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Republic, Delta settle lawsuit, strike deal to continue flights

March 25, 2016

Delta Air Lines Inc. has settled its lawsuit against Republic Airways Holdings Inc. in which it accused the Indianapolis-based carrier of failing to operate a full schedule of flights as promised.

Republic, which filed for bankruptcy restructuring in February, announced Friday that it has restructured its deal with Delta. Delta would continue to contract flights to Republic.

"The comprehensive deal we have reached today secures Delta as a long-term strategic partner, provides significant benefits to our airline, and will preserve schedule integrity and a high quality of service for Delta’s customers,” said Republic CEO Bryan Bedford in a written release.

Republic operates a fleet of under-80-seat planes, which provide flights for larger airlines including Delta, American Airlines Group Inc., and United Continental Holdings Inc.

In its suit filed in October, Delta said that Republic had been unable to fulfill an unspecified number of flights for Delta’s regional operation, Delta Connection. That led Delta to find replacement flights and occasionally re-book passengers and issue refunds, costing direct damages exceeding $1 million.

Republic’s Shuttle America Corp. unit is one of several regional carriers that transport passengers from small airports to Delta’s large hubs.

Delta’s lawsuit, heavily redacted to conceal contract information, said Shuttle America operates 71 aircraft for Delta Connection, a mix of 50-seat, 70-seat and 76-seat Embraer SA planes.

As part of the agreement, Republic will phase out flights in 50-seat aircraft. Delta also has entered into a credit agreement to give Republic $75 million.

The settlement agreement is subject to court approval. It was set to be considered in a bankruptcy hearing on April 14.
 

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