Posted on: 07 August 2015 by Ross McSweeny
Republic Airways Holdings’ financial results for the second quarter of 2015 (2Q15) have been negatively impacted by a high number of pilot-related cancellations as a result of the growing national pilot labour shortage and ongoing labour dispute with the International Brotherhood of Teamsters (IBT). Republic’s pre-tax income for 2Q15 was $9.1 million, compared with $33.3 million for the prior year's second quarter (2Q14). Similarly, Republic’s net income for 2Q15 was $4.3 million, compared with a net income of $20.1 million in 2Q14. The effective tax rate of 52.7% for the quarter was higher than the normalised tax rate due to miscellaneous non-deductible expenses.The airline’s second quarter results were also impacted by fleet transition costs and idled aircraft costs totalling $10.8 million associated with the removal of Embraer 190 aircraft, Bombardier Q400 aircraft and surplus ERJ 145 aircraft. Nonetheless, proceeds from the sale of aircraft and other assets increased from $8.6 million in 2Q14 to $89.5 million in 2Q15 – Republic leased five Q400s during the period (three were temporarily parked, two were transitioned to Flybe) as well as leasing three owned E170s to other operators). This means that at the end of the first half of 2015 (1H15), Republic was operating a total of 41 44-50 seat aircraft, an 8.9% decrease in comparison with 1H14, but its number of 69-99 seat aircraft had increased from 192 by 4.7% to 201 across the respective periods. The figure for passengers carried only reduced by 1.5% to 10,869,181 from 11,038,416 in 1H14 despite these changes.Whilst operating revenues for 1H15 decreased by 0.3% from $680.5 million in 1H14 to $678.6 million, wages and benefits expenses increased by 4.5%, or $8.2 million, primarily due to an increase in pilot wages. Cost per ASM for 1H15 increased 5.1% in comparison with the same period in 2014. Nonetheless, Republic's debt decreased to $2.25 billion as of 30 June 2015, compared with $2.34 billion at 31 December 2014 thanks to its scheduled principal repayments. Also, for the first half of the year (1H15) the average length of aircraft flights (miles) increased by 1.2% from 495 in 1H14 to 501 this year.