Republic soars as lower fuel costs prompt analyst upgrade

Back to TopCommentsE-mailPrintBookmark and Share

Shares of Republic Airways Holdings Inc. enjoyed a 22-percent rocket ride on Monday after a stock analyst gave the beleaguered airline an upgrade and as the price of jet fuel crept downward.

The Indianapolis-based airline also took a step forward on its integration of two recently acquired airlines, as a key pilots union decided to join the Teamsters.

Republic’s stock closed Monday at $5.67, up more than $1 per share from last week. The stock gave back nearly 6 percent of that gain in trading Tuesday morning, trading as low as $5.33 per share.

Republic, which built up a profitable business flying point-to-point routes for larger airlines, has stumbled since buying two scheduled-service carriers in 2009. It is still trying to integrate the operations of Denver-based Frontier Airlines and Milwaukee-based Midwest Airlines, all under the Frontier brand.

Those scheduled-service airlines now represent 60 percent of Republic’s business and led the company to a $22.4 million loss in its first quarter. As IBJ reported Monday, many analysts and investors have grown sour on the deal.

Republic also has been staggered by a run-up in jet-fuel prices that were about 50 percent higher this spring than the previous year. Republic has not hedged its fuel costs as much as some other airlines and, therefore, is more susceptible to price spikes.

But prices have been coming down, along with crude oil prices, giving Republic some relief. The shift caused Evercore Partners analyst Duane Pfennigwerth to issue a new forecast Monday, saying he now expects Republic’s 2012 earnings per share to be 90 cents, way up from his previous estimate of 35 cents.

The difference is almost entirely due to Pfennigwerth’s estimate that fuel prices will average $3 per gallon next year, instead of his previous estimate of $3.20 per gallon.

“RJET has the highest fuel leverage across our coverage list,” said Pfennigwerth, referring to Republic by its stock ticker symbol. “Small changes in fuel price assumptions drive large changes in EPS.”

Pfennigwerth, who is based in New York, said Republic’s stock price could hit $9 per share in a few months. He also praised Republic’s progress on reducing costs in its Frontier operation.

A big step came June 10 when Republic won pay freezes and benefits cuts from pilots, in exchange for an equity stake in Frontier. The agreement Monday for the pilots unions from Midwest and Frontier to jointly have Teamsters representation clears up what has been a major distraction for Republic’s management.

Also, it was reported last week that Republic had ordered 80 new jets from France-based Airbus and Montreal-based Bombardier, which will be more fuel-efficient than some of its current fleet.



  • not a valid logic
    Europeans and others sometimes buy our jets, and we sometimes buy theirs. It's called capitalism & free market, we like to claim that we invented it.
  • Planes
    To good to buy planes from the US/no wonder jobs are going fast to other countrys

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?