Airlines and Republic Airways and Aviation and Fuel and Transportation, Distribution & Logistics

Republic Airways blames fuel costs for $15M quarterly loss

August 2, 2011

Republic Airways Holdings Inc. late Monday reported that it lost nearly $15 million in the second quarter, as high fuel prices continued to drag down its results.

The company said it spent nearly $227 million on aircraft fuel in the quarter, compared with $161 million in the same period a year earlier.

Republic said it lost $14.9 million, or 31 cents per share, on $739.7 million in revenue. In the second quarter of 2010, the company reported a profit of $2.6 million, or 8 cents a share, on revenue of $683.3 million.

The Indianapolis-based company has been vulnerable to fluctuations in fuel prices since buying Frontier Airlines and Midwest Airlines two years ago. It previously had specialized in fixed-fee contract flying for other airlines, which reimbursed it for fuel costs.

On June 10, Republic reached an agreement with pilots that provides them a stake in Frontier in return for pay freezes and other concessions. Republic agreed to attract other equity investors to the airline and to reduce its stake below 50 percent by 2015. Republic negotiated the pact as part of restructuring plan aimed at saving $120 million.

Results for the second quarter were affected by a series of one-time items. Excluding those items, the Frontier and Midwest operations—which now operate under the Frontier banner—posted a pretax loss of $32.8 million.

Excluding one-time items, Republic’s contract-flying business earned $17.6 million before taxes.

In Monday's announcement, the company said it expects that third-quarter revenue and pre-tax profit each will be reduced by about $10 million because of a severe hailstorm at Denver International Airport on July 13 that damaged 22 of its aircraft and forced it to cancel about 250 flights.

Republic shares are down sharply from the $10.39 high reached right before the Frontier and Midwest acquisitions. They closed Monday at $4.27 each, down 6 cents on the day.

 

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