Chautauqua must find growth opportunities for 50-seat fleet

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Republic Airways Holdings has raised the prospect of disbanding its Chautauqua Airlines subsidiary operating 50-seat regional jets if options for growth are not available.

Bryan Bedford, Republic's chief executive, today compared the newly-launched Chautauqua restructuring project to the situation of Lynx Aviation, the low-cost regional feeder to Frontier Airlines operating 13 Bombardier Q400s.

Republic acquired Frontier and Lynx in 2009 and then shuttered Lynx a year later after a review determined there were no options for significant growth.

"Much like the [Lynx] Q400s, we have to figure out how to get bigger and grow as a lower-cost, 50-seat platform, or we have to consider other options," Bedford told reporters at the Regional Airline Association convention.

Bedford then declined to elaborate, saying: "We'll just let that hang out there." As a standalone unit, Chautauqua Airlines is the 14th-largest regional airline in the US in terms of passengers emplaned in 2010, according to the Regional Airline Association's 2011 annual report. The carrier operates mainly Embraer ERJ145s and ERJ140s.

Earlier this month, Republic announced it was launching a restructuring review of Chautauqua, as its 50-seat jets were responsible for dragging down the overall company's earnings in the first quarter.

Bedford also described how scope clause changes at American Airlines and Delta Air Lines are causing uncertainty about Chautauqua's future.

American has revealed plans to buy hundreds of larger regional jets while reducing its 50-seat jet fleet as part of the ongoing bankruptcy restructuring. Chautauqua operates 15 Embraer ERJ140s on behalf of American under a contract that expires in February. Bedford said he does not expect American to renew the contract, leaving Chautauqua with the task of finding a new sponsor for the 50-seat regional jets.

Delta, meanwhile, also has announced an agreement with pilots to loosen its scope restrictions on larger regional jets. Chautauqua operates 24 50-seat jets for Delta, Bedford said.

"As a group it remains to be seen through our restructuring efforts at Chautauqua how our 50-seat business is going to operate with Delta over the long-term," he said.