Republic expects up to $20m in Q4 pre-tax income

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US regional carrier Republic Airways Holdings expects its subsidiaries excluding Frontier Airlines to post a pre-tax income of $15 million to $20 million in the fourth quarter.

Revenue across these subsidiaries should remain flat year-on-year, while unit costs excluding fuel should fall between 8.6 cents and 8.7 cents, says Republic's chief financial officer Tim Dooley.

The unit cost performance takes into account benefits that Republic will reap from the restructuring of subsidiary Chautauqua Airlines. Republic announced yesterday that it had reached agreements with several stakeholders to restructure Chautauqua that would result in $45 million of annual cost savings over the next five years.

Republic is also in the process of spinning off Frontier and will begin meetings with prospective buyers of the carrier this month. It aims to decide on a sale in early 2013.

Frontier is expected to meet some unit cost headwinds in the fourth quarter due to a 9% decline in departures for its Airbus narrowbodies due to expiring leases on some aircraft, says Dooley.

Excluding fuel, unit costs at Frontier are expected to be in the range of 7.4 cents to 7.6 cents in the fourth quarter, says Dooley.

The guidance provided by Republic does not take into account the flight cancellations resulting from Hurricane Sandy, says Dooley, who notes that Republic's subsidiaries excluding Frontier cancelled just under 2,000 flights in recent days due to Sandy. Dooley adds that it is too early to assess the financial impact of the cancellations.