Republic Airways (RJET) 8-K Republic Airways Holdings Announces Fourth Quarter

For Immediate release:

Contact: Timothy P. Dooley

Republic Airways Holdings

Tel. (317) 487-4308

                                                                                                                                              & #160;                       

 

Republic Airways Holdings Announces Fourth Quarter

and Calendar Year 2008 Earnings

Indianapolis, Indiana,(February 16, 2009) – Republic Airways Holdings Inc. (NASDAQ/NM: RJET) today reported operating revenues of $339.3 million for the quarter ended December 31, 2008, a 3.6% decrease, compared to $351.8 million for the same period last year.  The Company also reported net income of $19.0 million, or $0.56 per diluted share, for the quarter ended December 31, 2008, compared to $24.3 million of net income, or $0.65 per diluted share, for the same period last year.  The prior year’s fourth quarter results included a year-to-date adjustment for state tax liabilities which increased net income for the quarter by approximately $2.7 million, or $0.07 per diluted share.

The primary items of significance affecting the fourth quarter of 2008 are outlined below:

Fourth Quarter 2008 Highlights

Excluding reimbursement for fuel expense, which is a pass-through cost to our partners, regional airline service revenues increased 7.0% to $286.7 million for the fourth quarter of 2008 from $268.0 million for the same quarter of 2007, primarily as a result of a shift in the mix of flying toward larger regional jets.

During the quarter the Company took delivery of eight, new 76-seat E175 aircraft and entered into long-term, fixed-rate debt financing arrangements for all eight aircraft.  The Company also removed from service seven 50-seat CRJ-200 aircraft and two 37-seat E135 aircraft during the quarter.

Total operating expenses for the fourth quarter of 2008, including interest expense but excluding fuel charges (which are reimbursable by the Company’s partners) of $263.4 million, increased 10.9% from $237.5 million for the same quarter of 2007.  Operating cost per ASM (CASM), including interest expense but excluding fuel increased to 8.09¢ from 7.38¢ in the prior year’s fourth quarter.  For the quarter, the Company reported a 1.2% increase in available seat miles (ASMs) to 3.26 billion ASMs, up from 3.22 billion ASMs during the same period last year.

This year’s fourth quarter pre-tax results included $4.9 million of expenses, or 0.15¢ per ASM, to accrue for return costs associated with 16 of the 24 CRJ-200 aircraft that are on short-term lease.  During the quarter the Company incurred $5.1 million, or 0.16¢ per ASM, of carrying costs for aircraft that were not in revenue service.  Also, during the quarter the Company had a non-cash, fuel expense adjustment which increased pre-tax income by $4.4 million.

Full Year 2008 Highlights

For the full year ended December 31, 2008, operating revenues increased 14.5% to $1.48 billion, compared to $1.29 billion for the same period last year.  Excluding reimbursement for fuel expense, which is a pass-through cost to our partners, regional airline services revenues increased 16.0% to $1.13 billion for 2008 from $0.98 billion for 2007, primarily as a result of an 8.9% increase in block hours and a shift in the mix of flying toward larger regional jets.  The Company also reported net income of $84.6 million for 2008, or $2.42 per diluted share compared to $82.8 million of net income, or $2.02 per diluted share for 2007.

Total ASMs for 2008 increased 14.8% from 2007 to 13.2 billion and block hours increased 8.9% from 2007 to 740,403 in 2008.  Operating cost per ASM (CASM), including interest expense but excluding fuel increased to 7.79¢ in 2008 from 7.58¢ in 2007.

The Company increased its operating fleet to 221 aircraft as of December 31, 2008, from 219 as of December 31, 2007.  Twenty-six additional E175 aircraft were placed into service during the year and twenty-four 37-50 seat aircraft were removed from service.  These removals include all 17 E135 aircraft, 15 of which were flown for Delta and two of which were in charter service, as well as seven CRJ-200 aircraft removed from Continental service in the fourth quarter of 2008.  As of December 31, 2008, the Company owned nine E135 aircraft, eight of which are under firm agreements to be sold.

Balance Sheet Information

At December 31, 2008, the Company had $129.7 million in cash and marketable securities compared to $164.0 million as of December 31, 2007.   The Company’s long-term debt increased to $2.28 billion as of December 31, 2008, compared to $1.91 billion at December 31, 2007. 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 sheets.  At a 7.0% discount factor, the present value of these lease obligations was approximately $685 million as of December 31, 2008 compared to approximately $777 million reported as of December 31, 2007.

As of December 31, 2008, the Company had three aircraft on firm order with Embraer.  The final firm delivery is scheduled to close on February 19, 2009.  The Company maintains approximately 50 option positions for E-jet aircraft with delivery dates beginning in the second quarter of 2010.

Recent Business Developments

On October 15, 2008, the Company announced that it had reached an agreement with Mokulele Airlines of Hawaii to operate four, 70-seat E170 jets under a 10-year capacity-purchase agreement beginning November 19, 2008. The Company agreed to provide $8.0 million in direct financing to Mokulele in the form of a line of credit, which can be converted, at the Company's option, for up to 45% of the common stock of Mokulele.

On October 23, 2008, the Company announced that it had entered into a loan agreement with US Airways to provide up to $35 million in two tranches.  The first tranche of $10 million has been funded.  At US Airways’ option and subject to certain other conditions, the second tranche of $25 million may be funded on March 31, 2009.

On October 24, 2008, the Company announced that it had reached an agreement with American Airlines to amend its airline services agreement.  The Company will lower its reimbursement paid by American by approximately 3%, effective April 1, 2009 and will also reduce the number of aircraft operated under the agreement to 13 from 15 aircraft, effective June 1, 2009.  Also, the amendment includes a three year deferral of American’s early termination option from March 2009 to March 2012.  The agreement’s normal expiration date remains unchanged at February 1, 2013.

Corporate Information

Republic Airways Holdings, based in Indianapolis, Indiana, is an airline holding company that owns Chautauqua Airlines, Republic Airlines and Shuttle America. The airlines offer scheduled passenger service on approximately 1,300 flights daily to 104 cities in 36 states, Canada, Mexico, Jamaica and the US Virgin Islands through airline services agreements with seven U.S. airlines. All of the airlines' flights are operated under their airline partner brand names, such as AmericanConnection, Continental Express, Delta Connection, Midwest Airlines, Mokulele Airlines, United Express and US Airways Express. As of December 31, 2008, the airlines employed approximately 4,500 aviation professionals and operated 221 regional jets. 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 10:00 a.m. EST. This call is being webcast by Thomson/CCBN and can be accessed at Republic Airways Holdings website at www.rjet.com.  For those wishing to participate please call 800-659-2037 and for international calls please dial 617-614-2713, the password is 21642999. To listen to a telephone replay of the webcast please call 888-286-8010 and the password is 34499224. For international telephone replay please call 617-801-6888 and use the same password.  The replay will be available from February 17, 2009 at 12:30 pm until February 26, 2009. 

Additional Information

In addition to historical information, this release contains forward-looking statements.  Republic Airways 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," "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 Republic Airways as of such date.  Republic Airways 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 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,
	2008			2007			Change			2008			2007			Change
OPERATING REVENUES
Regional Airline Services	$	334,530		$	347,747			-3.8	%	$	1,462,211		$	1,274,607			14.7	%
Other		4,722			4,092			15.4	%		17,544			18,070			-2.9	%
Total operating revenues		339,252			351,839			-3.6	%		1,479,755			1,292,677			14.5	%
OPERATING EXPENSES
Wages and benefits		61,709			62,836			-1.8	%		252,336			226,521			11.4	%
Aircraft fuel		47,817			79,759			-40.0	%		327,791			296,573			10.5	%
Landing fees		14,806			14,307			3.5	%		59,891			53,684			11.6	%
Aircraft and engine rent		32,888			33,924			-3.1	%		134,206			124,961			7.4	%
Maintenance and repair		44,702			34,637			29.1	%		169,425			130,237			30.1	%
Insurance and taxes		7,498			4,821			55.5	%		25,793			19,039			35.5	%
Depreciation and amortization		34,057			28,865			18.0	%		133,206			106,594			25.0	%
Other		32,458			29,214			11.1	%		122,012			104,790			16.4	%
Total operating expenses		275,935			288,363			-4.3	%		1,224,660			1,062,399			15.3	%
OPERATING INCOME		63,317			63,476			-0.3	%		255,095			230,278			10.8	%
OTHER INCOME (EXPENSE)
Interest expense		(35,284	)		(28,888	)		22.1	%		(131,856	)		(107,323	)		22.9	%
Other income		3,007			1,983			51.6	%		14,176			11,013			28.7	%
Total other income (expense)		(32,277	)		(26,905	)		20.0	%		(117,680	)		(96,310	)		22.2	%
INCOME BEFORE INCOME TAXES		31,040			36,571			-15.1	%		137,415			133,968			2.6	%
INCOME TAX EXPENSE		12,049			12,304			-2.1	%		52,835			51,210			3.2	%
NET INCOME		18,991			24,267			-21.7	%		84,580			82,758			2.2	%
PER SHARE, BASIC	$	0.56		$	0.66			-15.2	%	$	2.43		$	2.05			18.5	%
PER SHARE, DILUTED	$	0.56		$	0.65			-13.8	%	$	2.42		$	2.02			19.8	%
Weighted Average Common Shares
Basic		34,174			36,933			-7.5	%		34,855			40,350			-13.6	%
Diluted		34,174			37,246			-8.2	%		34,949			41,046			-14.9	%

Unaudited Operating Highlights
Operating Highlights	Three Months Ended December 31,									Year Ended December 31,
	2008			2007			Change			2008			2007			Change
Regional airline services revenues, excluding fuel ($000)		286,713			267,988			7.0	%		1,134,420			978,034			16.0	%
Operating expenses plus interest, Excluding fuel ($000)		263,402			237,492			10.9	%		1,028,725			873,149			17.8	%
Passengers carried		4,499,049			4,466,422			0.7	%		18,917,502			16,286,807			16.2	%
Revenue passenger miles (000)		2,306,956			2,333,764			-1.1	%		9,700,978			8,581,836			13.0	%
Available seat miles (000)		3,256,325			3,218,343			1.2	%		13,213,702			11,511,795			14.8	%
Passenger load factor		70.8	%		72.5	%	-1.7 pts				73.4	%		74.5	%	-1.1 pts
Cost per available seat mile, including interest expense (cents)		9.56			9.86			-3.0	%		10.27			10.16			1.1	%
Fuel cost per available seat mile (cents)		1.47			2.48			-40.7	%		2.48			2.58			-3.9	%
Cost per available seat mile, including interest expense, but excluding fuel expense (cents)		8.09			7.38			9.6	%		7.79			7.58			2.8	%
Operating aircraft at period end:
37-50 seat regional jets		94			118			-20.3	%		94			118			-20.3	%
70+ seat regional jets		127			101			25.7	%		127			101			25.7	%
Block hours		175,195			187,477			-6.6	%		740,403			679,718			8.9	%
Departures		101,290			104,883			-3.4	%		422,558			381,415			10.8	%
Average daily utilization of each aircraft (hours)		9.6			10.3			-6.8	%		10.0			10.3			-2.9	%
Average aircraft stage length (miles)		528			521			1.3	%		512			522			-1.9	%