Republic aims for $40m-$60m Chautauqua savings

Washington DC
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Republic Airways Holdings will seek to bolster subsidiary Chautauqua Airlines' bottom line by between $40 million and $60 million by the end of the year as part of a sweeping restructuring plan, executives said today.

The Indianapolis-based subsidiary operates 50- and 70-seat Embraer jets, with the former especially flying under loss-making capacity purchase agreements with partner airliners, says Bryan Bedford, Republic's chief executive.

"We're optimistic we will be successful" with the restructuring, Bedford told analysts while discussing first quarter earning results.

Republic revealed that it had engaged Seabury Advisors to help with restructuring Chautauqua as the carrier posted a $7.1 million net loss in the first quarter.

A number of Chautauqua's idled 50-seat ERJ145s, which were parked rather than operating on loss-making agreements, contributed to Republic's bottom-line result, Bedford says.

Chautauqua is one of three regional airlines, including Republic and Shuttle America, that will continue to remain under Bedford's control. The holding company is currently attempting to spin-off subsidiary Frontier Airlines as a stand-alone, ultra-low cost carrier.

But Chautauqua has been hit most heavily under Republic's operations from the financial challenges facing all US regional airlines, especially those operating 50-seat jets.

Bankruptcy negotiations with mainline carriers since 2004 have produced a series of loss-making capacity purchase agreements for their regional partners, along with caps on escalation rates and no flexibility on reimbursements for aircraft utilisation reductions, Bedford says.