Republic Airways Holdings Inc. shares rebounded Wednesday afternoon after the airline’s pilot union said it was ready to resume talks on a contract, easing investor concern of a possible bankruptcy.
The regional carrier has said a court-supervised restructuring is an option if a new contract isn’t secured. The shares earlier plunged as much as 32 percent after Teamsters General President James Hoffa refused to overturn a decision by Local 357 negotiators to skip a vote on the latest offer, which Republic had called a “final” one.
Local 357 “is ready to resume negotiations” with Republic to reach an agreement as soon as possible, union President James Clark told members Wednesday in a written statement. Clark e-mailed Republic Chief Executive Officer Bryan Bedford and Matt Koscal, the airline’s vice president of human resources, with an offer to talk, but said in an interview that he has received no response.
After the national Teamsters’ decision the airline said it would keep the proposal on the table. “Given the gravity of the situation, we believe these circumstances are extraordinary,” Bedford said in a statement Tuesday. The pilots should be allowed to vote on the offer, he said. Republic previously said it would not resume talks.
A lack of pilots is forcing the airline to cut the flights it makes for larger carriers, and the company says it needs a new agreement -- with higher pay -- to stop attrition and make new hires. Republic has also blamed increased U.S. requirements for pilot training and limits on duty hours for the shortage.
“The only option for the airline may be renegotiating its contracts with its airline partners, and the only way to do that may be through the courts,” Helane Becker, a Cowen & Co. analyst, wrote in a note Wednesday. “We would continue avoiding these shares.”
Becker downgraded the stock to underperform from market perform.
Republic shares jumped back into positive territory, to $3.21 per share, following Clark's statement, after declining to $2.05 each earlier in the day. They closed the day almost even. The shares had slumped 79 percent this year through Tuesday.
Local 357 leaders refused on Aug. 26 to send the final offer to a vote in part because Republic didn’t provide data to support pay proposals, modified contract language previously agreed to and added wording that prevented some communications between the local and international unions and Republic’s pilots, according to a letter sent to members.
The union hopes a new counterproposal completed last weekend will entice Republic back to the negotiating table, Clark said Tuesday.