008. During the quarter the Company incurred expenses totaling $7.4 million including an accrual for the estimated return costs of the E135 aircraft and an adjustment to the carrying value of these assets to their future sales price. The Company also incurred carrying costs on unallocated E170 aircraft of approximately $8.0 million. Excluding these two items, CASM decreased to 7.48c for the third quarter of 2008, from 7.50c for the same quarter of 2007. As discussed below, all but one of the 17 aircraft previously under contract with Frontier Airlines will be redeployed to Midwest Airlines and Mokulele Airlines.
During the quarter the Company took delivery of six new E175 regional jets. One was placed into fixed-fee service for US Airways and five have been placed into fixed-fee service for Delta. The Company entered into fixed-rate debt financing arrangements for these aircraft. The Company also returned one 37-seat E135 aircraft to the lessor during the quarter. At September 30, 2008, the Company's fleet consisted of 233 regional jet aircraft.
In July 2008, the Company received noticefrom United Air Lines that United was exercising its right to early terminate the United Express Agreement that provides for the Company to operate seven 50-seat E145 aircraft. The termination will be effective December 31, 2009. The agreement to operate 38 E170 aircraft is unaffected by United's termination letter andthere is no early termination provision in the E170 agreement.
Also in July 2008, the Company announced that it and Delta Air Lines had reached agreement to remove the final eleven 37-seat E135 aircraft from service effective September 30, 2008. The aircraft were originally scheduled to be removed between November 2008 and April 2009. All eleven of the E135 aircraft removed are under agreement to be sold by April 2009 at a specified price.
In August 2008, the Company agreed to participate with two other creditors in providing a debtor-in-possession (DIP) firm financing commitment of $30 million to Frontier, subject to customary closing conditions. The Company's portion of this commitment was $12.5 million. Any additional funding is at the sole discretion of the lenders.
In September 2008, the Company announced that it had reached an agreement with Midwest Airlines to provide 12, 76-seat E170 jets operating as Midwest Connect with initial service beginning October 1, 2008. All 12 aircraft will be in operation by November 15, 2008. The Company also made available to Midwest a one year term loan facility in the amount of $25 million,whichhas been fully drawn, including $10 million that was funded today.
Recent Developments
On October 15, 2008, the Company announced that it had reached an agreement with Mokulele Airlines of Hawaii to operate four, 70-seat E170 jets under a 10-year capacity-purchase agreement beginning November 19, 2008. The Company will provide up to $8.0 million in direct financing to Mokulele in the form of a line of credit, which can be converted, at the Company's option, for up to 45% of the common stock of Mokulele.
On October 23, 2008, the Company announced that it had entered into a loan agreement with US Airways to provide up to $35 million in two tranches. The first tranche of $10 million has been funded. At US Airways' option and subject to certain other conditions, the second tranche of $25 million may be funded on March 31, 2009.
On October 24, 2008, the Company announced that it had reached an agreement with American to amend its airline services agreement. The Company will lower its reimbursement paid by American by approximately 3%, effective April 1, 2009 and will also reduce the number of aircraft operated under the agreement by two to 13, effective June 1, 2009. Also, the amendment includes an extension of the date on which American may early terminate the agreement by three years, to March 2012.
Balance Sheet Information
At September 30, 2008 the Company had $134.2 million in cash and cash equivalents compared to $164.0 million as of December 31, 2007. The Company's long-term debt increased to $2.16 billion as of September 30, 2008, compared to $1.91 billion at December 31, 2007. All of the Company's long-term debt is at fixed interest rates and is secured by the aircraft. The Company also has significant long-term operating lease obligations. At a 7% discount factor, the present value of these lease obligations was approximately $700 million as of September 30, 2008.