Transportation

Republic Airways Tailspins After Chapter 11 Bankruptcy Filing

Chris Lange

Published: February 26, 2016 12:35 pm

Last Updated: January 13, 2020 12:39 pm

Republic Airways Holdings Inc. (NASDAQ: RJET) saw its shares in free fall on Friday following a recent bankruptcy filing. The company announced that it and certain of its subsidiaries have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code.

Under the Chapter 11 debt reorganization, Republic’s operating subsidiaries will conduct normal flight operations and the company will do business as usual across its locations. The company believes that it has sufficient assets and liquidity to meet its working capital and operating expenses during the restructuring process.

Republic’s board of directors unanimously determined that this reorganization was the best course of action for the company and its stakeholders. The process allows Republic and its subsidiaries to continue normal business operations while restructuring the company’s finances and contractual relationships, all while putting its liabilities on hold for the time being.

Bryan Bedford, chairman, president and CEO of Republic Airways, commented:

We worked hard to avoid this step. Over the last several months, we’ve attempted to restructure the obligations on our out-of-favor aircraft – made so by a nationwide pilot shortage – and to increase our revenues. It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise. Our filing today is a result of our loss of revenue during the past several quarters associated with grounding aircraft due to a lack of pilot resources, combined with the reality that our negotiating effort with key stakeholders shows no apparent prospect of a near term resolution.

He added:

The airline, our associates, partners, passengers, creditors, shareholders and its other stakeholders – including the communities served by Republic – will be best served by an orderly, court-supervised restructuring. We filed with a strong core business and the liquidity resources necessary to carry out our restructuring plan. Our restructuring will maintain Republic as the world’s largest operator of EJET aircraft. Along with the 6,000 dedicated professional women and men of Republic, we believe this action will allow us to restore our airline and take it to new heights.

Shares of Republic Airways were trading down 74% at $0.89, with a consensus analyst price target of $5.25 and a 52-week trading range of $0.61 to $14.80.