Republic and Frontier

katbuad · 04-23-2008, 12:42 PM

My husband just sent me this via email. He works for Chautauqua. He did comment in a personal section of the email that my BIL was keeping his recent Republic captian up grade. But that everyone was in a tizzie over the news. . . .

All of the following is a cut and paste from the email.

Republic Airways Announces Termination of Frontier Agreement

INDIANAPOLIS--(BUSINESS WIRE)--April 23, 2008--Republic Airways Holdings (NASDAQ/NM: RJET), today reported that it has reached agreement with Frontier Airlines with respect to Frontier Airlines rejection of its Airline Services Agreement ("ASA") in Frontier Airlines' chapter 11 cases. The agreement is subject to customary approvals. Currently, the Company is operating 12 E170 aircraft under the ASA.

"We have enjoyed our partnership with Frontier and have a lot of respect for their people," said Republic CEO Bryan Bedford. "It's unfortunate that despite their many efforts to reorganize their business outside of Chapter 11, factors beyond their control conspired to force a deeper reorganization. We wish them success in their continuing efforts to combat persistently high oil prices."

The agreement provides for an orderly wind-down under which the Company will remove four aircraft on May 1, an additional six aircraft on June 2 and the final two aircraft on June 23, 2008. Immediately prior to Frontier's filing, the Company was generating approximately $6 million in gross monthly revenues under the ASA. Under the ASA, Frontier pays for certain costs such as fuel and landing fees directly.

The Company has additional commitments on five E170 aircraft that would have otherwise been placed into service with Frontier during the second half of 2008. The Company will seek to place the aircraft into service with other airline partners and/or sell the aircraft.

"We appreciate the great job Republic has done in helping us serve our customers," said Frontier President and CEO Sean Menke. "Republic, while operating under the Frontier brand, provided a safe, efficient and customer friendly product that is hallmark to our Company. Unfortunately with current economic conditions and other business changes, we have been forced to drastically rethink the use of regional aircraft in our fleet mix."

The Company intends to file a damage claim for approximately $260 million arising out of Frontier Airline's rejection of the ASA. The ultimate amount of the Company's claim will be determined in the future by the Bankruptcy Court. The ultimate recovery value of the claim is unknown at this time.

Management will discuss the Frontier situation during the Company's regularly scheduled 2008 first quarter earnings conference call scheduled for Thursday, April 24th at 11:00 a.m. EST.

Republic Airways Holdings, based in Indianapolis, Indiana is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on approximately 1,300 flights daily to 125 cities in 37 states, Canada, Mexico and Jamaica through airline services agreements with six U.S. airlines. All of the airlines' flights are operated under their airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, Frontier Airlines, United Express and US Airways Express. The airlines currently employ approximately 5,000 aviation professionals and operate 226 regional jets.

CONTACT: Republic Airways Holdings Warren R. Wilkinson, 317-484- 6042
SOURCE: Republic Airways Holdings

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Republic Airways Holdings's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the summary of risk factors contained in our earnings release.

and here is the letter from our ceo,

Special announcement concerning Frontier Airlines

Dear fellow employees,

This morning we announced that we have reached an agreement with Frontier Airlines to terminate our marketing partnership and accelerate the removal of our 12 E170 aircraft. I will give you the details of that removal schedule shortly. First, however, I would like to share some background on how we got to where we are today.

As everyone in the airline industry knows, oil prices are having a severe negative impact on the viability of all airlines. As oil prices moved above $100 per barrel, Frontier came to us looking for help and we began the discussion of reworking our marketing agreement and deferring the delivery of the remaining 5 aircraft, which were due to be placed into service with Frontier over the last five months of 2008.

We have been working closely with Frontier to better understand their business plans and what other steps they would take to ensure the viability of their franchise. I have to tell you we have been very impressed with Frontier's CEO Sean Menke and what he has been able to accomplish at Frontier in his first six months of leadership and had fuel prices remained at $100 or less, I'm sure we would have been able to reach a mutually beneficial compromise to maintain our working relationship.

However, fuel prices did not stay at or below $100 and on April 8th, Frontier was informed by its credit card processor that they were going to increase the amount of cash they hold back for Frontier credit card sales. Of course the rest is history, with oil prices surging past $115 per barrel, Frontier filed bankruptcy on April 11th. And as of last night, for what it's worth, close crude oil was touching $120 per barrel. This is truly uncharted water. And despite what some might say, this is not business as usual.

As I have said we reached an agreement last night to begin an accelerated but orderly wind down of our Frontier flying. On May 2nd, we will remove four aircraft (three lines of flying and the operating spare). On June 1st, we will reduce the schedule by another six lines of flying. And on June 23rd, we will remove the final two lines of flying and our relationship with Frontier will come to an end.

Frontier has issued its own press release this morning which we have posted. Their release provides additional information regarding the impact on the cities which will no longer receive Frontier service due to the loss of our aircraft.

So what does all this mean for our company?

In the short term, we will have four displaced aircraft coming back to us in just eight days and all 12 aircraft coming back to us over the course of the next 60 days. So we have a lot of work to do quickly to resize the Republic Airline operation. We are expecting a new Frontier May schedule later today and will attempt to process and rebid the crew schedules ASAP. This is extremely important in order to quickly begin the process of rebalancing our crew resources across the three certificates to ensure that we have crewmembers where they are most needed.

We simply do not know at this time what we will do with the 17 aircraft which were allocated to Frontier this year. We may be able to move some displaced aircraft to our other partners; we may be able to trade out some of the smaller RJs for the E170s; we may choose to sell some of the aircraft off shore. We may do a little bit of all these things in order to reduce the cash burn of the non-productive aircraft as quickly as possible. What we won't do is start a branded flying operation or fly prorate services at a loss.

Republic is a strong business that is, unfortunately, losing a customer. That will mean making some adjustments that we were not planning to make this year and it will mean lower profits in the short term. This is a disappointment for our employees and will be a distraction for the management team as we repair the damage associated with the unexpected loss of this code share and the disposition of the 17 E170s. But this is exactly why we have worked so hard to diversify our business, to become one of the most reliable, most efficient and lowest cost regional airlines in the industry, so that we can work through these difficult situations without fear of our business falling part.

Under normal circumstances, I would not be worried about the disposition of these aircraft. The E170 is a terrific aircraft and we fly them very efficiently. But $120 oil is hardly "normal circumstances". As you are probably following in the press, the major airlines are hemorrhaging cash due to the cost of fuel. At the current cost of fuel they need to dramatically reduce capacity not increase it. So I am a lot less certain we will be able to simply push these aircraft to other partners under these economic conditions. Having said that it certainly makes good economic sense to trade out old, B737-500's for efficient E170s. So as mainline carriers rationalize capacity this fall, we may find a lot more interest for these aircraft. I also feel strongly that consolidation can actually be helpful in the rationalization process. We will try and be prudent and patient as we work through this set back.

In the very near term I simply ask you to stay focused on your primary mission: to fly safe, clean, reliable service and to do it more efficiently than any of our competitors. That's what you do best; better than anybody else in the regional airline business. Great people and great products is a good formula for success. That's our formula.

I will continue to keep you informed as things develop. Until then, God bless you all!

Bryan

Brenda · 04-23-2008, 01:21 PM

Eh, I really think he (Bedford) has everything under control. It won't harm any jobs. Thank goodness for 5 codeshares, huh?

BAC · 04-23-2008, 04:55 PM

They just had to send a class of new hires home at Republic, and are going to have to downgrade a bunch of recent upgrades. They are going to do what they can not to furlough, but they might have to ask for voluntary leaves of absences. Luckily, Frontier is only 5% of Republic Airways' business... but still.. it isn't good.

I'm sure Bedford had to see this whole fuel price thing coming.. and hopefully has taken some precautions. Hopefully.

BlooEyes · 04-24-2008, 07:03 AM

SO had just gotten here for a visit when he got the news. He's miserable because he's at the bottom of the seniority list right now and fears the worst. (Plus he had a bad trip last week so that doesn't help!) From what I can tell they're trying not to furlough, but SO may go on reserve for a long time in PHL- he was spoiled from the beginning with an immediate line.
Keep us posted please!

04-23-2008, 12:42 PM	#1 (permalink)
katbuad Jetgirls Plus Member Join Date: Jul 2007 Location: Nashville, TN USA Posts: 697 Recipes: Thanks: 9 Thanked 13 Times in 13 Posts	Republic and Frontier My husband just sent me this via email. He works for Chautauqua. He did comment in a personal section of the email that my BIL was keeping his recent Republic captian up grade. But that everyone was in a tizzie over the news. . . . All of the following is a cut and paste from the email. Republic Airways Announces Termination of Frontier Agreement INDIANAPOLIS--(BUSINESS WIRE)--April 23, 2008--Republic Airways Holdings (NASDAQ/NM: RJET), today reported that it has reached agreement with Frontier Airlines with respect to Frontier Airlines rejection of its Airline Services Agreement ("ASA") in Frontier Airlines' chapter 11 cases. The agreement is subject to customary approvals. Currently, the Company is operating 12 E170 aircraft under the ASA. "We have enjoyed our partnership with Frontier and have a lot of respect for their people," said Republic CEO Bryan Bedford. "It's unfortunate that despite their many efforts to reorganize their business outside of Chapter 11, factors beyond their control conspired to force a deeper reorganization. We wish them success in their continuing efforts to combat persistently high oil prices." The agreement provides for an orderly wind-down under which the Company will remove four aircraft on May 1, an additional six aircraft on June 2 and the final two aircraft on June 23, 2008. Immediately prior to Frontier's filing, the Company was generating approximately $6 million in gross monthly revenues under the ASA. Under the ASA, Frontier pays for certain costs such as fuel and landing fees directly. The Company has additional commitments on five E170 aircraft that would have otherwise been placed into service with Frontier during the second half of 2008. The Company will seek to place the aircraft into service with other airline partners and/or sell the aircraft. "We appreciate the great job Republic has done in helping us serve our customers," said Frontier President and CEO Sean Menke. "Republic, while operating under the Frontier brand, provided a safe, efficient and customer friendly product that is hallmark to our Company. Unfortunately with current economic conditions and other business changes, we have been forced to drastically rethink the use of regional aircraft in our fleet mix." The Company intends to file a damage claim for approximately $260 million arising out of Frontier Airline's rejection of the ASA. The ultimate amount of the Company's claim will be determined in the future by the Bankruptcy Court. The ultimate recovery value of the claim is unknown at this time. Management will discuss the Frontier situation during the Company's regularly scheduled 2008 first quarter earnings conference call scheduled for Thursday, April 24th at 11:00 a.m. EST. Republic Airways Holdings, based in Indianapolis, Indiana is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on approximately 1,300 flights daily to 125 cities in 37 states, Canada, Mexico and Jamaica through airline services agreements with six U.S. airlines. All of the airlines' flights are operated under their airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, Frontier Airlines, United Express and US Airways Express. The airlines currently employ approximately 5,000 aviation professionals and operate 226 regional jets. CONTACT: Republic Airways Holdings Warren R. Wilkinson, 317-484- 6042 SOURCE: Republic Airways Holdings "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Republic Airways Holdings's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the summary of risk factors contained in our earnings release. and here is the letter from our ceo, Special announcement concerning Frontier Airlines Dear fellow employees, This morning we announced that we have reached an agreement with Frontier Airlines to terminate our marketing partnership and accelerate the removal of our 12 E170 aircraft. I will give you the details of that removal schedule shortly. First, however, I would like to share some background on how we got to where we are today. As everyone in the airline industry knows, oil prices are having a severe negative impact on the viability of all airlines. As oil prices moved above $100 per barrel, Frontier came to us looking for help and we began the discussion of reworking our marketing agreement and deferring the delivery of the remaining 5 aircraft, which were due to be placed into service with Frontier over the last five months of 2008. We have been working closely with Frontier to better understand their business plans and what other steps they would take to ensure the viability of their franchise. I have to tell you we have been very impressed with Frontier's CEO Sean Menke and what he has been able to accomplish at Frontier in his first six months of leadership and had fuel prices remained at $100 or less, I'm sure we would have been able to reach a mutually beneficial compromise to maintain our working relationship. However, fuel prices did not stay at or below $100 and on April 8th, Frontier was informed by its credit card processor that they were going to increase the amount of cash they hold back for Frontier credit card sales. Of course the rest is history, with oil prices surging past $115 per barrel, Frontier filed bankruptcy on April 11th. And as of last night, for what it's worth, close crude oil was touching $120 per barrel. This is truly uncharted water. And despite what some might say, this is not business as usual. As I have said we reached an agreement last night to begin an accelerated but orderly wind down of our Frontier flying. On May 2nd, we will remove four aircraft (three lines of flying and the operating spare). On June 1st, we will reduce the schedule by another six lines of flying. And on June 23rd, we will remove the final two lines of flying and our relationship with Frontier will come to an end. Frontier has issued its own press release this morning which we have posted. Their release provides additional information regarding the impact on the cities which will no longer receive Frontier service due to the loss of our aircraft. So what does all this mean for our company? In the short term, we will have four displaced aircraft coming back to us in just eight days and all 12 aircraft coming back to us over the course of the next 60 days. So we have a lot of work to do quickly to resize the Republic Airline operation. We are expecting a new Frontier May schedule later today and will attempt to process and rebid the crew schedules ASAP. This is extremely important in order to quickly begin the process of rebalancing our crew resources across the three certificates to ensure that we have crewmembers where they are most needed. We simply do not know at this time what we will do with the 17 aircraft which were allocated to Frontier this year. We may be able to move some displaced aircraft to our other partners; we may be able to trade out some of the smaller RJs for the E170s; we may choose to sell some of the aircraft off shore. We may do a little bit of all these things in order to reduce the cash burn of the non-productive aircraft as quickly as possible. What we won't do is start a branded flying operation or fly prorate services at a loss. Republic is a strong business that is, unfortunately, losing a customer. That will mean making some adjustments that we were not planning to make this year and it will mean lower profits in the short term. This is a disappointment for our employees and will be a distraction for the management team as we repair the damage associated with the unexpected loss of this code share and the disposition of the 17 E170s. But this is exactly why we have worked so hard to diversify our business, to become one of the most reliable, most efficient and lowest cost regional airlines in the industry, so that we can work through these difficult situations without fear of our business falling part. Under normal circumstances, I would not be worried about the disposition of these aircraft. The E170 is a terrific aircraft and we fly them very efficiently. But $120 oil is hardly "normal circumstances". As you are probably following in the press, the major airlines are hemorrhaging cash due to the cost of fuel. At the current cost of fuel they need to dramatically reduce capacity not increase it. So I am a lot less certain we will be able to simply push these aircraft to other partners under these economic conditions. Having said that it certainly makes good economic sense to trade out old, B737-500's for efficient E170s. So as mainline carriers rationalize capacity this fall, we may find a lot more interest for these aircraft. I also feel strongly that consolidation can actually be helpful in the rationalization process. We will try and be prudent and patient as we work through this set back. In the very near term I simply ask you to stay focused on your primary mission: to fly safe, clean, reliable service and to do it more efficiently than any of our competitors. That's what you do best; better than anybody else in the regional airline business. Great people and great products is a good formula for success. That's our formula. I will continue to keep you informed as things develop. Until then, God bless you all! Bryan

04-23-2008, 01:21 PM	#2 (permalink)
Brenda Jetgirls Plus Member Join Date: Feb 2005 Location: EVV Posts: 1,219 Recipes: Thanks: 11 Thanked 4 Times in 4 Posts	Re: Republic and Frontier Eh, I really think he (Bedford) has everything under control. It won't harm any jobs. Thank goodness for 5 codeshares, huh? __________________ - Brenda, wife to Eric, Capt for Shuttle America.

04-23-2008, 04:55 PM	#3 (permalink)
BAC Jetgirls Plus Member Join Date: Mar 2007 Location: Indianapolis, IN Posts: 926 Recipes: Thanks: 12 Thanked 5 Times in 5 Posts	Re: Republic and Frontier They just had to send a class of new hires home at Republic, and are going to have to downgrade a bunch of recent upgrades. They are going to do what they can not to furlough, but they might have to ask for voluntary leaves of absences. Luckily, Frontier is only 5% of Republic Airways' business... but still.. it isn't good. I'm sure Bedford had to see this whole fuel price thing coming.. and hopefully has taken some precautions. Hopefully. __________________ Becky Check out my current and past books @

04-24-2008, 07:03 AM	#4 (permalink)
BlooEyes Member Join Date: Jul 2007 Location: Virginia Tech Posts: 21 Recipes: Thanks: 0 Thanked 0 Times in 0 Posts	Re: Republic and Frontier SO had just gotten here for a visit when he got the news. He's miserable because he's at the bottom of the seniority list right now and fears the worst. (Plus he had a bad trip last week so that doesn't help!) From what I can tell they're trying not to furlough, but SO may go on reserve for a long time in PHL- he was spoiled from the beginning with an immediate line. Keep us posted please!

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