RAH signs agreement with Midwest Airlines
 

On September 3, 2008, Republic Airways Holdings Inc. (the "Company") announced that its wholly-owned subsidiary, Republic Airline Inc. ("Republic Airline"), has signed an agreement with Midwest Airlines, Inc. ("Midwest Airlines") to provide twelve 76-seat Embraer E170 jets for Midwest Airlines with initial service beginning October 1, 2008.

Key commercial terms of the agreement include (i) under the Airline Service Agreement (the "Agreement"), Midwest Air Group, Inc. ("Midwest") will purchase all capacity at predetermined rates and will directly pay or reimburse Republic Airline for industry standard pass-through costs; (ii) the first aircraft will be placed into service on October 1, 2008 and the last aircraft on November 15, 2008; (iii) the Agreement has a term of ten years. However, at Midwest's option, and at any time prior to June 1, 2010, Midwest can elect to convert the Agreement into a long-term aircraft lease. The twelve E170s would be leased from Republic Airline for the remaining duration of the Agreement and operated on the Midwest Airlines operating certificate; (iv) all fuel will be purchased directly by Midwest and will not be charged back to Republic Airline; (v) the Company will make a one-year term loan to Midwest in the amount of $15.0 million, with an additional loan commitment of $10.0 million, based on the achievement of certain milestones as determined by the Company; and (iv) the loan(s) will be collateralized by all of Midwest's unencumbered assets and generally be senior to other lender's security position.

I hope that this flying isn't occuring to replace some of the Mad dogs at Midwest Mainline. If not kudos to RAH.

Yup. Good for Republic now, horrible for Midwest pilots.

Keep reading the fine print...
-Midwest already got rid of all their MD-80s.
-Midwest announced they will be getting rid of 16 of their B-717s.
-Midwest's fleet will consist of all of 9 (NINE) mainline jets.
-Republic will now hold all of Midwest's assets as collateral.
-Midwest has the option, and in all likelyhood will...
---"Crew these airplanes and add them to their operating certificate, pending labor contract renegotiation and FAA approval."
---""We recognize the difficulty this presents to our flight crews and maintenance staff, who will experience additional temporary furloughs,"

So again, good for Republic; they have homes for the old Frontier jets, although they won't get to keep staffing them once Midwest takes over, but at a huge loss for Midwest pilots.

Republic Airlines to Operate 12 Embraer E170 Jets for Midwest Airlines: Financial News - Yahoo! Finance

The new jets will beging flying OCtober 1st. This is a good deal for my roommate who was slated to go on furlough from Shuttle on Friday. Maybe this will change the amount of guys getting furloughed. Perhaps not.....

The interesting part will be when Midwest tries to staff our aircraft with their own crews. This looks like a major violation of our CBA!

How is it a violation of your CBA for the company to dry-lease the airplanes to Midwest Airlines?

cause the contract says any airplane that has anything to do with republic will be flown by republic pilots

Good for RAH's and their scheduled furloughs but I fear Midwest won’t existing in 1 year. AirTran has started flying many of their routes and will start to fly many more. AirTran has the lowest operating cost, when you subtract fuel cost, in the industry and Midwest just can’t compete.

Current MKE AirTran routes:

MKE to SEA, SFO, LAX, SAN, LAS, PHX, MCO, FLL, TPA, RSW, BWI, ATL, IAD, BO & LGA.

I would wager that your contract probably says something about republic airlines, not republic holdings or whatever they call it. Holding companies can usually do whatever they want, that's why they're out there.

I could easily be wrong though since I have never seen your contract.

WOW so the Midwest guys are taking your flying..that is just plain wrong

is midwest going to cut skywest flying out completely?

Republic Airlines to Operate 12 Embraer E170 Jets for Midwest Airlines: Financial News - Yahoo! Finance

Key commercial terms of the agreement include:
1. Under the Airline Service Agreement (“ASA”), Midwest will purchase all capacity at predetermined rates and will directly pay or reimburse Republic for industry standard pass-through costs.

2. The first aircraft will be placed into service on October 1, 2008 and the last aircraft on November 15, 2008.

3. The agreement has a term of ten years. However, at Midwest’s option, and at any time prior to June 1, 2010, Midwest can elect to convert the ASA into a long term aircraft lease. The 12 E170’s would be leased from Republic for the remaining duration of the ASA and operated on the Midwest Airlines operating certificate.

4. All fuel will be purchased directly by Midwest and will not be charged back to Republic.

5. Republic made a one year term loan to Midwest in the amount of $15.0 million, with an additional loan commitment of $10.0 million, based on the achievement of certain milestones.
6. The loan(s) is collateralized by all of Midwest’s unencumbered assets and generally be senior to other lender’s security position.

I could be misinterpreting this, but some pilots, FA, Maint personnel will be furloughed as a result of cnx of 16 B-717. I'm under the inpression the Midwest Airlines is trying to put E-170 on their certificate, but the Pilots would have to negotiote a contract before the can proceed further.

Midwest Airlines Announces Progress On Restructuring Plan - Midwest Airlines

Milwaukee, September 3, 2008 -- Midwest Airlines today announced significant progress in its voluntary restructuring plan and $60 million in additional financing, including commitments from TPG Capital and Republic Airways Holdings, an Indianapolis-based airline holding company.

Timothy E. Hoeksema, Midwest Airlines chairman and chief executive officer, said $40 million of the additional financing has already been funded, with an additional $20 million committed to be funded upon completion of certain milestones in the airline’s voluntary restructuring plan. Midwest’s restructuring has focused on a strategy to serve its core business markets, cost reductions necessary to address high jet fuel prices and a soft economy, and revenue enhancement actions.

"This commitment of additional financing provides us the best opportunity to preserve what our customers and communities have always valued from our airline, while positioning us for a return to sustained profitability and future growth," Hoeksema said. He added that under the agreement, Northwest Airlines will continue its codeshare and frequent flyer programs with Midwest.

As part of the financing agreement, Republic has entered into an airline services agreement with Midwest to operate 12 Embraer 170 jets under the Midwest Connect brand. Republic will operate the 76-seat Embraer 170s until Midwest can transition the fleet under its own FAA operating certificate. The new Embraer 170 service will be introduced into Midwest Connect’s schedule throughout the fall, beginning October 1.

Additionally, Midwest said that it had reached an agreement in principle with Boeing Capital Corporation on renegotiated leases for its fleet of Boeing 717s. Under the terms of the agreement, Midwest will continue to fly nine of the original 25 Boeing 717s it had under lease for its mainline fleet, returning 16 to Boeing this fall.

"Operating a more fuel-efficient, flexible mix of aircraft makes good economic sense in this new energy environment for the airline industry," Hoeksema said. "We have had to make difficult decisions as part this restructuring that have resulted in change for our airline. But our strategy of offering nonstop service to key business markets and giving our customers what they have always valued about the Midwest brand -- what we were built on -- will not change."

Revenue enhancement actions that are part of the restructuring include the introduction of Midwest Class seating on the airline’s Boeing 717 fleet, which was announced last week, as well as a $15 fee for first checked bag and an increase in the second checked bag fee from $20 to $25. Those fees will apply to tickets purchased on or after Thursday, September 4, 2008 for travel October 21 and beyond. Active members of the U.S. military and Midwest Miles Executive members are exempt from the fees. Wheelchairs, walkers, strollers, child car seats and other mobility-assistive devices are also excluded.

The airline said it plans to continue negotiating with the unions representing its pilots and flight attendants on concessions necessary to align its labor costs to the marketplace, in order to meet one of the final goals of its restructuring plan. It also said that the airline services agreement with Republic would result in additional furloughs for Midwest pilots, flight attendants and maintenance staff until Midwest can operate the Embraer 170 fleet on its own FAA operating certificate. The airline said it expected this process, which includes training for its flight crews and maintenance staff, would take eight months to a year.

"We recognize the difficulty this presents to our flight crews and maintenance staff, who will experience additional temporary furloughs," Hoeksema said. "We informed union leadership of our plan and advised them that this was the best option to keep our airline viable and that in the best interests of our employees, customers and communities, we need them to come to the table on cost reductions so we can obtain certification and bring the jobs back to Midwest."

Seabury Group LLC is advising Midwest Airlines on its restructuring plan and advised the airline on securing and structuring these financial commitments, as well as on restructuring the Boeing Capital Corporation agreement.


Midwest Airlines features jet service throughout the United States, including Milwaukee’s most daily nonstop flights and best schedule to major destinations. Catering to business travelers and discerning leisure travelers, the airline earned its reputation as "The best care in the air" by providing passengers with impeccable service and onboard amenities at competitive fares.

No, we are still under contract but the CR2 just isn’t as efficient as the CR7/9 or the E170/175’s are. I'm certain Jerry was approached but we just don't have the a/c sitting around like RAH does plus I think Jerry sees the writing on the wall.

Well, that's good news for the RAH guys, not so good news for the Midwest guys. Pretty sad when you have loan $25 million to your mainline airline for a CPA!? :rolleyes: This industry is so screwed up, nothing surprised me anymore...

I also read that Midwest will be returning 16 717s to Boeing and will utilize the replacement jets to cover the flying.

Seriously?

RAH is flying a comparable sized aircraft in the colors of Midwest while Midwest guys are on the street, and it's the Midwest guys who are stealing RAH's flying?

That's a screwed up viewpoint if you're serious.

You have it all wrong. RAH operates the 170s till Midwest can get a labor deal with it's pilot group. That can happen between now and June 2010. If that does not happen by then, RAH will operate for 10 years.

No I was beign sarcastic to those guys stating that it is a violation of the CBA

we got the same point of view

Here is YX ALPA's Response

Midwest Pilots Express Outrage at Airline’s Deal with Republic Airways



MILWAUKEE—Captain Jay Schnedorf, chairman of the Midwest Airlines unit of the Air Line Pilots Association (ALPA), issued this statement today following Midwest Airlines’ announcement that it had secured commitments from Republic Airways Holdings. As part of the deal, Midwest announced that Republic flightcrews would fly 12 EMB 170s as Midwest Connect, beginning October 1, 2008, directly replacing all but nine of the Boeing 717 aircraft flown by Midwest pilots.



“This is catastrophic news for our pilot group and for all Midwest employees. Management’s plan to replace all but nine of our B-717s with EMB 170s and replace Midwest pilots with Republic pilots will have a devastating impact—raising the number of Midwest pilots who are out of work to approximately 300 of the some 400 pilots who were employed before TPG/NWA purchased the airline earlier this year. Furthermore, management restated its continued intent to wring drastic, draconian concessions from our pilots, holding our very jobs hostage as part of its deal with Republic.



“Midwest pilots are outraged that management is using such underhanded tactics and further decimating this airline. We are putting management on notice that they cannot hold a gun to our heads and deal with our pilot group in this manner. We strongly believe that management’s actions are a repudiation of its contract with us, and we are exploring all of our options to protect our pilots and hold management accountable for the deal it made with us in 2000 and the concessions we made during our company’s restructuring in 2003.



“A year ago, CEO Tim Hoeksema stated publicly that the deal with TPG/Northwest would ‘be good for our airline, the employees, and the community.’ Make no mistake: with this latest deal, Mr. Hoeksema, TPG, and Northwest have revealed their complete disregard for this airline and its employees. Today marks a dark day in the history of Milwaukee, Wisconsin, as management has essentially sounded the death knell for Midwest Airlines and the reputation the employees have built for providing the ‘best care in the air.’”



ALPA is the bargaining representative for the 400 pilots at Midwest Airlines. Founded in 1931, ALPA represents 53,000 pilots at 37 airlines in the United States and Canada.



###



ALPA CONTACTS:

First Officer Paul Sweet, (414) 698-7167, [email protected]

Barbara Gottshalk, (703) 689-4100, [email protected]

they are not taking OUR flying! They are going to try to do THEIR flying on our aircraft!

I feel for the midwest guys, thats terrible what your management is doing!! Are the midwest guys going to fight this????

The bottom line is the pilots of Midwest need to sign a contract with the company that includes provisions to fly the 170's... when they do the midwest pilots will fly them and the RaH guys will go home...... kinda sucks all the way around... but then..MIDWEST could just close the doors...that would suck worse....

AND I do believe that its a violation of the CBA with the RAH pilots to lease those aircraft to Midwest....... but then RAH mgt has always taken the attitude that we will do it... and you can grieve it....

im just saying that the rah contract states that the agreement covers "the company, any subsidiary of the company, the companys parent, any subsidiary of the company's parent and any future airline certificates." It goes on to state that the company will not transfer aircraft to other airlines to evade the contract. as far as who looses flying its not good for the whole industry. Im sure republic will be used as a whipsaw for the midwest pilots and in the end the net result will be less pay for every one.

This deal is just wrong...in the short term it is Great for RAH management and pilots, in the long term it is bad for Midwest and RAH....lets hope April's fools day just came late this year!

I hope this thing falls through for the industries sake. Republic does not look into the future it seems but makes decisions based on the next 24 hours.

This deal isn't good for either pilot group. Both sides need to stand up and fight for their respective intrests.

While it might save my job in the near term (I get furloughed next Monday) I don't see this as a positive move for our group.

rah management, as sleazy as they are, usually don't enter into agreements like this! I think they were just so anxious to get the frontier birds I'm the air anyway they can.

I urge every Midwest and RAH pilot out there to vote this whole C.F. down!! That is if it even gets to a vote! This deal is no good for anyone involved except for the management of these two. The future ramifications of relaxing scope overshadow any sort of immediate " benefit". I'm currently throwing up in my own mouth at the idea of how our management treats our CBA. So again vote this down and call your union leadership! And if your in the local 747, put your red bagtag on! That's about our only option at this joke of an airline.

Yea i agree with you. It was a bad deal with the frontier flying and this is what they think is going to fix it??? There only hurting themselves.

If the unions are able to come to an agreement with management on Midwest pilots flying 170's for midwest airlines it'd be good for midwest pilots. One of the problems i see is that currently midwest is equipping their 717's like their 170's, now, they'll have a comparable package. Hopefully, they'll negotiate better than regional salaries for the aircraft, but it might go to show all of us, that the E-170/175 is as much a mainline aircraft as the 190/95 is, and should be flown as such. Good luck to all.

I'm all for 170s going to mainline and pilots flying them for mainline rates. But if its done like this! I want no part of it! I dont want to be flying 170s for midwest undercutting the pilots as they let people go and I don't want them flying our aircraft while our guys get a thanks but no thanks kick in the pants! No matter how you look at it either RAH or midwest pilots are going to get the shaft! Unless we all take a stand!

It would seem that Midwest management has put it's pilots into a corner. They are doomed if they take a crappy contract and they are doomed if they hold out past June of 2010. I can see it now, we RAH pilots are not going to be liked. All this cause of the actions of our management groups. I pray the Midwest guys get a good contract out of this. This would only make swallowing this $hit pill easier.

I pray neither pilot group gives in on this one and hope that both come together to fight this one. Both have groups an intrest in this.

Sadly, we won't. And both sides are losing out.

I don't want my job saved only because I'm now a whipsaw.

We've all been whipsaw's since we've been on the seniority list. Get used to it.

Great attitude!!!

I don't like the fact that I make what I do. I'd much rather be flying these things without the "express" tag on the side. Different arguement for a different time.

This thing is different than the traditional codeshare. We're whipsawing them, and they could end up flying our aircraft in violation of our contract.

No matter what, both groups lose.

I dont post much here anymore, I have grown tired of the bad news in the industry and usually me on this site leads to me growing bitter but this news sums it all up. Airline management will continue to farm out flying to regional guys if they are able to operate the flights for lower cost. The major reason they are able to do that is because they pay labor such low wages. The majority of pilots accept low wages (including myself) in hopes of gaining experience and moving on to a major airline.......................GUESS WHAT FELLAS?, there will no longer be any jobs at the major level.

I dont blame the RAH pilots, I blame the Midwest scum that are doing this to get around paying a fair wage to their pilots, I do expect RAH to raise the bar come contract time.....enough is enough I am thoroughly disgusted with this industry and I hope MIDWEST PILOTS stop showing up for work................then the airline could shut down and there will be no flying to ***** out, so be it if RAH furloughs.........I would much rather see a 20k a year guy furloughed then one at a Major level. In all honesty I would imagine RAH guys are embarrassed, I mean after all the 717 (Midwest configurations) arent much larger then the "E-JETS"

PS This is all predicated one who will actually be flying these planes, if its Midwest guys fine, if its RAH guys, I stand by my post above

I read this post on the XJT forum, and I think it sums it up very well

You guys, just wait till you see what United has in store for Republic. Watch another jets for jobs deal come out of that whole mess this year. That company is a virus and a cancer in this industry and will be the demise of our careers. The writing is on the wall and we are heading towards a new era in airline flying.

We have a bunch of failing major airlines being propped up by cheap, eager, opportunistic regional carriers who move in when the gettin is good. Just when a major is about to go toe up in swoops their savior, Republik...my balls...and takes over a huge chunk of flying the the major just couldn't support anymore. In turn, the major airline negotiates the contract down to the bare bones and the regional passes this down to the labor groups, and the beat goes on, and on.

Meanwhile, said labor group watches their company grow, expand and prosper, yet continually fails to negotiate a contract remotly approaching the rates proportionate to the flying they are now doing inplace of their brother that came before them.

Have fun Republic. You guys are the demise of our industry. How many more 737 jobs can you diassemble? When will you step up and push back at your company that doesn't care about the history of airline piloting? When are you going to do your part, or are you going to just keep on taking?

Saab, you should see the discussion over @ RP.org. we've pretty much come to the same conclusion as here. this is an attempt to whipsaw Midwest and screw all of us over.

if any one knows if it's bad juju to post excerpts of your contract, i'll come back later and post the Scope section of ours. basically, if it's owned by RAH, then RAH pilots have to fly it. i can't see any way that if it were to go to court that they could get around it.

Enough is enough. I am happy to see the posts here that realize this is a whipsaw in the race to the bottom, and it's embarassing to see those of you that think this is good news for Republic.

When we all got into this field we were hoping to get on at a major some day. That's not going to happen if we keep flying LARGE regional jets for wages that are barely middle class.

The unions need to take a larger, more aggressive stance against this BS. Teamsters and ALPA both.

-XJT Furloughed: my job replaced by a non-union pilot who will fly a larger Continental Connection aircraft for less. Thanks guys.

I knew this was coming. Please do not take this out on our pilot group. Trust me, our pilot group is not embracing this with open arms. The only good this has to it is that RAH stops bleeding money cause planes are sitting on the ground. Doesn't put money in my pocket.

The way this industry is going, I swear to god in the fine print of our job description something similar to this must reside:

This industry makes me sick.

I agree completely. Not good for Midwest......and an eyesore for RAH. I hate the thought of ANY flightcrew on the street, pilot or fa alike.

With that being said, I don't make company policy, I don't choose what new business to pursue and possibly obtain, I just show up for work so I can get those kibbles on the 15th and the 30th, so I can feed my family.