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4Q09 and full-year results announced by Republic Airways

Republic Airways Holdings has reported its financial figures for the fourth quarter of 2009 (4Q09) and for the the last full calendar year.

Operating revenues of $637.3 million were achieved for the quarter ended 31 December 2009, an 87.9% increase, compared with $339.3 million for the same period last year. The company also reported net income of $20.1 million for 4Q09, compared to $19.0 million of net income for the same period in the previous year.

The 4Q09 results include $109.2 million of goodwill and other impairment charges and a $203.7 million gain on bargain purchase related to the acquisition of Frontier Airlines. These two non-recurring items increased pre-tax income by $94.5 million and net income by $17.1 million for the quarter. Additionally, the company recorded a year-end tax adjustment, which increased net income by $2.1 million for the quarter. Excluding these non-recurring items, income before taxes was $1.5 million and net income was $0.9 million.

For the full year ended 31 December 2009, operating revenues were $1.64 billion, an increase of 11.0% from 2008. Net income for the year was $39.7 million compared with the $84.6 million of net income in 2008.

Republic’s total fixed-fee service revenues of $266.7 million declined $67.8 million from prior year’s fourth quarter. However, excluding fuel reimbursement from its partners, fixed-fee service revenues decreased $35.8 million, or 12.5% for the fourth quarter of 2009 due to a reduction in block hours.

The company removed 15 aircraft from fixed-fee operations in 2009 and reported all Midwest regional operations in its branded segment from the beginning of August 2009. Income before taxes on the fixed-fee operations, excluding a $2.0 million impairment charge for intangible assets, was $24.5 million for the quarter. Cost per ASM (CASM), including interest expense but excluding fuel and the impairment charge decreased to 7.59¢ for the 4Q09, from 7.62¢ in 4Q08.

Total revenues from Republic’s branded airlines were $364.9 million for the quarter. Load factor was 79.7% for the quarter and total revenue per ASM (TRASM) was 10.10¢. Excluding a $96.5 million pre-tax gain from non-recurring items, the branded operations posted a loss before taxes of $18.5 million for 4Q09. Cost per ASM (CASM), including interest expense but excluding fuel and non-recurring items, was 7.31¢ in 4Q09.

The company’s “Other” business segment includes revenues from aircraft subleases, slot rentals and charter operations and expenses associated with those activities and any idle aircraft. Republic reported a pre-tax loss of $4.5 million on this segment in 4Q09 related mostly to idle aircraft.

During the quarter Republic acquired Frontier Airlines and its 62 operational aircraft. It also took delivery of six of the ten Embraer 190s bought from US Airways during the quarter and removed the final six Boeing 717s from its fleet, bringing the total operational fleet from 228 aircraft at 39 September 2009 to 290 aircraft at 31 December 2009.

For the fixed-fee segment across the whole of 2009, revenues were $1.09 billion, a decrease of $282.0 million from the previous year’s results. Excluding fuel reimbursement from partners, fixed-fee service revenues decreased $46.4 million, or 4.1% for the year due to a reduction in block hour activity.

Income before taxes on the fixed-fee operations, excluding impairment charges of $15.3 million, was $102.0 million. Cost per ASM (CASM), including interest expense but excluding fuel and impairment charges, increased to 7.65¢ in 2009, from 7.50¢ in 2008.

Branded operations for 2009 include Mokulele Airlines between April and October 2009, Midwest Airlines starting in August 2009, and Frontier Airlines starting in October 2009. For the full year ended 31 December 2009, branded revenues totalled $444.3 million. Load factor was 79.2% for the year and total revenue per ASM (TRASM) was 10.52¢.

The branded operations posted a loss before taxes and non-recurring items of $38.5 million for 2009. Cost per ASM (CASM), including interest expense but excluding fuel and non-recurring items, was 8.01¢ for 2009.

In its ‘Other’ segment, Republic had a pre-tax loss of $8.4 million for the year, related mostly to idle aircraft.

At 31 December 2009, Republic Airways had $350.2 million in cash, of which $192.7 million was restricted. This compares to $130.9 million in cash, of which $1.2 million was restricted at 31 December 2008.

The company’s debt increased to $2.79 billion as of 31 December 2009, compared to $2.28 billion at 31 December 2008. The increase in debt is related mostly to aircraft purchases made during the year combined with the acquisition of Frontier Airlines and its aircraft debt. As of 31 December 2009, all but $85 million of the company’s debt is secured by the aircraft and approximately 80% of the total debt is fixed-rate.

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 sheet. At a 7.0% discount factor, the present value of these lease obligations was approximately $1.17 billion as of 31 December 2009 compared to approximately $685 million at 31 December 2008.

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