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American Air Deal Removes Hurdle to Republic's Bankruptcy Exit - Bloomberg

American Air Deal Removes Hurdle to Republic’s Bankruptcy Exit
Mary Schlangenstein
Schlangenstein


September 2, 2016 — 6:05 PM EDT

• Pact complements earlier agreements with Delta and United
• Accord provides $250 million unsecured claim to American

Republic Airways Holdings Inc. reached a deal to continue providing regional flights for its largest customer, completing its third pact with the biggest U.S. carriers and removing an obstacle on the path to exiting bankruptcy.

The agreement with American Airlines Group Inc. is critical because the world’s largest carrier accounts for about half of Republic’s revenue, the bankrupt regional airline said in a court filing Friday. While the accord will initially reduce Republic’s flying for the airline, there’s an option to increase it with American’s consent.

“The comprehensive commercial settlement and claims resolution with American is a major achievement for the debtors that clears the pathway for a successful emergence from Chapter 11,” Republic said in the filing. The agreement must be approved by U.S. Bankruptcy Court Judge Sean Lane.

The number of aircraft Republic will operate for American, and options for more in the future, were redacted from the legal filing. American will receive a $250 million unsecured bankruptcy claim as part of the settlement, Republic said in a statement. The Indianapolis-based carrier earlier reached agreements to continue operating flights for Delta Air Lines Inc. and United Continental Holdings Inc.

Under the latest deal, American will pay to reconfigure some Embraer E175 aircraft operated by Republic to have 76 seats instead of 80, making them consistent with the rest of the bankrupt carrier’s fleet and in compliance with pilot contracts at its larger partners. As of July 31, Republic was making about 470 daily flights for American, 280 for United and 225 for Delta, according to the court filing.

The regional airline, which ferries passengers from smaller cities to hub airports, sought court protection from creditors in February after struggling with a shortage of pilots. Republic secured a new contract with its workers in 2015 but was unable to negotiate deals with the larger airlines at that time to help cover costs of higher pilot pay.

The case is In re Republic Airways Holdings Inc., 16-10429, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

EMBFlyer

2200NM ETOPS RJs Comin' in hot!

Got ALPA Scope?!

LuckyNow

This is the footnote to the 'We're Retiring Twenty 80s Today' story that ran earlier in the week. All bad news will be delivered on a Friday afternoon before a holiday weekend. Same old story.

Sliceback

S80 drawdown was planned in 2011(?).

WesternSkies

k .

Arado 234

Don't forget to "axe" United that question after a couple of Kirby weeks...

LuckyNow

Right, but with all the trouble on the regional front with reliability and staffing, was there not the hope that (like Delta) that we could do some of this flying in house? Even if that meant growing group 1. Our management team seems to have a myopic obsession with Delta, you'd think they'd try to mirror their operational plan.

EMBFlyer

They have a bigger obsession with RJs. However, the one pushing that the most is at United now.

Buzzlightyear

The increase the RJ move has had its share of challenges. Letting various feed operators call themselves AA is not working out well for the airline. Managements number one goal in the merger was to do better than United and Delta did. Most of the milestones have come and gone and the big hurdles are behind them. From my view AAG has been content to focus on not screwing up the integration and took a stance of "we will get to operational stuff down the road". I think they may now be looking at operational issues and trying to pivot off the integration to focus more on other issues. Kirbys baby was creating the feed du jour (12 different regionals) environment. Not sure if they are reversing course and bringing the flying back or other smaller steps but I think they know a pivot is in their future.