UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________
FORM 10-Q
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED June 30, 2007
OR
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER: 000-49697
REPUBLIC AIRWAYS HOLDINGS INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 06-1449146 |
| (State or other jurisdiction of | (I.R.S. Employer Identification Number) |
| incorporation or organization) |
8909 Purdue Road, Suite 300, Indianapolis, Indiana 46268
(Address of principal executive offices) (Zip Code)
(317) 484-6000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_____________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one)
Large accelerated filer o | Accelerated filer x | Non-accelerated filer o |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) r Yes xNo
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of August 03, 2007, the latest practicable date.
| Outstanding on | |
| Class | August 03, 2007 |
| Common Stock | 41,450,007 |
TABLE OF CONTENTS
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Exhibit 10.9 Agreement between Chautauqua Airlines, Inc. and the Flight Dispatchers in the employ of Chautauqua Airlines, Inc. as represented by Transport Workers Union of America, AFL-CIO, dated as of June 1, 2007. | ||
Exhibit 10.39(s)*Amendment No. 19 to Purchase Agreement DCT-014/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of June 22, 2007. | ||
Exhibit 10.40(k)*Amendment No. 11 to Letter Agreement DCT-015/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of May 29, 2007. | ||
Exhibit 10.40(l)*Amendment No. 12 to Letter Agreement DCT-015/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of June 22, 2007. | ||
Exhibit 31.1 Certification by Chief Executive Officer | ||
Exhibit 31.2 Certification by Chief Financial Officer | ||
Exhibit 32.1 Certification by Chief Executive Officer | ||
Exhibit 32.2 Certification by Chief Financial Officer | ||
| *A request for confidential treatment was filed for certain portions of the indicated document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 24b-2 of the Commission. | ||
All other items of this report are inapplicable
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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES | |||||||
(In thousands, except share and per share amounts) | |||||||
June 30, | December 31, | ||||||
2007 | 2006 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 234,390 | $ | 195,528 | |||
| Receivables—net of allowance for doubtful accounts of $347 and $340 respectively | 22,912 | 19,639 | |||||
| Inventories—net | 37,875 | 31,821 | |||||
| Prepaid expenses and other current assets | 15,656 | 11,411 | |||||
| Restricted cash | 1,183 | 1,238 | |||||
| Deferred income taxes | 8,017 | 3,467 | |||||
| Total current assets | 320,033 | 263,104 | |||||
| Aircraft and other equipment—net | 2,027,570 | 1,889,717 | |||||
| Intangible and other assets | 203,579 | 192,285 | |||||
| Goodwill | 13,335 | 13,335 | |||||
| Total | $ | 2,564,517 | $ | 2,358,441 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current Liabilities: | |||||||
| Current portion of long-term debt | $ | 96,475 | $ | 86,688 | |||
| Accounts payable | 18,667 | 23,899 | |||||
| Accrued liabilities | 95,776 | 92,458 | |||||
| Total current liabilities | 210,918 | 203,045 | |||||
| Long-term debt—less current portion | 1,594,775 | 1,482,115 | |||||
| Deferred credits and other non current liabilities | 121,570 | 23,566 | |||||
| Deferred income taxes | 170,615 | 140,886 | |||||
| Total liabilities | 2,097,878 | 1,849,612 | |||||
| Commitments and contingencies | |||||||
| Stockholders' Equity: | |||||||
| Preferred stock, $.001 par value; 5,000,000 shares authorized; no shares issued or outstanding | |||||||
| Common stock, $.001 par value; one vote per share; 150,000,000 shares authorized; 43,444,027 and 42,708,743 shares issued and 41,444,027 and 42,708,743 shares outstanding, respectively | 43 | 43 | |||||
| Additional paid-in capital | 290,806 | 281,826 | |||||
| Warrants | — | 8,574 | |||||
| Treasury stock, 2,000,000 shares, at cost | (41,000 | ) | — | ||||
| Accumulated other comprehensive loss | (3,235 | ) | (3,877 | ) | |||
| Retained earnings | 220,025 | 222,263 | |||||
| Total stockholders' equity | 466,639 | 508,829 | |||||
| Total | $ | 2,564,517 | $ | 2,358,441 | |||
See accompanying notes to condensed consolidated financial statements (unaudited).
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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES | |||||||||||||
(In thousands, except per share amounts) | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
| OPERATING REVENUES: | |||||||||||||
| Passenger | $ | 316,485 | $ | 279,430 | $ | 600,887 | $ | 527,606 | |||||
| Charter revenue and ground handling | 985 | 1,165 | 4,120 | 5,606 | |||||||||
| Other | 2,843 | 3,718 | 5,749 | 8,445 | |||||||||
| Total operating revenues | 320,313 | 284,313 | 610,756 | 541,657 | |||||||||
| OPERATING EXPENSES: | |||||||||||||
| Wages and benefits | 54,756 | 43,595 | 105,498 | 83,740 | |||||||||
| Aircraft fuel | 78,184 | 82,137 | 145,133 | 158,660 | |||||||||
| Landing fees | 13,184 | 10,492 | 25,236 | 19,086 | |||||||||
| Aircraft and engine rent | 30,297 | 24,394 | 57,331 | 44,746 | |||||||||
| Maintenance and repair | 32,480 | 24,522 | 59,486 | 46,903 | |||||||||
| Insurance and taxes | 4,603 | 4,978 | 8,649 | 9,270 | |||||||||
| Depreciation and amortization | 26,158 | 22,080 | 50,668 | 43,498 | |||||||||
| Other | 26,105 | 19,555 | 49,380 | 35,277 | |||||||||
| Total operating expenses | 265,767 | 231,753 | 501,381 | 441,180 | |||||||||
| OPERATING INCOME | 54,546 | 52,560 | 109,375 | 100,477 | |||||||||
| OTHER INCOME (EXPENSE): | |||||||||||||
| Interest expense | (26,128 | ) | (21,961 | ) | (51,532 | ) | (43,830 | ) | |||||
| Other income | 3,136 | 2,648 | 5,922 | 4,614 | |||||||||
| Total other income (expense) | (22,992 | ) | (19,313 | ) | (45,610 | ) | (39,216 | ) | |||||
| INCOME BEFORE INCOME TAXES | 31,554 | 33,247 | 63,765 | 61,261 | |||||||||
| INCOME TAX EXPENSE | 12,513 | 12,992 | 25,444 | 24,106 | |||||||||
| NET INCOME | $ | 19,041 | $ | 20,255 | $ | 38,321 | $ | 37,155 | |||||
| NET INCOME PER COMMON SHARE | $ | 0.46 | $ | 0.48 | $ | 0.91 | $ | 0.89 | |||||
| DILUTED NET INCOME PER COMMON SHARE | $ | 0.46 | $ | 0.47 | $ | 0.89 | $ | 0.86 | |||||
See accompanying notes to condensed consolidated financial statements (unaudited).
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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES | |||||||
(In thousands) | |||||||
Six Months Ended | |||||||
June 30, | |||||||
2007 | 2006 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | $ | 137,106 | $ | 110,066 | |||
INVESTING ACTIVITIES: | |||||||
| Purchase of aircraft and other equipment | (28,588 | ) | (43,102 | ) | |||
| Proceeds from sale of spare aircraft equipment | 7,797 | 3,555 | |||||
| Aircraft deposits and other | (23,270 | ) | (3,920 | ) | |||
| Aircraft deposits returned | 25,820 | 13,171 | |||||
NET CASH FROM INVESTING ACTIVITIES | (18,241 | ) | (30,296 | ) | |||
FINANCING ACTIVITIES: | |||||||
| Payments on short/long-term debt | (43,874 | ) | (35,841 | ) | |||
| Proceeds from exercise of stock options | 7,774 | 1,078 | |||||
| Payments of debt issue costs | (2,903 | ) | (2,497 | ) | |||
| Purchase of treasury stock | (41,000 | ) | — | ||||
NET CASH FROM FINANCING ACTIVITIES | (80,003 | ) | (37,260 | ) | |||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 38,862 | 42,510 | |||||
CASH AND CASH EQUIVALENTS—Beginning of period | 195,528 | 162,005 | |||||
CASH AND CASH EQUIVALENTS—End of period | $ | 234,390 | $ | 204,515 | |||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||
CASH PAID FOR INTEREST AND INCOME TAXES: | |||||||
| Interest paid | $ | 50,290 | $ | 43,823 | |||
| Income taxes paid | 861 | 629 | |||||
NON-CASH INVESTING & FINANCING TRANSACTIONS: | |||||||
| Aircraft, inventories, and other equipment purchased through financing arrangements from manufacturer | 166,320 | 104,900 | |||||
| Refinancing aircraft debt from manufacturer to debt permanently financed | — | 115,755 | |||||
| Parts, training and lease credits from aircraft manufacturer | (4,560 | ) | (5,292 | ) | |||
| Fair value of warrants surrendered by Delta Air Lines | 49,103 | — | |||||
| Engine received and to be financed | 3,281 | — | |||||
See accompanying notes to condensed consolidated financial statements (unaudited).
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REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES
(In thousands, except share and per share amounts)
1. Basis of Presentation
The unaudited condensed consolidated financial statements of Republic Airways Holdings Inc. and its subsidiaries (the “Company”) as of June 30, 2007 and December 31, 2006 and for the three and six months ended June 30, 2007 and 2006 included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The subsidiaries include Chautauqua Airlines, Inc. (“Chautauqua Airlines”), Republic Airline Inc. (“Republic Airline”) and Shuttle America Corporation (“Shuttle America”). Certain information and disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the following disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary to present fairly the results of operations for the interim periods presented. All adjustments are of a normal recurring nature, unless otherwise disclosed. The results of operations for the three and six months ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending December 31, 2007. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K filed March 15, 2007.
Revenue Recognition
Under the Company’s code-share agreements, the Company is reimbursed an amount per aircraft designed to compensate the Company for certain aircraft ownership costs. In accordance with Emerging Issues Task Force No. 01-08, Determining Whether an Arrangement Contains a Lease, the Company has concluded that a component of its revenue under the agreement discussed above is rental income, inasmuch as the agreement identifies the “right of use” of a specific type and number of aircraft over a stated period of time. The amounts deemed to be rental income during the three and six months ended June 30, 2007 and 2006 were $75,610 and $64,113, and $146,990 and $121,816, respectively, and have been included in passenger revenue in the Company’s condensed consolidated statements of income.
New Accounting Standards
In September 2006, the Financial Accounting Standards Board (FASB) issued Statements of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, which defines fair value, establishes a framework for measuring fair value and requires expanded disclosures about fair value measurements. This statement is effective for fiscal years beginning after November 15, 2007. We have not yet completed our assessment of the impact of this statement on our consolidated financial statements.
In February 2007, the FASB released SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities, a new standard that permits an entity to choose to measure many financial instruments and certain other items at fair value. The objective of this statement is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is effective in the first quarter of fiscal 2008. We have not yet completed our assessment of the impact of this statement on our consolidated financial statements.
2. Delta Air Lines Amendments
In March 2007, Chautauqua Airlines and Shuttle America amended their fixed-fee agreements with Delta Air Lines (“Delta”). On March 27, 2007 the United States Bankruptcy Court for the Southern District of New York approved the amended agreements. Key terms of the amended agreements include the removal of all 15 thirty-seven seat ERJ-135 aircraft beginning in September 2008 at a rate of 2 aircraft per month, and effective May 1, 2007, an approximate 3% permanent reduction of block hour fees charged on Chautauqua Airlines’ remaining 24 fifty seat ERJ-145 and Shuttle America's 16 seventy seat ERJ-170 aircraft. In return for these amended terms, Delta agreed to surrender its warrants for 3,435,000 shares of the Company’s common stock, and the Company was granted a pre-petitioned, unsecured, general claim in the amount of $91,000 in Delta's Chapter 11 bankruptcy case. In April 2007, the Company sold the $91,000 pre-petition claim to a third party for $44,590 in cash.
In March 2007, the Company recorded a deferred credit of $44,590, which represented the net realizable value of the pre-petition claim on the approval date by the Bankruptcy Court. In addition, the Company recorded a deferred gain on the surrender of the warrants from Delta of $42,735, which was net of the write-off of the previously reported unamortized deferred warrant charge of $6,369. Stockholders' equity was reduced by $46,767, net of tax. The deferred credits for the proceeds of the pre-petition claim and the gain on the surrender of the warrants totaling $87,325 will be amortized as an adjustment to revenue over the remaining life of the agreements with Delta.
3. Risk Management
Beginning in April 2004, in anticipation of financing the purchase of regional jet aircraft on firm order with the manufacturer, the Company entered into fourteen treasury lock agreements with notional amounts totaling $373,500 and a weighted average interest rate of 4.47% with expiration dates through June 2005. Management designated the treasury lock agreements as cash flow hedges of forecasted transactions. The treasury lock agreements were settled at each respective settlement date, which were the purchase dates of the respective aircraft. The Company settled all of the agreements during 2004 and 2005 and the net amount paid was $7,472, and was recorded in accumulated other comprehensive loss, net of tax. Amounts paid or received on the settlement date are reclassified to interest expense over the term of the respective aircraft debt. The Company reclassified $216 and $75, and $385 and $150 to interest expense during the three month and six month periods June 30, 2007 and 2006, respectively. The Company had an accumulated other comprehensive loss relating to treasury lock agreements as of June 30, 2007 and December 31, 2006 of $3,235 and $3,877.
4. Stock Compensation
The Company maintains stock-based compensation plans which allow for the issuance of nonqualified stock options to officers, other key employees of the Company, and to members of the Board of Directors. The Company accounts for stock compensation using the fair value recognition provisions of SFAS No. 123(R), Share-Based Payment (SFAS No. 123(R)).
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Employee Stock Options
In connection with employment agreements for certain key employees, the Company granted options to purchase shares of the Company's common stock with exercise prices ranging from $1.75 to $18.59. Certain stock options vest ratably over the term of the employment agreements (generally 48 months) and are exercisable for five years following the vesting dates. Additional options have been granted and these options vest ratably over periods ranging from 8 months to 48 months, and are exercisable until 10 years from the date of grant. During the first quarter of 2007, pursuant to certain amended employment agreements, 440,000 stock options were granted with an exercise price of $18.59 which vest ratably over 12 months beginning either July 31, 2007 or August 31, 2007.
The following table summarizes the activity under the Company's stock option plans for the six months ended June 30, 2007:
Shares | Weighted Average Exercise Price | Aggregate Intrinsic Value In Thousands | Weighted Average Remaining Contractual Life | ||||||||||
| Outstanding at January 1, 2007 | 1,725,577 | $ | 12.54 | ||||||||||
| Granted | 455,000 | 18.71 | |||||||||||
| Exercised | 697,651 | 11.14 | |||||||||||
| Forfeited | 49,793 | 13.53 | |||||||||||
| Outstanding at June 30, 2007 | 1,433,133 | $ | 15.15 | $ | 7,458 | 8.3 years | |||||||
| Exercisable at June 30, 2007 | 696,325 | $ | 13.14 | $ | 5,021 | 7.5 years | |||||||
Restricted Common Shares
During the six months ended June 30, 2007, pursuant to certain amended employment agreements, restricted shares were granted to purchase 37,633 shares of the Company’s common stock. The shares have a purchase price of $0.001 par value per share and vest ratably over 12 months beginning either July 31, 2007 or August 31, 2007. The fair value of all restricted shares granted was $700.
During the three and six months ended June 30, 2007, $776 ($466, net of tax) and $1,205 ($723, net of tax), respectively, was charged to expense for stock compensation. The total intrinsic value of options exercised during the six month period ended June 30, 2007 was $6,426. The Company has a policy of issuing new common shares to satisfy the exercise of stock options. As of June 30, 2007, there was $3,009 of total unrecognized pre-tax compensation cost related to non-vested share-based compensation arrangements that is expected to be recognized through 2010.
Non-employee Director Stock Options
The Company has also granted options for non-employee directors under the 2002 Equity Incentive Plan at a price equal to the fair market value of the Common Stock on the date of the grant. Each non-employee director was automatically granted options to purchase shares of common stock in May 2004 on the day prior to commencement of the initial public offering. The options vest over a 3 year period with 1/24 of the shares vesting monthly for the first 12 months and 1/48 of the shares vesting monthly over the remaining 24 months. The non-employee directors are to receive 2,500 options on the first trading day after each annual meeting of stockholders at which he or she is re-elected as a non-employee director. These options vest ratably over 12 months of continuous service. The non-employee options are exercisable until 10 years from the date of grant. During the six months ended June 30, 2007, 15,000 stock options were granted to non-employee directors.
5. Net Income Per Common Share
Net income per common share is based on the weighted average number of shares outstanding during the period. The following is a reconciliation of the weighted average common shares for the basic and diluted per share computations:
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| Weighted-average common shares outstanding for basic net income available for common shareholders per share | 41,319,327 | 41,941,377 | 41,969,262 | 41,889,127 | ||||||||||||
| Effect of dilutive employee stock options, restricted stock and warrants | 388,298 | 1,336,093 | 1,065,161 | 1,259,759 | ||||||||||||
�� Adjusted weighted-average common shares outstanding and assumed conversions for diluted net income available for common shareholders per share | 41,707,625 | 43,277,470 | 43,034,423 | 43,148,886 | ||||||||||||
There were no employee stock options, restricted stock and warrants for the three and six months ended June 30, 2007 and 2006 excluded in the calculation of diluted net income per share due to their anti-dilutive impact.
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6. Treasury Stock
In March 2007, the Company entered into an agreement with WexAir LLC, the Company's former majority stockholder, to purchase two million shares of its holdings in the Company’s common stock, par value $.001 per share, at a price of $20.50 per share, for total consideration of $41,000. The transaction was recorded as treasury stock on the Company’s consolidated balance sheet. Settlement of the transaction occurred on March 21, 2007.
7. Debt
During the six months ended June 30, 2007, the Company obtained 29 aircraft, eight of which were debt-financed and 21 leased. The debt was obtained from banks and the aircraft manufacturer for terms between 12 and 15 years at interest rates ranging from 6.59% to 7.18%. The total debt incurred for the eight aircraft was $166,320.
The Company’s revolving credit agreement with a bank was amended during the three months ended March 31, 2007. Among the significant amendments, the term was extended to March 31, 2009, the revolving credit facility was reduced to $15,000 and a liquidity covenant was added. The Company’s revolving credit agreement contains restrictive covenants that require, among other things, that the Company maintain a certain fixed charge coverage ratio, a debt to earnings leverage ratio and a liquidity covenant. The Company was in compliance with the covenants at June 30, 2007. As of June 30, 2007 and December 31, 2006, the Company had no outstanding borrowings under this agreement with the bank.
8. Commitments and Contingencies
As of June 30, 2007, the Company has 32 ERJ-170/175 regional jets on firm order. The current total list price for these 32 regional jets is $992,000. The Company has a commitment to obtain financing for all of these aircraft. The Company also has a commitment to acquire eleven spare aircraft engines with a current list price totaling approximately $47,900. These commitments are subject to customary closing conditions.
During the six months ended June 30, 2007, the Company made aircraft deposits in accordance with the aircraft commitments of $23,270 The aircraft deposits are included in other assets. All payments were made from cash generated from operations.
In July 2006, the Company announced that it had reached an agreement to operate forty-four 50-seat regional jets for Continental Airlines, Inc. Twenty of the aircraft are ERJ-145 regional jets that will be transitioned from the Company’s current US Airways operations. The Company has firm commitments to lease 24 aircraft CRJ-200 regional jets, consistent with the terms of the Continental agreement. As of June 30, 2007, 22 CRJ-200 and 16 ERJ-145 regional jets were in operation for Continental. The remaining six aircraft are expected to be placed into service for Continental by September 2007 and will be operated for terms that vary from two to five years. Under certain conditions Continental may extend the term on the aircraft up to five additional years.
In January 2007, the Company and Frontier entered into an agreement whereby the Company will operate seventeen, 76-seat ERJ-170 regional jets. As of June 30, 2007, four of the ERJ-170 regional jets were in operation and the remaining 13 aircraft will be funded by deliveries from the manufacturer.
During the three months ended June 30, 2007, the Company entered into long-term maintenance agreements for engines and APU’s for the Company’s CRJ-200 regional jets. The term of the engine agreement is through February 2010 and the term of the APU agreement is through December 2012.
9. Income Taxes
In July 2006, the FASB issued Interpretation No. 48 Accounting for Uncertainty in Income Taxes - An Interpretation of FASB 109 (FIN 48). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes and prescribes a recognition threshold and measurement attributes for financial statement disclosure of tax positions taken or expected to be taken on a tax return. Under FIN 48, the impact of an uncertain income tax position on an income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Additionally, FIN 48 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006.
The Company adopted the provisions of FIN 48 on January 1, 2007. At December 31, 2006, the Company had $1,200 recorded for income tax contingencies for a probable loss for uncertain income tax positions. The total amount of unrecognized tax benefits as of the date of adoption was $3,500. As a result of the implementation of FIN 48, the Company recognized a $2,300 increase in the liability for the unrecognized tax benefits which was accounted for as a reduction to retained earnings and an increase to deferred tax liability. During the three and six months ended June 30, 2007, the Company recorded an additional $263 and $578, respectively, for unrecognized tax benefits.
All of the unrecognized tax benefits at June 30, 2007, if recognized, would affect the effective tax rate.
The Company did not record interest or penalties during the years ended December 31, 2006, 2005 and 2004 or six months ended June 30, 2007. No interest and penalties were accrued for payment at December 31, 2006 and 2005 or June 30, 2007. The Company would recognize interest and penalties accrued related to unrecognized tax benefits in income tax expense if they occur. The adoption of FIN 48 on January 1, 2007, had no effect on the Company’s accrual for interest and penalties.
The Company is subject to taxation in the US and various states. The Company’s tax years 2000 to 2006 are subject to potential examination by the tax authorities.
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In addition to historical information, this Quarterly Report on Form 10-Q contains forward-looking statements. 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 the Company’s beliefs, expectations, hopes or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely" and similar expressions 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 the Company as of such date. The Company assumes no obligation to update any forward-looking statement. Actual results may vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others, the risks discussed in our Annual Report on Form 10-K and our other filings made with the Securities and Exchange Commission, which discussions are incorporated into this Quarterly Report on Form 10-Q by reference. As used herein, "unit cost" means operating cost per Available Seat Mile (ASM).
Overview
Republic Airways Holdings Inc., (“the Company”) is a Delaware holding company organized in 1996 that owns Chautauqua Airlines, Inc., (“Chautauqua Airlines”), Republic Airline Inc. (“Republic Airline”) and Shuttle America Corporation (“Shuttle America”). As of June 30, 2007, we offered scheduled passenger service on approximately 1,100 flights daily to 114 cities in 36 states, Canada, Jamaica and the Bahamas pursuant to code-share agreements with AMR Corp., the parent of American Airlines, Inc. (“American”), US Airways, Inc. (“US Airways”), Delta Air Lines, Inc. (“Delta”) and United Air Lines, Inc. (“United”), Continental Airlines, Inc. (“Continental”) and Frontier Airlines, Inc. (“Frontier”). In July 2006, we entered into a code-share agreement with Continental and we began flying for Continental in January 2007. Also, in January 2007, we entered into a code-share agreement with Frontier. We began flying for Frontier in March 2007. Currently, we provide our six partners with regional jet service, operating as AmericanConnection, US Airways Express, Delta Connection, United Express, Continental Express or Frontier, including service out of their hubs and focus cities in Atlanta, Boston, Denver, Chicago, Cincinnati, Columbus, Houston, Indianapolis, New York, Philadelphia, Pittsburgh, St. Louis and Washington, D.C. (Dulles and National).
We have established Chautauqua to operate regional jets having 50 or fewer seats; Shuttle America to operate regional jets having 70-seats; and Republic Airline to operate regional jets having more than 70-seats.
We have long-term, fixed-fee regional jet code-share agreements with each of our partners that are subject to our maintaining specified performance levels. Pursuant to these fixed-fee agreements, which provide for minimum aircraft utilization at fixed rates, we are authorized to use our partners' two-character flight designation codes to identify our flights and fares in our partners' computer reservation systems, to paint our aircraft in the style of our partners, to use their service marks and to market ourselves as a carrier for our partners. In addition, in connection with a marketing agreement among Delta, Continental and Northwest Airlines, certain of the routes that we fly using Delta's and Continental’s flight designator codes are also flown under Northwest's designator code. Our fixed-fee agreements eliminate our exposure to fluctuations in fuel prices, fare competition and passenger volumes. Our development of relationships with multiple major airlines has enabled us to reduce our dependence on any single airline, allocate our overhead more efficiently among our partners and reduce the cost of our services to our partners.
For the six months ended June 30, 2007, US Airways accounted for approximately 22% of the Company’s passenger revenues, Delta accounted for approximately 34%, American accounted for approximately 10%, United accounted for approximately 26%, Continental accounted for approximately 7% and Frontier accounted for 1%.
Certain Statistical Information
Operating Expenses per ASM in cents | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
| Wages and benefits | 1.95 | 1.93 | 2.01 | 1.98 | ||||||||||||
| Aircraft fuel | 2.79 | 3.64 | 2.76 | 3.76 | ||||||||||||
| Landing fees | 0.47 | 0.46 | 0.48 | 0.45 | ||||||||||||
| Aircraft and engine rent | 1.08 | 1.08 | 1.09 | 1.06 | ||||||||||||
| Maintenance and repair | 1.16 | 1.09 | 1.13 | 1.11 | ||||||||||||
| Insurance and taxes | 0.16 | 0.22 | 0.16 | 0.22 | ||||||||||||
| Depreciation and amortization | 0.93 | 0.98 | 0.96 | 1.03 | ||||||||||||
| Other | 0.93 | 0.87 | 0.94 | 0.84 | ||||||||||||
| Total operating expenses | 9.49 | 10.27 | 9.53 | 10.45 | ||||||||||||
| Interest expense | 0.93 | 0.97 | 0.98 | 1.04 | ||||||||||||
| Total operating expenses and interest expense | 10.42 | 11.24 | 10.51 | 11.49 | ||||||||||||
| Total operating expenses and interest expense less fuel | 7.63 | 7.60 | 7.75 | 7.73 | ||||||||||||
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The following table sets forth the major operational statistics and the percentage-of-change for the periods identified below:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
Increase/(Decrease) | Increase/(Decrease) | |||||||||||||||
2007 | 2007-2006 | 2006 | 2007 | 2007-2006 | 2006 | |||||||||||
| Revenue passengers | 4,134,981 | 24.2 | % | 3,328,129 | 7,385,277 | 25.5 | % | 5,883,377 | ||||||||
| Revenue passenger miles (000) (1) | 2,193,603 | 26.4 | % | 1,735,977 | 3,904,301 | 25.5 | % | 3,110,267 | ||||||||
| Available seat miles (000) (2) | 2,801,158 | 24.1 | % | 2,257,596 | 5,253,942 | 24.4 | % | 4,222,798 | ||||||||
| Passenger load factor (3) | 78.3 | % | 1.4 | pp | 76.9 | % | 74.3 | % | 0.6 | pp | 73.7 | % | ||||
| Cost per available seat mile (cents) (4) | 10.42 | (7.3 | %) | 11.24 | 10.51 | (8.5 | %) | 11.49 | ||||||||
| Average price per gallon of fuel (5) | $2.42 | 7.6 | % | $2.25 | $2.22 | 1.0 | % | $2.20 | ||||||||
| Fuel gallons consumed (6) | 32,314,077 | (11.5 | %) | 36,496,459 | 65,376,118 | (9.5 | %) | 72,214,458 | ||||||||
| Block hours (7) | 165,878 | 21.4 | % | 136,620 | 315,618 | 22.2 | % | 258,252 | ||||||||
| Average length of aircraft flight (miles) | 522 | 1.2 | % | 516 | 521 | 0.2 | % | 520 | ||||||||
| Average daily utilization of each aircraft (hours) (8) | 10.3 | 0.0 | % | 10.3 | 10.3 | 1.0 | % | 10.2 | ||||||||
| Actual aircraft in service at end of the period | 204 | 22.9 | % | 166 | 204 | 22.9 | % | 166 | ||||||||
| (1) Revenue passenger miles are the number of scheduled miles flown by revenue passengers. |
| (2) Available seat miles is the number of seats available for passengers multiplied by the number of scheduled miles those seats are flown. |
| (3) Revenue passenger miles divided by available seat miles. |
| (4) Total operating and interest expenses divided by available seat miles. |
| (5) Cost of aircraft fuel in gallons, including fuel taxes and into-plane fees. |
| (6) Excludes miscellaneous fuel and fuel consumed for a portion of our United operations in 2007. United elected to provide fuel directly for certain locations beginning in January 2007. In addition, US Airways, Continental and Frontier elect to provide fuel directly. |
| (7) Hours from takeoff to landing, including taxi time. |
| (8) Average number of hours per day that an aircraft flown in revenue service is operated (from gate departure to gate arrival). |
Results of Operations
Three Months Ended June 30, 2007 Compared to Three Months Ended June 30, 2006
Operating revenue in 2007 increased by 12.7%, or $36.0 million, to $320.3 million in 2007 compared to $284.3 million in 2006. The increase was due to fixed-fee revenue earned from 38 additional regional jets that were added to revenue service since June 30, 2006. Twenty-two were added for Continental, 11 were added for US Airways, four were added for Frontier and one was added for Delta.
Total operating and interest expenses increased by 15.0% or $38.2 million, to $291.9 million in 2007 compared to $253.7 million in 2006 due to the increase in flight operations. The unit cost on total operating and interest expenses, excluding fuel charges, remained unchanged at 7.6¢. Factors relating to the change in operating expenses are discussed below.
Wages and benefits increased by 25.6%, or $11.2 million, to $54.8 million for 2007 compared to $43.6 million for 2006. The increase was due mainly to an $8.0 million increase in flight crew and maintenance operations wage expense to support the increase in regional jet operations and a $2.4 million increase in related employee benefit costs resulting from the additional wage expense and increased costs for employee welfare programs. We recorded stock based compensation expense of $0.8 million in 2007 compared to $0.4 million in 2006. The cost per available seat mile increased from 1.9¢ in 2006 to 2.0¢ in 2007.
Aircraft fuel expense decreased 4.8%, or $4.0 million, to $78.2 million for 2007 compared to $82.1 million for 2006 due to an 11% decrease in the in the amount of gallons consumed partially offset by a 7.6% increase in the average price per gallon from $2.25 in 2006 to $2.42 in 2007. Beginning in January 2007, we did not record fuel expense and the related revenue for a portion of the United operations, due to United paying for fuel directly at certain airports. We also do not pay for or record fuel expense and the related revenue for Continental, Frontier, or US Airways operations. The unit cost decreased from 3.6¢ in 2006 to 2.8¢ in 2007.
Landing fees increased by 25.7%, or $2.7 million, to $13.2 million in 2007 compared to $10.5 million in 2006. The increase is due to a 16% increase in departures, combined with a heavier average landing weight per departure caused by the additional 70+ seat regional jets. Our fixed-fee agreements provide for a direct reimbursement of landing fees. The unit cost remained unchanged at 0.5¢.
Aircraft and engine rent increased by 24.2%, or $5.9 million, to $30.3 million in 2007 compared to $24.4 million in 2006 due mainly to a $7.3 million increase in aircraft rents on the additional 25 leased regional jets since June 2006 and leases on additional spare engines, partially offset by the purchase of 5 previously leased regional jets in the third quarter of 2006. The unit cost remained unchanged at 1.1¢.
Maintenance and repair expenses increased by 32.5%, or $8.0 million, to $32.5 million in 2007 compared to $24.5 million for 2006. The increase is due mainly to the increased level of operations for both 50-seat and 70-seat flying, increasing our payments for long-term maintenance agreements by $4.9 million. Additionally, heavy maintenance, or c-check expenses increased by $0.8 million and damage related expenses, combined with out of warranty costs, increased $2.3 million. The unit cost increased from 1.1¢ in 2006 to 1.2¢ in 2007.
Insurance and taxes decreased 7.5% or $0.4 million to $4.6 million in 2007 compared to $5.0 million in 2006. The increase in operations was more than offset by a decline in the average insurance rates year over year. The unit cost remained unchanged in 2006 and in 2007 at 0.2¢.
Depreciation and amortization increased 18.5%, or $4.1 million, to $26.2 million in 2007 compared to $22.1 million in 2006 due mainly to $4.3 million of additional depreciation on 18 regional jet aircraft purchased since June 30, 2006. The amortization for aircraft take-off and landing slots was $0.1 million in 2007 compared to $0.9 million in 2006. The cost per available seat mile decreased to 0.9¢ in 2007 compared to 1.0¢ in 2006.
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Other expenses increased 33.5%, or $6.5 million, to $26.1 million in 2007 from $19.6 million in 2006, due primarily to $6.2 million of increases in pilot training expenses, flight crew travel expenses, passenger catering costs, and administrative expenses to support the increased regional jet operations. The unit cost remained unchanged at 0.9¢.
Interest expense increased 19.0% or $4.2 million, to $26.1 million in 2007 from $22.0 million in 2006 primarily due to interest on debt related to the purchase of 18 regional jet aircraft since June 30, 2006. The weighted average interest rate increased to 6.2% in 2007 from 6.1% in 2006. The unit cost decreased to 0.9¢ in 2007 compared to 1.0¢ in 2006.
We incurred income tax expense of $12.5 million during 2007, compared to $13.0 million in 2006. The effective tax rate for 2007 of 39.7% is higher than the statutory rate due to state income taxes.
Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006
Operating revenue in 2007 increased by 12.8%, or $69.1 million, to $610.8 million in 2007 compared to $541.7 million in 2006. The increase was due to fixed-fee revenue earned from 38 additional regional jets that were added to revenue service since June 30, 2006. Twenty-two were added for Continental, 11 were added for US Airways, four were added for Frontier and one was added for Delta.
Total operating and interest expenses increased by 14.0% or $67.9 million, to $552.9 million in 2007 compared to $485.0 million in 2006 due to the increase in flight operations. The unit cost on total operating and interest expenses, excluding fuel charges, increased 0.3% to 7.8¢ in 2007 from 7.7¢ in 2006. Factors relating to the change in operating expenses are discussed below.
Wages and benefits increased by 26.0%, or $21.8 million, to $105.5 million for 2007 compared to $83.7 million for 2006. The increase was due mainly to a $15.8 million increase in flight crew and maintenance operations wage expense to support the increase in regional jet operations and a $5.5 million increase in related employee benefit costs resulting from the additional wage expense and increased costs for employee welfare programs. We recorded stock based compensation expense of $1.2 million in 2007 compared to $0.6 million in 2006. The cost per available seat mile remained unchanged at 2.0¢.
Aircraft fuel expense decreased 8.5%, or $13.5 million, to $145.1 million for 2007 compared to $158.7 million for 2006 due to a 9% decrease in the amount of gallons consumed. The average price per gallon was $2.22 in 2007 compared to $2.20 in 2006. The unit cost decreased to 2.8¢ in 2007 compared to 3.8¢ in 2006.
Landing fees increased by 32.2%, or $6.2 million, to $25.2 million in 2007 compared to $19.1 million in 2006. The increase was due to 16% more departures and a higher average fee charged by the airports in 2007. The unit cost remained unchanged at 0.5¢.
Aircraft and engine rent increased by 28.1%, or $12.6 million, to $57.3 million in 2007 compared to $44.7 million in 2006 due mainly to a $15.8 million increase in aircraft rents on the additional 25 leased regional jets since June 2006 and leases on additional spare engines, partially offset by the purchase of 5 previously leased regional jets in the third quarter of 2006. The unit cost remained unchanged at 1.1¢.
Maintenance and repair expenses increased by 26.8%, or $12.6 million, to $59.5 million in 2007 compared to $46.9 million for 2006. The increase is due mainly to the increased level of operations for both 50-seat and 70-seat flying, increasing our payments for long-term maintenance agreements by $5.9 million Additionally, heavy maintenance, or c-check expenses increased by $1.9 million and damage related expenses, combined with out of warranty costs, increased $4.4 million. The unit cost remained unchanged at 1.1¢.
Insurance and taxes decreased 6.7%, or $0.6 million to $8.6 million in 2007 compared to $9.3 million in 2006. The increase in operations was more than offset by a decline in the average insurance rates year over year. The unit cost remained unchanged at 0.2¢.
Depreciation and amortization increased 16.5%, or $7.2 million, to $50.7 million in 2007 compared to $43.5 million in 2006 due mainly to $7.5 million of additional depreciation on 18 regional jet aircraft purchased since June 30, 2006. The amortization for aircraft take-off and landing slots was $0.2 million in 2007 compared to $1.8 million in 2006. The cost per available seat mile remained unchanged at 1.0¢.
Other expenses increased 40.0%, or $14.1 million, to $49.4 million in 2007 from $35.3 million in 2006, due primarily to $12.3 million of increases in pilot training expenses, flight crew travel expenses, passenger catering costs, and administrative expenses to support the increased regional jet operations. The unit cost increased to 0.9¢ in 2007 compared to 0.8¢ in 2006.
Interest expense increased 17.6% or $7.7 million, to $51.5 million in 2007 from $43.8 million in 2006 primarily due to interest on debt related to the purchase of 18 additional regional jet aircraft since June 30, 2006. The weighted average interest rate remained unchanged at 6.1%. The unit cost remained unchanged at 1.0¢.
We incurred income tax expense of $25.4 million during 2007, compared to $24.1 million in 2006. The effective tax rate for 2007 of 39.9% is higher than the statutory rate due to state income taxes.
Liquidity and Capital Resources
Historically, the Company has used internally generated funds, third-party financing and funds generated from common stock offerings to meet its working capital and capital expenditure requirements. As of June 30, 2007, the Company had $234.4 million in cash and a working capital surplus of $109.1 million.
During the six months ended June 30, 2007, the Company obtained 29 aircraft, eight of which were debt-financed and 21 leased. The total debt incurred for the eight purchased aircraft was $166.3 million.
Net cash from operating activities was $137.1 million for the six months ended June 30, 2007. Net cash from operating activities consists primarily of net income of $38.3 million, the receipt of the Delta pre-petition claim of $44.6 million, adjustments to reconcile net income to net cash from operating activities consisting of depreciation and amortization of $50.7 million, the changes in deferred income taxes of $23.2 million, debt issuance costs and other amortization of $3.2 million, and the effects of changes in certain assets and liabilities consisting of increases in accounts receivable of $2.2 million, prepaid and other current assets of $4.2 million, inventory of $6.1 million, other assets of $16.0 million, offset by an increase in accounts payable and accrued liabilities of $5.6 million.
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Net cash used by investing activities was $(18.2) million for the six months ended June 30, 2007. The net cash used by investing activities consists of the down payments made to purchase eight aircraft, the purchase of aircraft related equipment and aircraft deposits for future deliveries.
Net cash used by financing activities was $(80.0) million for the six months ended June 30, 2007. The net cash used by financing activities included the Company’s purchase of its common stock for $41.0 million, scheduled debt payments and debt issuance costs payments of $46.8 million offset by $7.8 million of proceeds from the exercise of employee stock options.
The Company currently anticipates that its available cash resources, cash generated from operations and anticipated third-party financing arrangements will be sufficient to meet its anticipated working capital and capital expenditure requirements for at least the next 12 months.
Aircraft Leases and Other Off-Balance Sheet Arrangements
The Company has significant obligations for aircraft that are classified as operating leases, and are not reflected as liabilities on its balance sheet. These leases expire between 2009 and 2022. As of June 30, 2007, the Company’s total mandatory payments under operating leases aggregated approximately $1.3 billion and total minimum annual aircraft rental payments for the next 12 months under all non-cancelable operating leases is approximately $145.5 million.
Other non-cancelable operating leases consist of engines, terminal space, operating facilities and office equipment. The leases expire through 2023. As of June 30, 2007, the Company’s total mandatory payments under other non-cancelable operating leases aggregated approximately $111.8 million. Total minimum annual other rental payments for the next 12 months are approximately $10.8 million.
Purchase Commitments
The Company has substantial commitments for capital expenditures, including the acquisition of new aircraft. The Company intends to finance these aircraft through long-term loans or lease arrangements, although there can be no assurance the Company will be able to do so.
As of June 30, 2007, the Company has a commitment to purchase 32 additional ERJ-170/175 regional jets. The current total list price of the 32 regional jets is approximately $992.0 million. During the six months ended June 30, 2007, the Company made aircraft deposits in accordance with the aircraft commitments of $23.3 million. The Company also has a commitment to acquire 11 spare aircraft engines with a current list price of approximately $47.9 million. These commitments are subject to customary closing conditions.
In July 2006, the Company announced that it had reached an agreement to operate forty-four 50-seat regional jets for Continental Airlines, Inc. Twenty of the aircraft are ERJ-145 regional jets that will be transitioned from the Company’s current US Airways operations. The Company has firm commitments to lease 24 aircraft CRJ-200 regional jets, consistent with the terms of the Continental agreement. As of June 30, 2007, 22 CJR-200 and 16 ERJ-145 regional jets were in operation for Continental. The remaining six aircraft are expected to be placed into service for Continental by September 2007 and will be operated for terms that vary from two to five years. Under certain conditions Continental may extend the term on the aircraft up to five additional years.
In January 2007, the Company and Frontier entered into an agreement whereby the Company will operate seventeen, 76-seat ERJ-170 regional jets. As of June 30, 2007, four of the ERJ-170 regional jets were in operation and the remaining 13 aircraft will be funded by deliveries from the manufacturer.
During the three months ended June 30, 2007, the Company entered into long-term maintenance agreements for engines and APU’s for the Company’s CRJ-200 regional jets. The term of the engine agreement is through February 2010 and the term of the APU agreement is through December 2012.
The Company’s commercial commitments at June 30, 2007 include letters of credit totaling $11.9 million expiring within one year.
The Company anticipates cash payments for interest for the year ended 2007 to be approximately $106.3 million, and the Company does not anticipate significant tax payments in 2007.
Interest Rates
The Company’s earnings are affected by changes in interest rates due to amount of cash and securities held. At June 30, 2007 and December 31, 2006 all of the Company’s long-term debt was fixed rate debt. We anticipate that additional debt will be at fixed rates.
The Company maintains “disclosure controls and procedures”, as such term is defined under Securities Exchange Act Rule 13a-15(e), that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, the Company’s management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and the Company’s management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company carried out an evaluation, as of the end of the period covered by this report, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon their evaluation and subject to the foregoing, the Company’s Chief Executive Officer and Chief Financial Officer concluded that its disclosure controls and procedures were reasonably designed to ensure that material information is made known to them by others within the Company during the period in which this report was being prepared.
There have been no significant changes in the Company’s internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2006 (the “10-K”) and Part II, "Item 1A. Risk Factors" in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2007 (the "10-Q"), which could materially affect our business, financial condition or future results. The risks described in our 10-K and 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
At the Company’s Annual Meeting of Stockholders held on June 6, 2007, three proposals were voted upon by the Company’s stockholders. A description of the proposals and a tabulation of the votes follows:
1. To elect seven directors to hold office until the 2008 Annual Meeting of Stockholders and until their respective successors shall have been duly elected and qualified. All seven nominees were elected:
| For Nominee | Authority Withheld From Nominee | |
| Bryan K. Bedford | 33,902,769 | 1,529,876 |
| Lawrence J. Cohen | 33,474,996 | 1,957,649 |
| Joseph M. Jacobs | 29,505,225 | 5,927,420 |
| Douglas J. Lambert | 33,752,836 | 1,679,809 |
| Mark E. Landesman | 34,431,570 | 1,001,075 |
| Jay L. Maymudes | 29,096,977 | 6,335,668 |
| Mark L. Plaumann | 31,495,242 | 3,937,403 |
2. To approve the Republic Airways Holdings Inc. 2007 Equity Incentive Plan. The Republic Airways Holdings Inc. 2007 Equity Incentive Plan was approved:
For | Against | Abstain |
| 17,408,964 | 15,259,695 | 8,712 |
3. To approve an Amendment to the Company’s Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock from 75,000,000 to 150,000,000. The Amendment to the Company’s Amended and Restated Certificate of Incorporation was approved:
For | Against | Abstain |
| 28,516,164 | 6,905,209 | 11,269 |
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| (a) | Exhibits | |
| 10.9 | Agreement between Chautauqua Airlines, Inc. and the Flight Dispatchers in the employ of Chautauqua Airlines, Inc. as represented by Transport Workers Union of America, AFL-CIO, dated as of June 1, 2007. | |
| 10.39(s)* | Amendment No. 19 to Purchase Agreement DCT-014/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of June 22, 2007. | |
| 10.40(k)* | Amendment No. 11 to Letter Agreement DCT-015/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of May 29, 2007. | |
| 10.40(l)* | Amendment No. 12 to Letter Agreement DCT-015/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline Inc., dated as of June 22, 2007. | |
| 31.1 | Certification by Bryan K. Bedford, Chairman of the Board, Chief Executive Officer and President of Republic Airways Holdings Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. | |
| 31.2 | Certification by Robert H. Cooper, Executive Vice President and Chief Financial Officer of Republic Airways Holdings Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. | |
| 32.1 | Certification by Bryan K. Bedford, Chairman of the Board, Chief Executive Officer and President of Republic Airways Holdings Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. | |
| 32.2 | Certification by Robert H. Cooper, Executive Vice President and Chief Financial Officer of Republic Airways Holdings Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in connection with Republic Airways Holdings Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007. | |
| * | A request for confidential treatment was filed for certain portions of the indicated document. Confidential portions have been omitted and filed separately with the Commission as required by Rule 24b-2 of the Commission. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| REPUBLIC AIRWAYS HOLDINGS INC. | |
| (Registrant) | |
| Dated: August 03, 2007 | By: /s/ Bryan K. Bedford |
| Bryan K. Bedford | |
| Chairman of the Board, Chief Executive Officer and President | |
| (principal executive officer) | |
| Dated: August 03, 2007 | By: /s/ Robert H. Cooper |
| Robert H. Cooper | |
| Executive Vice President and Chief Financial Officer | |
| (principal financial and accounting officer) | |
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