Republic Airways Holdings Inc., one of the biggest US regional carriers, has filed for bankruptcy protection. The filing has been followed by the pressures of a pilot shortage and a shift by large network airlines to use larger planes. Republic CEO Bryan Bedford has characterized the move as helping take the airline to new heights.
The Indianapolis based carrier operates flights on behalf of the commuter brands of carriers including American Airlines Group Inc. and Delta Air Lines Inc. The airline plans to conduct operations while restructuring, reports The Wall Street Journal.
The airline operates a fleet of around 240 small planes containing 80 seats and below. The bankruptcy filing is the first in commercial aviation history since American Airlines' chapter 11 filing in 2011. The filing appears amid reporting of record profits by the national carriers in the wake of significant industry consolidation, capacity cuts and renewed power pricing, according to a report published in Forbes.
In the US, regional carriers have struggled to find enough pilots because of relatively low starting salaries and new federal rules requiring new aviators to have additional training. Republic is also hit with an outdated pilot contract which is less attractive compared to those of competitors. The carrier has warned last year that it may be pushed into bankruptcy protection, reports Market Watch. Republic has failed to reach a deal with big creditors and partners, reveals Republic in its regulatory filing. But it has agreed with Delta to stay the outstanding litigation. Delta has filed a lawsuit claiming damage for the loss of service centering acute pilot shortage. Republic has worked hard to avoid the filing, but its negotiating efforts with the major stakeholders exhibit no apparent prospect for a short term solution. The information has been disclosed through a Republic statement issued on Thursday. However, the airline has declined to authorize an executive for interview. The regional carrier is indebted with $2.98 billion against total assets of $3.56 billion at the time of filing. However, its stocks have been slashed by 77% to $ 0.78 during after hours trading on Thursday. The carrier is operating its normal flight schedules while keeping salaries and benefits unchanged. Republic operates a fleet of 242 aircraft running more than 1,000 daily flights for American, Delta and United Continental Holdings Inc. The carrier has held orders from Brazil's Embraer SA or 55 E175 regional jets that may fly with American and United.
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