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Bombardier dealt blow by Republic's bankruptcy filing

February 26, 2016

Bombardier Inc.’s embattled C Series program was dealt another blow after one of its largest customers, Indianapolis-based Republic Airways Holdings Inc., filed for creditor protection in New York on Thursday.

Republic Airways has 40 firm orders for Bombardier’s new transcontinental jet, making it the largest customer for C Series alongside Macquarie AirFinance, which also has 40, according to Bombardier’s website. The Republic Airways order accounts for 16 percent of Montreal-based Bombardier’s C Series firm backlog, which currently stands at 243 aircraft.

Bombardier, more than two years late with the C Series and about $2 billion over budget, is poised to receive a $1 billion cash injection from the Quebec government to keep the program going and has asked the federal Canadian government for aid. Republic signed a firm order for 40 CS300 planes in 2010, though CEO Bryan Bedford later cast doubt on the estimated $3 billion agreement after the carrier’s strategy changed.

Republic’s bankruptcy filing has “no immediate impact” on the airline’s C Series order, said Marianella de la Barrera, a spokeswoman for Bombardier.

“For now, it’s business as usual, but we are monitoring the situation closely,” she said in an interview. “We’ve seen many customers go through restructuring and bankruptcy protection only to emerge strong and better equipped to deal with today’s challenges.‎ We’re very familiar with the process.”

Republic Airways is the first large U.S. airline to file for bankruptcy since American Airlines went into Chapter 11 in 2011. Major U.S. carriers have reported record profits in the past two years.

“Republic has serious challenges that we must still address and several quarters of recovery and rebuilding ahead of us,” Bedford said on a November conference call. The company blamed a lack of pilots for the filing.

In bankruptcy, Republic could ask a judge to cancel unprofitable contracts without the penalties that would be imposed outside court protection. The filing also will allow the company to escape leases for planes it’s not flying or that are too costly.

Republic Airways offers regional passenger service with more than 1,200 flights daily to more than 100 cities in 39 states and Canada.

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