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Republic Airways Holdings Reports First Quarter 2015 Financial Results

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May 7, 2015 7:08 PM EDT

INDIANAPOLIS--(BUSINESS WIRE)-- Republic Airways Holdings Inc. (NASDAQ/NM: RJET) reported financial results for the first quarter of 2015.

Republic’s pre-tax income for the first quarter of 2015 was $11.2 million, compared to $22.8 million for the prior year’s first quarter. Republic’s net income for the first quarter of 2015 was $6.4 million, or $0.13 per diluted share. The Company incurred approximately $8.0 million, or $0.09 per diluted share, for charges related to fleet transition expenses and employee severance costs, which are included in other operating expense.

The first quarter of 2015 results also were negatively affected by a reduction in operational reliability. Republic’s operating performance, as measured in block hours, departures and available seat miles was approximately 4 percent lower than planned.

The Company reported the following key metrics for the three months ended March 31, 2015, and 2014:

   

 

Three Months ended March 31,
    % Increase /

(Unaudited)

2015 2014 Decrease
(in millions, except as noted with *)
Available seat miles (ASMs) 3,490 3,366 3.7 %
Block hours (hours) 177,568 185,613 (4.3 )%
Departures* 96,627 103,349 (6.5 )%
Operating revenues $ 341.0 $ 337.5 1.0 %
Pre-tax income $ 11.2 $ 22.8 (50.9 )%
Pre-tax Margin* 3.3 % 6.8 % -3.5 pts
Diluted earnings per share* $ 0.13 $ 0.26 (50.0 )%
EBITDA $ 87.2 $ 93.9 (7.1 )%
EBITDA margin* 25.6 % 27.8 % -2.2 pts
 

Operating Revenue Highlights

Operating revenues increased $3.5 million, or 1.0 percent, from the first quarter of 2014 to $341.0 million in the first quarter of 2015. Fixed-fee service revenue increased $7.1 million, or 2.2 percent, to $335.5 million. Since March 31, 2014, the Company added 23 E-Jet aircraft and removed 25 ERJ aircraft.

Operating Expense Highlights

Wages and benefits expenses increased 5.5 percent, or $4.9 million, which was primarily due to an increase in E-Jet operations and an increase in the cost of benefits we provide to our employees.

Maintenance and repair expenses increased 4.5 percent, or $2.9 million, primarily due to the increase in engine LLP events on our E-Jet aircraft.

Depreciation and amortization expense increased 11.4 percent, or $4.7 million, due primarily to the increase in the number of owned E-Jet aircraft.

Fleet Highlights

The Company took delivery of the final six E-Jet aircraft for its American Airlines E-Jet agreement, which now totals 47 aircraft. The Company expects to take delivery of 15 additional new E-Jet aircraft in the second half of 2015, which it will operate under its United E-Jet agreement. As of March 31, 2015, the Company operated 41 aircraft with 44-50 seats and 201 aircraft with 69-99 seats under its fixed-fee code-share and charter agreements.

During the first quarter of 2015, Delta Air Lines exercised its right to extend 24 aircraft under the Shuttle America ERJ code-share agreement from May 2016 to May 2021. The Company currently operates 41 aircraft under the agreement with Delta, of which 17 can be removed by Delta with 90 days prior written notice.

Balance Sheet and Liquidity Highlights

The Company’s unrestricted cash balance decreased $23.2 million, to $200.7 million, from Dec. 31, 2014, due mainly to investments in new aircraft. A consolidated balance sheet and a condensed statement of cash flows have been included in the tables section of this release.

The Company’s debt increased to $2.36 billion as of March 31, 2015, compared to $2.34 billion at December 31, 2014, primarily related to the financing of the last six new E-Jet aircraft purchased for our American Airlines fixed-fee agreement partially offset by the Company’s debt repayments.

Corporate Information

Republic Airways Holdings Inc., based in Indianapolis, Indiana, is an airline holding company that owns Republic Airlines, Shuttle America and Chautauqua Airlines, collectively “the airlines.” As of March 31, 2015, the airlines operate a combined fleet of about 240 aircraft and offer scheduled passenger service on about 1,250 flights daily to about 100 cities in the U.S. and Canada through fixed-fee flights operated under our major airline partner brands, including American Eagle, Delta Connection, United Express and US Airways Express. The Company currently employs about 6,500 aviation professionals. For more information about Republic Airways, please visit our website at www.rjet.com.

The Company has published an investor update, which includes revised 2015 guidance and other selected financial information on its website at http://www.rjet.com/en/Investor_Relations/Shareholder_Presentations.aspx.

The Company will conduct a telephone briefing to discuss its first quarter 2015 results at 10 a.m. (Eastern time) Friday, May 8, 2015. This call is being webcast by Thomson/Reuters and can be accessed at the Republic Airways Holdings’ website, www.rjet.com. Those wishing to participate can do so by calling (877) 703-6105. International callers can participate by calling +1 (857) 244-7304; the passcode is 31498138.

To listen to a telephone replay of the webcast, call (888) 286-8010 and use password 10594137. International telephone replay will be available by calling +1 (617) 801-6888 and using the same password. The replay will be available from 2 p.m. (Eastern time) May 8, 2015, to 11:59 p.m. (Eastern time) May 15, 2015.

Additional Information

In addition to historical information, this release contains forward-looking statements. Republic Airways Holdings Inc. may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements encompass the Company's beliefs, expectations, hopes or intentions regarding future events. Words such as “expects,” “intends,” “believes,” “anticipates,” “may,” “will,” “should,” “plan,” “estimate,” “predict,” “potential,” “continue,” or “likely” and similar expressions as well as the negative of such expressions are used to identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to the Company as of such date. The Company assumes no obligation to update any forward-looking statement. Actual results may vary, and could differ materially, from those anticipated, estimated, projected or expected in these forward-looking statements for a number of reasons, including, among others, the risk factors disclosed in the Company's most recent filing with the Securities and Exchange Commission.

 
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In millions, except per share amounts)
    Three Months Ended March 31,
    % Increase /
2015 2014 (Decrease)
OPERATING REVENUES:
Fixed-fee service $ 335.5 $ 328.4 2.2 %
Other 5.5   9.1   (39.6 )%
Total operating revenues 341.0 337.5 1.0 %
OPERATING EXPENSES:
Wages and benefits 94.1 89.2 5.5 %
Aircraft fuel 3.7 7.3 (49.3 )%
Landing fees and airport rents 5.9 7.2 (18.1 )%
Aircraft and engine rent 31.2 31.1 0.3 %
Maintenance and repair 67.2 64.3 4.5 %
Insurance and taxes 4.9 6.5 (24.6 )%
Depreciation and amortization 46.0 41.3 11.4 %
Impairment and other charges — 19.9 (100.0 )%
Other 46.8   36.5   28.2 %
Total operating expenses 299.8 303.3 (1.2 )%
 
OPERATING INCOME 41.2 34.2 20.5 %
OTHER INCOME (EXPENSE):
Interest expense (30.0 ) (29.8 ) 0.7 %
Fair value gain - restructuring asset —   18.4   (100.0 )%
Total other expense (30.0 ) (11.4 ) 163.2 %
 
INCOME BEFORE INCOME TAXES 11.2 22.8 (50.9 )%
 
INCOME TAX EXPENSE 4.8   8.8   (45.5 )%
 
NET INCOME 6.4 14.0 (54.3 )%
   
NET INCOME PER COMMON SHARE - BASIC $ 0.13   $ 0.28   (53.6 )%
NET INCOME PER COMMON SHARE - DILUTED $ 0.13   $ 0.26   (50.0 )%
 
Weighted average common shares:
Basic 50.2 49.6 1.2 %
Diluted 50.7 54.9 (7.7 )%
 
 
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In millions, except share and per share amounts)
    March 31,   December 31,
2015 2014

ASSETS

Current Assets:
Cash and cash equivalents $ 200.7 $ 223.9
Restricted cash 18.8 21.7
Receivables - net of allowance for doubtful accounts of $2.5 and $2.6, respectively 24.5 20.7
Inventories 62.1 60.9
Prepaid expenses and other current assets 19.3 15.6
Deferred income taxes 16.4   16.4  
Total current assets 341.8 359.2
Aircraft and other equipment, net 2,924.0 2,860.9
Maintenance deposits 53.0 53.2
Intangible and other assets, net 227.3   220.7  
Total assets $ 3,546.1   $ 3,494.0  

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
Current portion of long-term debt $ 302.1 $ 309.0
Accounts payable 24.8 19.3
Accrued liabilities 159.9   142.9  
Total current liabilities 486.8 471.2
Long-term debt - less current portion 2,056.7 2,030.2
Deferred credits and other non-current liabilities 82.5 88.1
Deferred income taxes 288.9   284.0  
Total liabilities 2,914.9 2,873.5
Commitments and contingencies
Stockholders' Equity:

Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding

— —

Common stock, $.001 par value; one vote per share; 150,000,000 shares authorized;

60,430,955 and 59,821,243 shares issued and 50,828,304 and 50,024,780 shares outstanding, respectively

— —
Additional paid-in capital 431.7 427.4
Treasury stock, 9,546,147 shares at cost (183.9 ) (183.9 )
Accumulated other comprehensive loss (2.2 ) (2.2 )
Accumulated earnings 385.6   379.2  
Total stockholders' equity 631.2   620.5  
Total liabilities and stockholders' equity $ 3,546.1   $ 3,494.0  
 
 
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In millions)
    Three Months Ended March 31,
2015   2014
   
NET CASH FROM OPERATING ACTIVITIES $ 57.2   $ 68.7  
 
INVESTING ACTIVITIES:
Purchase of aircraft and other equipment (147.2 ) (130.6 )
Proceeds from sale of aircraft and other assets 47.9 7.0
Aircraft deposits (5.0 ) —
Change in restricted cash 2.9 (3.1 )
   
NET CASH USED IN INVESTING ACTIVITIES (101.4 ) (126.7 )
 
FINANCING ACTIVITIES:
Payments on debt (77.5 ) (58.1 )
Proceeds from debt issuance and refinancing 147.5 116.2
Payments on early extinguishment of debt and refinancing (50.5 ) —
Proceeds from exercise of stock options 3.0 0.4
Other, net (1.5 ) (1.0 )
   

NET CASH FROM FINANCING ACTIVITIES

21.0   57.5  
 
NET CHANGES IN CASH AND CASH EQUIVALENTS (23.2 ) (0.5 )
CASH AND CASH EQUIVALENTS—Beginning of period 223.9   276.7  
CASH AND CASH EQUIVALENTS—End of period $ 200.7   $ 276.2  
 
 
REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED OPERATING HIGHLIGHTS
Operating Highlights     Three Months Ended March 31,
2015   2014   Change
 
Operating aircraft at period end:
44-50 seats7 41 68 (39.7 )%
69-99 seats8 201 179 12.3 %
Block hours5 177,568 185,613 (4.3 )%
Departures 96,627 103,349 (6.5 )%
Passengers carried 5,018,862 5,138,720 (2.3 )%
Revenue passenger miles ("RPM") (millions)1 2,618 2,566 2.0 %
Available seat miles ("ASM") (millions)2 3,490 3,366 3.7 %
Passenger load factor3 75.0 % 76.2 % -1.2 pts
Cost per ASM, including interest expense (cents)4 9.45 9.35 1.1 %
Cost per ASM, including interest expense and excluding fuel expense (cents) 9.34 9.13 2.3 %
Average daily utilization of each aircraft (hours)6 9.0 9.0 — %
Average length of aircraft flights (miles) 511 485 5.4 %
Average seat density 71 67 6.0 %
 
      1.     Revenue passenger miles are the number of scheduled miles flown by revenue passengers.
 
2. Available seat miles are the number of seats available for passengers multiplied by the number of scheduled miles those seats are flown.
 
3. Passenger load factor is revenue passenger miles divided by available seat miles.
 
4.

Costs (in all periods) exclude impairment, fair value gain and other non-operating income. Total operating and interest expenses excluding other impairment charges is not a calculation based on accounting principles generally accepted in the United States of America and should not be considered as an alternative to total operating expenses. Cost per available seat mile utilizing this measurement is included as it is a measurement recognized by the investing public relative to the airline industry.

 
5. Hours from takeoff to landing, including taxi time.
 
6. Average number of hours per day that an aircraft flown in revenue service is operated (from gate departure to gate arrival).
 
7. Excludes 11 owned and four leased E140 aircraft that were permanently parked, four owned and nine leased E145 aircraft that were temporarily parked, and one owned E135 aircraft and 11 owned E145 aircraft that are leased to other operators, as of March 31, 2015. Excludes two owned E140 aircraft that were abandoned and two E145 aircraft that serve as operational spares as of March 31, 2014.
 
8. Excludes five leased Q400 aircraft that were temporarily parked that will transition to Flybe and three owned E170 aircraft that are leased to other operators, as of March 31, 2015. Excludes four E175 aircraft that are scheduled to enter service in the second quarter of 2014, four temporarily parked E190 aircraft, and three Q400 aircraft that serve as operational spares as of March 31, 2014.
 

The Company is providing disclosure of the reconciliation of reported non-GAAP financial measures to its comparable GAAP basis financial measures. The Company believes that the non-GAAP financial measures provide investors meaningful measurements of the Company’s financial performance.

 

EBITDA:

   
($ in millions)

Three months ended March 31,

2015   2014
Net income $ 6.4 $ 14.0
Plus:
Income tax expense 4.8 8.8
Interest expense 30.0 29.8
Depreciation and amortization 46.0   41.3  
EBITDA $ 87.2   $ 93.9  
EBITDA margin % 25.6 % 27.8 %

Republic Airways Holdings
Investor Relations:
Joe Allman, 317-246-2612

Source: Republic Airways Holdings Inc.


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