Republic records a Q2 loss

Washington DC
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Republic Airways Holdings has announced a $14.9 million net loss for the second quarter of 2011, a decline from a $2.6 million profit in the same quarter last year.

The company's operating income plummeted 72% to $12 million.

Excluding special items, such as mark-to-market adjustments to Republic's fuel hedge portfolio, and "integration and fleet transition expenses", the company's loss was $8.9 million, compared to a ex-items profit of $13.7 million in the second quarter of 2010.

Republic's fixed-fee segment, in which its regional subsidiaries provide services for mainline carriers, recorded a $17.6 million pre-tax profit excluding items, lower than a $20.8 million profit a year ago.

The company's branded segment, Frontier Airlines, however, posted a $32.8 million pre-tax loss, excluding items. In the second quarter of 2010, Republic's branded business posted a $2.9 million profit before taxes and excluding items.

Frontier saw its second quarter total revenue per available seat mile increase 10.6% year-over-year. The boost in unit revenues, however, was outpaced by a 17.6% increase in total cost per available seat mile, mainly driven by fuel. Fronter's unit costs, excluding fuel, had increased 4.6% year-over-year, while fuel cost per available seat mile rose 44.1% compared to the second quarter of 2010.

Republic provided an update on a $100 million restructuring programme at Frontier that was originally announced during its first quarter earnings call. The company reported that the target value of the restructuring program was upped to $120 million in May.

Republic estimated that it is now "three-quarters complete in its restructuring efforts" and expects to be "successful in reaching the full annual target of $120 million by the end of September 2011".

Republic said it is in "constructive negotiations with key stakeholders and expects substantially all Airbus lessors and distribution partners to participate in the restructuring programme". According to the company, it has achieved 80% of a $25 million target in the restructuring of leases and 70% of a $10 million target of "distribution and advertising cost reductions".

The company also provided an update on the hailstorm that affected Frontier's Denver hub earlier this month, noting that 22 aircraft were damaged, including 18 of Frontier's 59 Airbus aircraft, two Bombardier Q400s, and two Embraer E-Jets.

Due to the storm, "revenues and pre-tax income on Frontier will each be negatively impacted by approximately $10 million in the third quarter", said the company.