Big Airlines say Contractor Bankruptcy Won't Disrupt Flights

Republic Airways filed for bankruptcy protection

If you fly on American Eagle, Delta Connection or United Express, there is a good chance you have been on a plane operated by Republic Airways, which just filed for bankruptcy protection.

The three leading U.S. airlines say, however, that the bankruptcy of a key supplier will not disrupt service for passengers.

Republic Airways Holdings Inc., whose airline subsidiaries operate more than 1,000 flights a day, filed for Chapter 11 protection from creditors on Thursday. But it said it would continue flying as usual.

Shares of Republic tumbled $2.50, or 73 percent, to 94 cents in afternoon trading on Friday.

Republic is one of several carriers that have contracts with American, Delta and United to operate regional flights using smaller planes. Passengers buy tickets from the big airlines, who pay regional carriers to operate flights with smaller planes -- typically 50 to 100 seats.

In the last dozen years, airline passengers have grown accustomed to flying on carriers that are operating under bankruptcy protection. American, Delta and United all went through bankruptcy.

American Airlines spokesman Casey Norton said Friday that his airline did not expect Republic's bankruptcy to affect American Eagle operations. He said American "will work with them as things develop to make sure we take care of our customers."

Delta spokesman Michael Thomas said Delta Connection would operate as usual. Delta has been phasing out use of Republic's 50-seat planes but will continue to use larger Republic jets, he said.

United spokesman Charles Hobart said likewise that his airline expected the bankruptcy to have no effect on the United Express schedule.

Indianapolis-based Republic has been profitable -- it earned $13.6 million in the first nine months of 2015 -- but far less so than the major airlines, which have been setting record profits thanks to cheaper fuel and growing passenger traffic. Republic's profit is also down sharply from 2014, and revenue has dipped as it grounded planes for lack of pilots. It failed in efforts to renegotiate aircraft deals.

American, Delta and United used bankruptcy to slash costs by renegotiating aircraft leases and labor contracts. Republic, which has 6,000 employees at Republic Airlines and Shuttle America, said it would not seek to throw out labor contracts -- a deal last year with Teamsters pilots was hard-fought. It could use bankruptcy to cut other costs, however.

Cowen and Co. analyst Cai von Rumohr said Republic is likely to cancel an order for 40 of Bombardier's C Series jets. Republic has lost interest in the order since selling Frontier Airlines, which placed the initial order.

Copyright AP - Associated Press
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