Attached files
| file | filename |
|---|---|
| 8-K - REPUBLIC AIRWAYS HOLDINGS INC | v175443_8k.htm |
For
Immediate release:
Contact:
Timothy P. Dooley
Republic
Airways Holdings
Tel. (317)
487-4308
Republic
Airways Holdings Announces Fourth Quarter
and
Calendar Year 2009 Earnings
Indianapolis,
Indiana, (February
24, 2010) – Republic Airways Holdings Inc. (NASDAQ/NM: RJET) today reported
operating revenues of $637.3 million for the quarter ended December 31, 2009, an
87.9% increase, compared to $339.3 million for the same period last year.
The Company also reported net income of $20.1 million, or $0.55 per diluted
share, for the quarter ended December 31, 2009, compared to $19.0 million of net
income, or $0.56 per diluted share, for the same period last
year. The fourth quarter results for 2009 include $109.2 million of
goodwill and other impairment charges and a $203.7 million gain on bargain
purchase related to the acquisition of Frontier Airlines. These two
non-recurring items increased pre-tax income by $94.5 million and net income by
$17.1 million for the quarter. Additionally, the Company recorded a
year-end tax adjustment, which increased net income by $2.1 million for the
quarter. Excluding these non-recurring items, and as presented in the
tables below, income before taxes was $1.5 million and net income was $0.9
million, or $0.03 per diluted share for the quarter.
Reconciliation
of non-GAAP income before tax and net income:
|
($$
in Millions)
|
Three
Months Ended
December
31, 2009
|
|||
|
Income
before income taxes
|
$ | 96.0 | ||
|
Subtract:
gain on bargain purchase
|
(203.7 | ) | ||
|
Add: goodwill
and other impairment charges
|
109.2 | |||
|
Income
before income taxes excluding gain on bargain purchase and the goodwill
and other impairment charges
|
$ | 1.5 | ||
|
($$
in Millions)
|
Three
Months Ended
December
31, 2009
|
|||
|
Net
Income of the Company
|
$ | 20.1 | ||
|
Subtract:
gain on bargain purchase, net of tax
|
(126.3 | ) | ||
|
Subtract:
year-end tax adjustment
|
(2.1 | ) | ||
|
Add: goodwill
and other impairment charges (non-deductible)
|
109.2 | |||
|
Net
income of the Company excluding gain on bargain purchase, tax adjustment,
and the goodwill and other impairment charges
|
$ | 0.9 | ||
For the
full year ended December 31, 2009, operating revenues were $1.64 billion, an
increase of 11.0% from 2008. Net income for the year was $39.7 million, or $1.13
per diluted share, compared to $84.6 million of net income, or $2.42 per diluted
share, for 2008.
Fourth Quarter 2009
Highlights
Fixed-Fee
Segment
Total
fixed-fee service revenues of $266.7 million declined $67.8 million from prior
year’s fourth quarter. However, excluding fuel reimbursement from our
partners, fixed-fee service revenues decreased $35.8 million, or 12.5% for the
fourth quarter of 2009 due to a reduction in block hours. We removed 15 aircraft
from fixed-fee operations in 2009 and reported all Midwest regional operations
in our branded segment beginning in August 2009. Income before taxes on the
fixed-fee operations, excluding a $2.0 million impairment charge for intangible
assets, was $24.5 million for the quarter. Cost per ASM (CASM), including
interest expense but excluding fuel and the impairment charge decreased to 7.59¢
for the fourth quarter of 2009, from 7.62¢ for the same quarter of
2008.
Branded
Segment
Total
revenues flown on our branded airlines were $364.9 million for the
quarter. Load factor was 79.7% for the quarter and total revenue per
ASM (TRASM) was 10.10¢. Excluding a $96.5 million pre-tax gain from
non-recurring items, the branded operations posted a loss before taxes of $18.5
million for the fourth quarter. Cost per ASM (CASM), including
interest expense but excluding fuel and non-recurring items, was 7.31¢ for the
fourth quarter of 2009. In addition to the non-recurring items
discussed above, this quarter’s branded results included the following pre-tax
items:
|
Description
|
Amount
|
Recurrence
|
||
|
Purchase
accounting adjustment to revenues (non-cash)
|
($10.8M)
|
Through
Q3 2010
|
||
|
Restructuring
costs for brand integration expenses, severance and other employee exit
costs
|
($7.0M)
|
Through
Q4 2010
|
||
|
Amortization
of intangible assets fair valued in the purchase of Frontier and Midwest
(non-cash)
|
($3.2M)
|
Every
quarter
|
||
|
Loss
on deconsolidation of Mokulele Airlines
|
($3.2M)
|
None
|
||
|
Reduction
in benefit plan obligations of Midwest (non-cash)
|
$8.3M
|
None
|
Other
Segment
The
Company’s “Other” business segment includes revenues from aircraft subleases,
slot rentals and charter operations and expenses associated with those
activities and any idle aircraft. The Company reported a pre-tax loss
of $4.5 million in the fourth quarter on this segment related mostly to idle
aircraft.
Fleet
During
the quarter the Company acquired Frontier Airlines and its 62 operational
aircraft. The Company also took delivery of six of the ten E190
aircraft purchased from US Airways during the quarter and removed the final six
B717 aircraft from its fleet, bringing the total operational fleet from 228
aircraft at September 30, 2009 to 290 aircraft at December 31,
2009.
Full Year 2009
Highlights
Fixed-Fee
Segment
For the
full year ended December 31, 2009, fixed-fee service revenues were $1.09
billion, a decrease of $282.0 million from the prior year’s
results. However, excluding fuel reimbursement from our partners,
fixed-fee service revenues decreased $46.4 million, or 4.1% for the year due to
a reduction in block hour activity. We removed 15 aircraft from
fixed-fee operations during the year and reported all Midwest regional
operations in our branded segment beginning in August 2009. Income before taxes
on the fixed-fee operations, excluding impairment charges of $15.3 million, was
$102.0 million. Cost per ASM (CASM), including interest expense but excluding
fuel and impairment charges, increased to 7.65¢ in 2009, from 7.50¢ in
2008.
Branded
Segment
Branded
operations for 2009 include Mokulele Airlines between April and October 2009,
Midwest Airlines starting in August 2009, and Frontier Airlines starting in
October 2009. For the full year ended December 31, 2009, branded revenues
totaled $444.3 million. Load factor was 79.2% for the year and total
revenue per ASM (TRASM) was 10.52¢. The branded operations posted a
loss before taxes and non-recurring items of $38.5 million for
2009. Cost per ASM (CASM), including interest expense but excluding
fuel and non-recurring items, was 8.01¢ for 2009.
Other
Segment
The
Company reported a pre-tax loss of $8.4 million for the year, related mostly to
idle aircraft.
Fleet
The
Company increased its operating fleet to 290 aircraft as of December 31, 2009,
from 221 as of December 31, 2008. Twenty aircraft were placed into service
during the year. This included three E175 aircraft that went into
fixed-fee service and 11 E190 and six E135 aircraft that went into branded
service. The Company also acquired Frontier Airlines and its 62
operational aircraft and removed thirteen 50-seat aircraft from service for
Continental. Ten of the aircraft removed were returned to the lessor
and three were subleased offshore.
Balance Sheet
Information
At
December 31, 2009, the Company had $350.2 million in cash, of which $192.7
million was restricted. This compares to $130.9 million in cash, of
which $1.2 million was restricted as of December 31, 2008. The Company’s
debt increased to $2.79 billion as of December 31, 2009, compared to $2.28
billion at December 31, 2008. The increase in debt is related mostly to aircraft
purchases made during the year combined with the acquisition of Frontier
Airlines and its aircraft debt. As of December 31, 2009, all but $85
million of the Company’s debt is secured by the aircraft and approximately 80%
of the total debt is fixed-rate. The Company has significant
long-term lease obligations for aircraft that are classified as operating leases
and are not reflected as liabilities on the Company’s consolidated balance
sheet. At a 7.0% discount factor, the present value of these lease
obligations was approximately $1.17 billion as of December 31, 2009 compared to
approximately $685 million reported as of December 31, 2008.
Recent Business
Developments
On
October 1, 2009, the Company completed its acquisition of Frontier
Airlines.
On
October 14, 2009, the Company announced that it will acquire 10 Embraer 190AR
jets from US Airways. Republic applied the full balance of its $35 million
unsecured loan to US Airways toward the purchase of the aircraft and assumed the
existing variable-rate debt on the aircraft. The aircraft are
expected to enter into branded service between November 2009 and the second
quarter of 2010.
On
October 16, 2009, the Company entered into an agreement with Mesa Air Group,
Inc. ("Mesa") to form Mo-Go, LLC, a new business partnership that will provide
inter-island commercial airlines services in Hawaii. Pursuant to the Agreement,
Mesa now owns 75% of Mo-Go and the former Mokulele shareholders own the
remaining 25%. Additionally, the partners agreed to capitalize the
new business with up to $6.0 million, $1.5 million of which would be funded by
Mokulele’s former shareholders.
On
February 4, 2010, the Company announced it will transition the regional service
operated by Lynx Aviation Bombardier Q400 turboprop aircraft to Embraer 170 and
190 jet service operated by Republic Airlines. The Company will remove three
Q400 turboprop aircraft from service effective April 6. Another three aircraft
will be removed from service on April 19. The remainder of the Q400
aircraft are expected to be removed by the end of the third quarter of
2010.
Corporate
Information
Republic
Airways Holdings, based in Indianapolis, Indiana is an airline holding company
that owns Chautauqua Airlines, Frontier Airlines, Lynx Aviation, Midwest
Airlines, Republic Airlines and Shuttle America, collectively “the airlines.”
The airlines offer scheduled passenger service on approximately 1,600 flights
daily to 118 cities in 44 states, Canada, Costa Rica, and Mexico under branded
operations at Frontier and Midwest and through fixed-fee airline services
agreements with five major U.S. airlines. The fixed-fee flights are operated
under an airline partner brand, such as AmericanConnection, Continental Express,
Delta Connection, United Express, and US Airways Express. As of the date of this
release, the airlines employ approximately 11,000 aviation professionals and
operate 283 aircraft. For more information on Republic Airways please
visit our website at www.rjet.com.
The
Company will conduct a telephone briefing to discuss its fourth quarter and
annual results tomorrow morning at 10:30 a.m. EST. This call is being webcast by
Thomson/Reuters and can be accessed at Republic Airways Holdings’ website at
www.rjet.com.
For those wishing to participate, please call 866-761-0748, and for
international calls please dial 617-614-2706; the password is 95643098. To
listen to a telephone replay of the webcast please call 888-286-8010 and use
password 66892909. For international telephone replay, please call 617-801-6888
and use the same password. The replay will be available from Feb. 25, 2010 at
1:30 p.m. until March 4, 2010.
Additional
Information
In
addition to historical information, this release contains forward-looking
statements. Republic Airways Holdings Inc. (the “Company”) 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 Republic Airways’ 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 Republic Airways as of such date. Republic Airways
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 many 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
STATEMENTS OF INCOME
|
||||||||||||||||||||||||
|
(Dollars
and Shares in Thousands, Except per Share Amounts)
|
||||||||||||||||||||||||
|
(Unaudited)
|
||||||||||||||||||||||||
|
Financial
Highlights
|
Three
Months Ended December 31,
|
Year
Ended December 31,
|
||||||||||||||||||||||
|
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
|
OPERATING
REVENUES
|
||||||||||||||||||||||||
|
Fixed-fee
service
|
$ | 266,685 | $ | 334,530 | -20.3 | % | $ | 1,180,209 | $ | 1,462,211 | -19.3 | % | ||||||||||||
|
Passenger
service
|
319,265 | - |
NM
|
389,653 | - |
NM
|
||||||||||||||||||
|
Cargo
and other
|
51,374 | 4,722 |
NM
|
72,356 | 17,544 |
NM
|
||||||||||||||||||
|
Total
operating revenues
|
637,324 | 339,252 | 87.9 | % | 1,642,218 | 1,479,755 | 11.0 | % | ||||||||||||||||
|
OPERATING
EXPENSES
|
||||||||||||||||||||||||
|
Wages
and benefits
|
134,918 | 61,709 | 118.6 | % | 342,364 | 252,336 | 35.7 | % | ||||||||||||||||
|
Aircraft
fuel
|
136,441 | 47,817 | 185.3 | % | 236,620 | 327,791 | -27.8 | % | ||||||||||||||||
|
Landing
fees and airport rents
|
41,481 | 14,806 | 180.2 | % | 96,915 | 59,891 | 61.8 | % | ||||||||||||||||
|
Aircraft
and engine rent
|
61,373 | 32,888 | 86.6 | % | 156,773 | 134,206 | 16.8 | % | ||||||||||||||||
|
Maintenance
and repair
|
60,016 | 44,702 | 34.3 | % | 211,503 | 169,425 | 24.8 | % | ||||||||||||||||
|
Insurance
and taxes
|
8,175 | 7,498 | 9.0 | % | 28,105 | 25,793 | 9.0 | % | ||||||||||||||||
|
Depreciation
and amortization
|
51,582 | 34,057 | 51.5 | % | 163,584 | 133,206 | 22.8 | % | ||||||||||||||||
|
Promotion
and sales
|
30,924 | - |
NM
|
36,265 | - |
NM
|
||||||||||||||||||
|
Impairment
of goodwill and other
impairments
|
109,224 | - |
NM
|
122,559 | - |
NM
|
||||||||||||||||||
|
Gain
on bargain purchase
|
(203,698 | ) | - |
NM
|
(203,698 | ) | - |
NM
|
||||||||||||||||
|
Other
|
70,488 | 32,458 | 117.2 | % | 179,828 | 122,012 | 47.4 | % | ||||||||||||||||
|
Total
operating expenses
|
500,924 | 275,935 | 81.5 | % | 1,370,818 | 1,224,660 | 11.9 | % | ||||||||||||||||
|
OPERATING
INCOME
|
136,400 | 63,317 | 115.4 | % | 271,400 | 255,095 | 6.4 | % | ||||||||||||||||
|
OTHER
INCOME (EXPENSE)
|
||||||||||||||||||||||||
|
Interest
expense
|
(39,747 | ) | (35,284 | ) | 12.6 | % | (144,994 | ) | (131,856 | ) | 10.0 | % | ||||||||||||
|
Other
income/(expense)
|
(635 | ) | 3,007 |
NM
|
9,784 | 14,176 | -31.0 | % | ||||||||||||||||
|
Total
other income (expense)
|
(40,382 | ) | (32,277 | ) | 25.1 | % | (135,210 | ) | (117,680 | ) | 14.9 | % | ||||||||||||
|
INCOME
BEFORE INCOME TAXES
|
96,018 | 31,040 | 209.3 | % | 136,190 | 137,415 | -0.9 | % | ||||||||||||||||
|
INCOME
TAX EXPENSE
|
75,911 | 12,049 | 530.0 | % | 99,805 | 52,835 | 88.9 | % | ||||||||||||||||
|
NET
INCOME (INCLUDING NONCONTROLLING INTERESTS)
|
20,107 | 18,991 | 5.9 | % | 36,385 | 84,580 | -57.0 | % | ||||||||||||||||
|
Net
loss (income) attributable to noncontrolling interest in
MFSI
|
- | - |
NM
|
(3,270 | ) | - |
NM
|
|||||||||||||||||
|
NET
INCOME OF THE COMPANY
|
20,107 | 18,991 | 5.9 | % | 39,655 | 84,580 | -53.1 | % | ||||||||||||||||
|
PER
SHARE, BASIC
|
$ | 0.58 | $ | 0.56 | 3.6 | % | $ | 1.15 | $ | 2.43 | -52.7 | % | ||||||||||||
|
PER
SHARE, DILUTED
|
$ | 0.55 | $ | 0.56 | -1.8 | % | $ | 1.13 | $ | 2.42 | -53.3 | % | ||||||||||||
|
Weighted
Average Common Shares
|
||||||||||||||||||||||||
|
Basic
|
34,599 | 34,174 | 1.2 | % | 34,599 | 34,855 | -0.7 | % | ||||||||||||||||
|
Diluted
|
37,218 | 34,174 | 8.9 | % | 35,699 | 34,949 | 2.1 | % | ||||||||||||||||
|
Unaudited
Operating Highlights
|
||||||||||||||||||||||||
|
Operating
Highlights – Fixed Fee
|
Three
Months Ended
December 31, |
Year
Ended
December 31, |
||||||||||||||||||||||
|
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
|||||||||||||||||||
|
Fixed-fee
service revenues, excluding fuel (000)
|
$ | 249,459 | $ | 285,251 | -12.5 | % | $ | 1,089,051 | $ | 1,135,431 | -4.1 | % | ||||||||||||
|
Passengers
carried
|
4,418,535 | 4,499,049 | -1.8 | % | 18,783,773 | 18,917,502 | -0.7 | % | ||||||||||||||||
|
Revenue
passenger miles (000)
|
2,200,666 | 2,306,956 | -4.6 | % | 9,560,637 | 9,700,978 | -1.4 | % | ||||||||||||||||
|
Available
seat miles (000)
|
2,964,671 | 3,256,325 | -9.0 | % | 12,894,899 | 13,213,701 | -2.4 | % | ||||||||||||||||
|
Passenger
load factor
|
74.2 | % | 70.8 | % |
3.4
pts
|
74.1 | % | 73.4 | % |
0.7
pts
|
||||||||||||||
|
Cost
per available seat mile, including interest expense (cents) ¹
|
8.17 | 9.08 | -10.0 | % | 8.36 | 9.97 | -16.1 | % | ||||||||||||||||
|
Cost
per available seat mile, including interest and excluding fuel expense
(cents)
¹
|
7.59 | 7.62 | -0.4 | % | 7.65 | 7.50 | 2.0 | % | ||||||||||||||||
|
Operating
Aircraft at period end:
³
|
||||||||||||||||||||||||
|
37-50
seats
|
77 | 92 | -16.3 | % | 77 | 92 | -16.3 | % | ||||||||||||||||
|
70-86
seats
|
112 | 121 | -7.4 | % | 112 | 121 | -7.4 | % | ||||||||||||||||
|
Block
hours
|
156,199 | 175,195 | -10.8 | % | 674,454 | 740,403 | -8.9 | % | ||||||||||||||||
|
Departures
|
91,663 | 101,290 | -9.5 | % | 396,559 | 422,558 | -6.2 | % | ||||||||||||||||
|
Average
daily utilization of each aircraft (hours)
|
10.1 | 9.6 | 5.3 | % | 10.1 | 10.1 | 0.0 | % | ||||||||||||||||
|
Average
length of aircraft flight (miles)
|
490 | 498 | -1.6 | % | 494 | 502 | -1.6 | % | ||||||||||||||||
|
Average
seat density
|
66 | 65 | 1.5 | % | 66 | 62 | 6.5 | % | ||||||||||||||||
|
Operating
Highlights – Branded ²
|
Three
Months
Ended
December
31,
|
Year
Ended
December
31,
|
||||||
|
2009
|
2009
|
|||||||
|
Total
revenues
|
$ | 364,908 | $ | 444,312 | ||||
|
Passengers
carried
|
3,416,605 | 4,200,044 | ||||||
|
Revenue
passenger miles (000)
|
2,882,354 | 3,344,953 | ||||||
|
Available
seat miles (000)
|
3,614,446 | 4,221,629 | ||||||
|
Passenger
load factor
|
79.7 | % | 79.2 | % | ||||
|
Total
revenue per available seat mile (cents)
|
10.10 | 10.52 | ||||||
|
Passenger
revenue per ASM (cents)
|
8.83 | 9.23 | ||||||
|
Cost
per available seat mile, including interest expense (cents)
¹
|
10.61 | 11.44 | ||||||
|
Fuel
cost per available seat mile (cents)
|
3.30 | 3.43 | ||||||
|
Cost
per available seat mile, including interest and excluding fuel expense
(cents)
¹
|
7.31 | 8.01 | ||||||
|
Gallons
consumed
|
55,302,996 | 67,388,662 | ||||||
|
Average
cost per gallon
|
$ | 2.15 | $ | 2.15 | ||||
|
Operating
Aircraft at period end:
³
|
||||||||
|
37-50
seats (including four aircraft operated by regional
partner)
|
11 | 11 | ||||||
|
70-99
seats
|
38 | 38 | ||||||
|
120+
seats
|
51 | 51 | ||||||
|
Block
hours
|
95,508 | 121,167 | ||||||
|
Departures
|
45,718 | 64,379 | ||||||
|
Average
daily utilization of each aircraft (hours)
|
10.8 | 10.7 | ||||||
|
Average
length of aircraft flight (miles)
|
829 | 749 | ||||||
|
Average
seat density
|
95 | 88 | ||||||
¹ Costs
(in all periods) exclude non-recurring items and other expenses not attributable
to either fixed-fee or branded segments.
²
Includes Mokulele from April 2009 to September 2009, Midwest starting
August 2009 and Frontier starting October 2009.
³ Excludes
three and two idle 37-50 seat aircraft and two and six idle 70-99 seat aircraft
at December 31, 2009 and 2008 respectively.