Posted on: 26 February 2014 by Mark Howells
Republic Airways Holdings (RAH) has announced its financial results for the fourth quarter of 2013 and for the full calendar year.
Full year income from continuing operations increased 54.3% to $48.3 million compared with $31.3 million for the full year 2012. For the full year 2013, the loss from discontinued operations was $21.6 million, compared to income of $20.0 million for 2012. The decrease in income from discontinued operations, net of tax, is primarily attributable to the loss on the disposal of Frontier Airlines.
RAH reported fourth quarter 2013 (4Q13) income from continuing operations of $16.5 million, compared with $8.8 million from continuing operations in 4Q12. Net income, which includes the results of discontinued operations at Frontier, increased 23.8% to $15.6 million for 4Q13, compared with $12.6 million in the same period in the prior year. Operating revenues for 4Q13 increased by 5.8% to $346.5 million compared with $327.4 million for 4Q12.
“This was a transformational year for Republic,” remarked Republic Airways Holdings chairman, president and CEO, Bryan Bedford. “The improved operating results are a reflection of our renewed focus on our core, fixed-fee operation and the expansion of flying under capacity purchase agreements with American, Delta and United. With the successful sale of Frontier behind us, we can now give our full attention to the pressing challenges facing the regional airline industry.”
Operating revenues increased $19.1 million, or 5.8%, from 4Q12 to $346.5 million in 4Q13. Fixed-fee service revenue increased $61.5 million, or 22.5%, to $334.9 million due to increased Q400 flying with United Airlines and new E175 flying with American Airlines. Passenger service revenue decreased $42.8 million due to the reduced number of E190 aircraft operating under pro-rate agreement with Frontier Airlines. That agreement terminated in February 2014.
Total operating revenues for 2013 decreased by 2.2% to $1,346.5 million compared with $1,377.4 million for 2012. Fixed-fee service revenues increased $174.0 million, or 15.8%, to $1,276.1 million due to the aforementioned increased Q400 flying with United Airlines, and the company's new E175 flying with American Airlines. Passenger service revenue decreased $201.6 million due to the removal of E190 aircraft operating under a pro-rate agreement with Frontier, which ended in February 2014.
RAH classified its Frontier business as discontinued operations with effect from 30 November 2013, due to the sale of the airline to Indigo Partners. The transaction closed in early December 2013. The company received net cash proceeds of approximately $76.6 million.
The impact of discontinued operations, net of tax decreased $4.7 million, from income of $3.8 million during the fourth quarter of the prior year, to a loss of $0.9 million in the fourth quarter of 2013. For the full year 2013, the loss from discontinued operations was $21.6 million. The decrease in income from discontinued operations, net of tax, is primarily attributable to the company’s loss on the disposal of Frontier.
As of 31 December 2013, Republic operated a fleet of 258 aircraft. Within fixed-fee and charter agreements, the company operated 72 aircraft with 44-50 seats and 184 aircraft with 69-99 seats.
In addition, two 99-seat aircraft were operated under the pro-rate agreement with Frontier, down from twelve 99-seat aircraft operated in pro-rate service during 4Q12. The E190 pro-rate agreement with Frontier terminated in February 2014. Five E190s previously operating under pro-rate operations at Frontier will be subleased offshore to another airline. The remaining five E190s will continue to operate under a fixed-fee charter service agreement.
During 4Q13, the company took delivery of 10 Embraer 175s related to its American Airlines E175 fixed-fee agreement. The company took delivery of 19 E175 aircraft during the year and 16 of those aircraft were operating by 31 December 2013. The company expects to take delivery of the remaining 28 E175s between now and the first quarter of 2015.
The company added one Q400 aircraft into operation during 4Q13. For the full year 2013, the company took delivery and placed into operation 10 Q400s and currently has a total of 28 of the type in operation.
On 11 February 2014, the company updated its 2014 operating fleet plans to reflect its intent to reduce its operating fleet by up to 27 ERJ family aircraft which the company anticipates will be removed from service by the end of the third quarter.
On 14 February 2014, the company announced that it had reached a Tentative Agreement (TA) on a new four-year contract with the International Brotherhood of Teamsters (IBT) Local 357. Local 357 represents all of the company’s pilots. The proposed contract includes increases in pay that will place Republic pilots at or near the top of their airline peers. It also includes improvements in work rules, quality of life enhancements and more flexibility in scheduling, as well as a significant signing bonus if ratified. The TA still must be presented to union members for review and a formal ratification vote, which, if it occurs, is expected to be completed in April 2014.