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Republic Airways buffeted by U.S. Airways pilot turbulence: Locally based carrier gets favorable ruling in one dispute, but remains mired in separate $1.2B lawsuit

December 12, 2005

Republic Airways Holdings Inc. has landed a break from an arbitrator who ruled the Indianapolis regional airline is obligated to hire no more than half the 300 pilots employed by US Airways' MidAtlantic regional airline, which Republic is acquiring.

Regional carrier Republic can avoid higher personnel costs by not having to hire as many U.S. Airways pilots with seniority. The amount of the savings was not immediately available.

But Republic remains a defendant in a complicated, $1.2 billion lawsuit that about 250 of those pilots filed two months ago in U.S. District Court for the Eastern District of New York. The principal defendants are Tempe, Ariz.-based U.S. Airways and pilots' union Air Line Pilots Association.

The 84-page suit alleges U.S. Airways underpaid furloughed pilots when they later came back to work to fly for its MidAtlantic regional airline.

Pilots allege that under their labor agreement they were entitled to earn at MidAtlantic what they earned at U.S. Airways flying large aircraft, because MidAtlantic remained part of U.S. Airways rather than being a separate, federally certified carrier.

Pilots argued that U.S. Airways and ALPA concocted a complex scheme to make it appear MidAtlantic was a separate carrier, which would have entitled the airline to pay MidAtlantic pilots half what they earned flying large aircraft under the U.S. Airways banner.

Making matters worse, pilots said, U.S. Airways gave them a short deadline to decide whether they wanted to work for new MidAtlantic owner Republic-or to remain on furlough with U.S. Airways with the possibility of being recalled later at higher pay.

Because Republic intended to hire only half the pilots, any pilot that opted to go with Republic had no guarantee of a job. Any who took that chance but weren't among those hired would've also given up their chance of being recalled by U.S. Airways.

The pilots' beef against Republic appears more tenuous. The suit contends Republic President Bryan Bedford was indifferent to the pilots' concerns.

Republic officials contend the suit is nonsense.

"The lawsuit is without merit. We believe the lawsuit will be dismissed," said Republic executive Warren Wilkinson.

Last September, Republic agreed to purchase from U.S. Airways 10 Embraer regional jets for $38.2 million. Republic also will assume from U.S. Airways $350 million in leases on 15 other Embraer aircraft.

Republic also is acquiring from the Virginia carrier 113 commuter slots at Ronald Reagan Washington National Airport and 24 commuter slots at New York's LaGuardia Airport-for a total of $51.6 million.

In the nine months ended Sept. 30, flights operated for U.S. Airways accounted for 22 percent of Republic's operating revenue. Thirty-three percent comes from Delta Airlines, 32 percent from United Airlines, and 13 percent from American Airlines.

Republic's Chautauqua Airlines flies Embraer regional jets under contract for mainline carriers. Republic has 1,300 flight crewmembers represented by Teamsters Local 747 in Houston.

MidAtlantic pilots say in the lawsuit they're likely to be "stapled to the bottom of the Republic seniority list."

If that were to happen, "it is conceivable and, in fact, virtually certain that a 17-year veteran pilot would be junior on the integrated seniority list to a Republic pilot who has been flying for two years," states the suit.

Besides seeking $1.2 billion in damages, the suit seeks to have U.S. Airways flight crewmembers transferred to Republic reinstated on U.S. Airways' seniority list.
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