INDIANA: Republic Airways Holdings Inc. witnessed a 1% year-over-year (YoY) decline to $905 million in its September revenue passenger miles (RPM). The company’s historical performance shows an increase in annual revenues from $1.3 billion in fiscal year 2013 (FY13) to $1.4 billion in FY14. Bidness Etc believes that the drop was due to the decline in airline fares, which is directly linked to the recent crude oil price fall.
We believe that Republic Airways has shown bleak September performance, compared to other airlines. Southwest Airlines Co. (NYSE:LUV) and Delta Air lines, Inc. (NYSE:DAL) reported 11.4% and 2.4% YoY increase in revenue per miles, respectively.
It experienced a 4% decline in available seat miles (ASM) to $1.16 billion, and also reported a 1.74% increase in block hours to $0.76 million, in 2014. However, in September 2015, the company reported a 5% decrease in block hours to 58,000.
Republic Airways is highly dependent on the relationship with its partners, which include Delta Air lines, United Continental Holdings Inc. (NYSE:UAL), and US Airways Group (NYSE:LCC), for its fixed fee revenues. If any of the fixed fee agreement is terminated, it is expected to affect the company’s overall revenues. Moreover, if any of its partners’ financial strength decreases, it will have an impact on the entire company’s financial performance,
Earlier this month, Delta sued Republic Airways, and said that the carrier did not fulfill the scheduled flights as per the contract. Republic Airways commented that it has not received full complaint, and has not breached any of its capacity purchase agreements. Therefore, it cannot comment on it further.
The company is also dependent on its labor, especially good pilots, for smooth operations. Currently, it is in a labor dispute with International Brotherhood of Teamsters, which represents all of the company’s pilots. The company stated that its inability to pay the pilots holds it back from hiring qualified pilots. In September, it reached a tentative agreement with the pilots union, although its acceptance will depend on the Teamsters members’ vote. This will allow the company to move away from operational disputes.
