IBJNews

Republic to cut Chautauqua costs to counter fuel prices

Back to TopCommentsE-mailPrintBookmark and Share

Republic Airways Holdings Inc. plans to seek reduced rates from aircraft lessors and vendors in order to cut expenses at its Chautauqua Airlines, where higher fuel prices have made the unit’s smaller jets too costly to operate.

Company executives discussed the effort on a conference call Thursday, without giving a cost-cut target. Republic, based in Indianapolis, undertook a similar $120 million restructuring last year at its Frontier Airlines unit that resulted in a return to annual profit.

Jet-fuel spot prices in New York have averaged $3.12 a gallon during the past 12 months, boosting operating costs above what can be recovered from the industry’s smallest jets. Chautauqua flies 37- to 50-seat regional jets, ferrying passengers from smaller cities to hub airports for larger carriers such as UAL Corp.’s United Continental Holdings Inc.

“We have 65 aircraft we need to return to a productive, cost-efficient basis,” Republic CEO Bryan Bedford said. “We certainly are not expecting our network partners to fix our problems. We’re going to have to fix it ourselves.”

The Frontier results “should be some indication of the team’s ability to make positive progress” on the Chautauqua effort, Bedford said.

The reductions discussed Thursday may take about six months, similar to the time it took to negotiate new agreements with Frontier employees, lessors and vendors, said Peter Kowalchuk, a company spokesman.

Republic is working to pick an adviser for the divestiture of Denver-based Frontier, which it bought out of bankruptcy in 2009, Bedford said last month. The carrier plans to further reduce operations in Milwaukee and Kansas City, where it has cut flights and jobs, and to expand in Denver.

Frontier also will add six seats to each of its 14 Airbus SAS A320 aircraft, bringing the total to 168. The work will begin in mid-April and finish by mid-May, before the summer travel season, Kowalchuk said.

“We’re seeing consistent high demand for our product,” he said. “People want to fly Frontier. The additional seats will allow more people to do so.”

The change follows a similar move by Southwest Airlines Co., which said in January that the addition of six seats to most of its Boeing Co. 737s would boost revenue by at least $250 million a year.

Republic shares rose 1.7 percent, to $5.40 each, in early-afternoon trading. The shares have gained 55 percent this year through Wednesday.

Republic said Wednesday night that fourth-quarter profit, excluding costs to reduce the value of some aircraft and return others, rose to $17 million, or 34 cents a share, from $7.4 million, or 18 cents, a year earlier. That exceeded the 33-cent average of five analysts’ estimates on that basis compiled by Bloomberg.

Including the one-time costs, Republic posted a net loss of $123.5 million, or $2.55 a share.
 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
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
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. The deductible is entirely paid by the POWER account. No one ever has to contribute more than $25/month into the POWER account and it is often less. The only cost not paid out of the POWER account is the ER copay ($8-25) for non-emergent use of the ER. And under HIP 2.0, if a member calls the toll-free, 24 hour nurse line, and the nurse tells them to go to the ER, the copay is waived. It's also waived if the member is admitted to the hospital. Honestly, although it is certainly not "free" - I think Indiana has created a decent plan for the currently uninsured. Also consider that if a member obtains preventive care, she can lower her monthly contribution for the next year. Non-profits may pay up to 75% of the contribution on behalf of the member, and the member's employer may pay up to 50% of the contribution.

  2. I wonder if the governor could multi-task and talk to CMS about helping Indiana get our state based exchange going so Hoosiers don't lose subsidy if the court decision holds. One option I've seen is for states to contract with healthcare.gov. Or maybe Indiana isn't really interested in healthcare insurance coverage for Hoosiers.

  3. So, how much did either of YOU contribute? HGH Thank you Mr. Ozdemir for your investments in this city and your contribution to the arts.

  4. So heres brilliant planning for you...build a $30 M sports complex with tax dollars, yet send all the hotel tax revenue to Carmel and Fishers. Westfield will unlikely never see a payback but the hotel "centers" of Carmel and Fishers will get rich. Lousy strategy Andy Cook!

  5. AlanB, this is how it works...A corporate welfare queen makes a tiny contribution to the arts and gets tons of positive media from outlets like the IBJ. In turn, they are more easily to get their 10s of millions of dollars of corporate welfare (ironically from the same people who are against welfare for humans).

ADVERTISEMENT