Posted on: 04 May 2010 by Ross McSweeny
Republic Airways Holdings has reported a net loss of $36.5 million for the quarter ended 31 March 2010, compared to $2.2 million of net income for the same period last year.
The company reported this despite operating revenues of $608.7 million for the first quarter of the calendar year – an 87.1% increase on the first quarter of 2009 when it reported $325.3 million. The increase in revenues is largely due to the acquisition of Frontier Airlines and Midwest Airlines during 2009.
During the first quarter of 2010, Republic’s pre-tax loss of $58.5 million was negatively impacted by an $11.5 million, non-cash impairment to write off the Midwest Airlines trademark and reduce the carrying value of other assets. The company also recorded a total of $13.1 million of expenses related to the integration of the branded business and the return of Q400 and CRJ aircraft. On top of these, severe winter storms in the first quarter of 2010 had an estimated $7.5 million negative impact on pre-tax results.
Excluding all non-recurring items and the impact of the storms, the company’s pre-tax loss was $26.4 million.
Additionally, Republic recorded $10.0 million of non-cash adjustments that reduced branded revenues and $3.2 million of amortisation for intangible assets associated with the purchase accounting for Frontier and Midwest. The non-cash adjustments to revenue are expected to continue in the second and third quarters of 2010 and the intangible amortisation is expected to continue at current levels for the remainder of 2010.
In the fixed-fee segment, total service revenues of $251.0 million declined $70.7 million from 1Q09. Excluding fuel reimbursement from partners, fixed-fee service revenues decreased $53.3 million in 1Q10 due to a 19.3% reduction in block hours.
Income before taxes on the fixed-fee operations was $14.3 million for the quarter. Results were negatively impacted by approximately $2.0 million due to the winter storms and $2.0 million for aircraft return costs, says Republic. Cost per ASM (CASM), including interest expense but excluding fuel, increased to 8.07¢ for 1Q10, from 7.80¢ for 1Q09.
In the branded segment, total revenues were $352.3 million for the quarter. The total revenue per ASM (TRASM) was 9.53¢. The branded operations posted a loss before taxes of $70.5 million for 1Q10. The branded business incurred non-recurring items totalling $22.6 million and was also negatively impacted by approximately $5.5 million due to the severe winter storms. Cost per ASM (CASM), including interest expense but excluding fuel and impairment charges, was 7.63¢ for the first quarter of 2010.
In its other businesses, including revenues from aircraft subleases, slot rentals and charter operations and expenses associated with those activities and any unassigned aircraft, Republic reported a pre-tax loss of $2.3 million in the first quarter related mostly to idle aircraft.