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. I never thought I'd see the day when a Republican Mayor would lead the charge in attempting to raise every tax we have to pay. Now it's income taxes and property taxes that Ballard wants to increase. And to pay for a pre-K program? Many studies have shown that pre-K offer no long-term educational benefits whatsoever. And Ballard is pitching it as a way of fighting crime? Who is he kidding? It's about government provided day care. It's a shame that we elected a Republican who has turned out to be a huge big spending, big taxing, big borrowing liberal Democrat.

  2. Why do we blame the unions? They did not create the 11 different school districts that are the root of the problem.

  3. I was just watching an AOW race from cleveland in 1997...in addition to the 65K for the race, there were more people in boats watching that race from the lake than were IndyCar fans watching the 2014 IndyCar season finale in the Fontana grandstands. Just sayin...That's some resurgence modern IndyCar has going. Almost profitable, nobody in the grandstands and TV ratings dropping 61% at some tracks in the series. Business model..."CRAZY" as said by a NASCAR track general manager. Yup, this thing is purring like a cat! Sponsors...send them your cash, pronto!!! LOL, not a chance.

  4. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  5. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

ADVERTISEMENT