Reorganization under Chapter 11 of US Bankruptcy Code Disclosure [Text Block] | CHAPTER 11 FILING AND GOING CONCERN The accompanying audited consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As disclosed in the accompanying consolidated financial statements, the Company incurred a net loss of $27.1 million for the year ended December 31, 2015. As of December 31, 2015, the Company had cash and cash equivalents of $173.5 million and will require additional working capital throughout 2016 to support a sustainable business operation. On February 25, 2016 (the “Petition Date”), Republic Airways Holdings Inc. and certain of its wholly-owned direct and indirect subsidiaries (collectively, the “Debtors”) filed voluntary petitions for reorganization (the “Bankruptcy Filing”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”). The Chapter 11 cases are being administered under the caption "In re Republic Airways Holdings Inc., et al.," Case Number 16-10429. The Debtors will continue to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The Bankruptcy Filing is intended to permit the Company to reorganize and improve liquidity, wind down unprofitable contracts and amend its capacity purchase agreements to enable sustainable profitability. The Company’s goal is to develop and implement a plan of reorganization that meets the standards for confirmation under the Bankruptcy Code. Confirmation of a plan of reorganization could materially alter the classifications and amounts reported in the Company’s consolidated financial statements, which do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization or other arrangement, or the effect of any operational changes that may be implemented. Operation and Implication of the Bankruptcy Filing Under Section 362 of the Bankruptcy Code, the filing of voluntary bankruptcy petitions by the Debtors automatically stayed most actions against the Debtors, including most actions to collect indebtedness incurred prior to the Petition Date or to exercise control over the Debtors’ property. Accordingly, although the Bankruptcy Filing triggered defaults for certain of the Debtors’ debt and lease obligations, counterparties are stayed from taking any actions as a result of such defaults. Absent an order of the Bankruptcy Court, substantially all of the Company’s pre-petition liabilities are subject to settlement under a plan of reorganization. As a result of the Bankruptcy Filing, the realization of assets and the satisfaction of liabilities are subject to uncertainty. The Debtors, operating as debtors-in-possession under the Bankruptcy Code, may, subject to approval of the Bankruptcy Court, sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in the consolidated financial statements. Further, a confirmed plan of reorganization or other arrangement may materially change the amounts and classifications in the Company’s consolidated financial statements. Subsequent to the Petition Date, the Debtors received approval from the Bankruptcy Court to pay or otherwise honor pre-petition obligations generally designed to stabilize the Company’s operations. These obligations relate to certain employee wages, salaries and benefits, taxes and certain vendors in the ordinary course for goods and services received after the Petition Date. The Debtors have retained, pursuant to Bankruptcy Court approval, legal and financial professionals to advise the Debtors in connection with the Bankruptcy Filing and certain other professionals to provide services and advice in the ordinary course of business. From time to time, the Debtors may seek Bankruptcy Court approval to retain additional professionals. Events Leading to the Chapter 11 Cases There is a growing national shortage of qualified pilots in the United States. This shortage is making it increasingly difficult to maintain the necessary pilot staffing levels to sustain reliable performance requirements under the agreements with the Company's Partners. As a result of the pilot shortage, the Company has been forced to ground operating aircraft and reduce scheduled flying for each of its Partners, which has adversely affected the Company's financial position and cash flows from operations. Although a new three year collective bargaining agreement reached with its pilots in late 2015 has enabled the Company to stem the rate of attrition and significantly increase new pilot hiring, the Company needs time to be able to train new pilots, return more of its idled aircraft to revenue service, and restore higher levels of scheduled service for its Partners. Government Regulation The current national pilot shortage noted above is the result of two primary factors: an aging pilot population and new government regulations that increase new pilot qualification requirements. These factors have created greater demand at mainline, low cost and cargo carriers, which recruit from the regional airlines and offer higher salaries and more extensive benefit programs than regional carriers are able to offer, and have made it more difficult for regional airlines, such as the Company, to retain sufficient pilots. On August 1, 2013, the congressionally-mandated pilot experience qualifications contained in the Airline Safety and FAA Extension Act of 2010 became effective. As a result of this legislation, the age and training requirements for the Company’s first officer pilots generally increased to 23 years and 1,500 hours of flight time. Military pilots are subject to somewhat lower standards, but as the wind-down of the U.S. involvement in conflicts in Iraq and Afghanistan has substantially concluded, there are fewer military-trained pilots entering the workforce. In addition, the FAA has implemented a new regulation that increases the flight crew duty, flight, and rest requirements for pilots. This update changed the length of time a pilot may be on duty and how much she or he may fly in a day, month, and year. These new limitations, together with the new, more restrictive certification and qualification requirements, have resulted in a growing scarcity of qualified new entrants and have contributed to the current severe nationwide pilot shortage. The new “time and duty rest” requirements have increased by approximately 5% - 7% the number of pilots that the Company historically needed to operate its schedules, thereby exacerbating an already acute labor shortage. The new minimum flight hour requirements have dramatically decreased the pool of qualified and competent new pilots available for hire by the Company (and other regional airlines) to meet its increased pilot needs in order to sustain its level of operations. This shortage has been further exacerbated by the aging population of experienced pilots employed at mainline carriers, who in order to address their own increased pilot needs due to the mandatory retirement of pilots at age 65, have heavily recruited pilots from Republic and other regional carriers by offering substantially higher pay and the prospect of greater opportunities for career advancement. As a consequence of there being fewer qualified pilots entering the work force, combined with increased attrition at the regional airlines to replace retirements at mainline, low cost and cargo airlines, the regional airline fleets are now underutilized and those aircraft that do operate do so with reduced schedules due to the reduced number of hours pilots can fly under the new regulations. Accordingly, the Company (and the regional airline industry generally) is experiencing declining revenue and higher costs. Collective Bargaining Agreement Concurrently with the changes discussed above, the Company was in negotiations with the International Brotherhood of Teamsters (“IBT Local 357 ” or the “IBT”), the union which represents the Company’s pilots. In October 2007, the Company’s collective bargaining agreement with the IBT became amendable. During the pendency of the amendable period, pilot wages under that agreement deteriorated significantly below industry standard, pilot attrition increased, and with the subsequent heightened requirements for non-military-trained pilots and a decreasing number of new entrant pilots who could satisfy the higher experience qualifications, the Company’s ability to attract qualified candidates was frustrated. Accordingly, over the eight years since its collective bargaining agreement with the IBT became amendable, the Company endeavored to negotiate increased compensation and improved benefits and work rules that might help the Company to retain its existing pilots and better position it to attract new pilots. At the same time, to address its pilot shortage, the Company, at times, provided premium pay for pilots when they agreed to perform additional unassigned flying on their scheduled days off and offered signing bonuses to prospective new-hires as an incentive to accept its employment offers. During the latter stages of negotiations, in July 2015, the IBT filed a complaint against the Company alleging that the Company unilaterally increased compensation for pilots and new hires in violation of the Railway Labor Act, which further affected the Company’s ability to hire new pilots. Disputing the merits of the complaint, the Company filed a motion to dismiss. This case was ultimately dismissed with prejudice. Negotiations with the IBT were protracted. The Company, however, worked resolutely toward a consensual resolution for its pilots. Though the Company and the collective bargaining representative for the pilots, IBT Local 747 , opened negotiations in 2007 and had reached tentative agreements on several sections of a new collective bargaining agreement over the next two years, in 2009, the IBT placed ots original Local 747 into trusteeship following complaints that Local 747 had failed to maintain proper financial controls. The trustee then withdrew Local 747 ’s agreement to the tentative agreements the parties had reached in the prior years of bargaining. Negotiations began anew the following year with the newly-established IBT Local 357 . In July 2011, after being unable to reach an agreement, the parties began to engage in collective bargaining negotiations supervised by the National Mediation Board (“NMB”), and thereafter in November 2013, under the auspices of a private mediator. Though the parties reached a tentative agreement three months later in February 2014, it was not ratified by the union membership, and the parties returned to contract negotiations under the auspices of the NMB. Over the course of the next year, the parties passed over 100 proposals on at least 18 sections of the contract and by May 1, 2015, had reached tentative agreements on 19 out of 30 sections of the contract. However, progress stalled thereafter on the issue of compensation. Ultimately, after a series of proposals, on September 28, 2015, the Company and the IBT reached a tentative agreement on the terms of a new three year contract, which the Company believes respects the role of its pilots in its long-term success and puts its pilots at the forefront of the regional airline industry. The IBT recommended the tentative agreement to its members, and at the conclusion of voting on October 27, 2015, it was ratified. Though the tentative agreement with the IBT has been ratified, ratification does not provide an immediate resolution and panacea for all of the issues facing the Company. The length and intensity of negotiations with the IBT has had a severe impact on operations: pilot attrition doubled, recruiting efforts suffered severely, and Republic was forced to ground significant portions of its operating fleet due to lack of qualified pilots, generating losses in revenue, higher costs, diminished cash flows, and an inability to meet minimum flying levels under its fixed-fee agreements. Moreover, new hires are subject to a mandatory minimum three -month training program. Accordingly, the Company’s staffing assumptions for months in the future, as well as its ability to agree to flight plans and scheduling with its Partners, have been impacted significantly. Recovery and growth will require time and achieving new agreements with key stakeholders. Partner Litigation On October 5, 2015, Delta Air Lines, Inc. (Delta) filed suit against Shuttle America Corporation and Republic Airways Holdings, Inc. alleging that Shuttle was in breach of its contractual obligations under both Delta Connection Agreements. Delta alleges, among other things, that Shuttle breached the Delta Connection Agreements by failing to operate all of Delta's flights, and claims damages. The Company believes the allegations are unfounded and without merit and intend to pursue its rights, remedies and defenses in the litigation. Delta has withheld in excess of $21.0 million of contractual payments through December 31, 2015 , which has resulted in past due receivables on the Company's balance sheet. The Company disputes Delta's right to withhold payments and intends to seek their recovery. The Company has deferred recognition of this revenue until this dispute can be resolved. Delta and the Company are currently engaged in confidential settlement discussions regarding all disputes between them, including the disputes in the Delta litigation. In connection with such settlement discussions, at the request of Delta and the Company, on February 8, 2016 the Court in the Delta litigation entered an order administratively closing the case and directed the parties to file within 60 days either (1) the necessary documents to dismiss this case or (2) a joint status update notifying the Court why they are unable to file such documents. No assurance can be given as to the value, if any, that may be ascribed to the Debtors’ various pre-petition liabilities and other securities. Accordingly, the Debtors urge that caution be exercised with respect to existing and future investments in any of these securities or other Debtor claims. In addition, trading in the Company’s common stock on the NASDAQ was suspended on March 8, 2016, and the Company’s common stock was delisted by the Securities and Exchange Commission from the NASDAQ on March 8, 2016. Plan of Reorganization In order for the Company to emerge successfully from Chapter 11, the Company must obtain the Bankruptcy Court’s approval of a plan of reorganization, which will enable the Company to transition from Chapter 11 into ordinary course operations outside of bankruptcy. In connection with a plan of reorganization, the Company also may require a new credit facility, or “exit financing.” The Company’s ability to obtain such approval and financing will depend on, among other things, the timing and outcome of various ongoing matters related to the Bankruptcy Filing. A plan of reorganization determines the rights and satisfaction of claims of various creditors and parties-in-interest, and is subject to the ultimate outcome of negotiations and Bankruptcy Court decisions ongoing through the date on which the plan of reorganization is confirmed. The Company presently expects that any proposed plan of reorganization will provide, among other things, mechanisms for settlement of claims against the Debtors’ estates, treatment of the Company’s existing equity and debt holders, and certain corporate governance and administrative matters pertaining to the reorganized Company. Any proposed plan of reorganization will be subject to revision prior to submission to the Bankruptcy Court based upon discussions with the Company’s creditors and other interested parties, and thereafter in response to interested parties’ objections and the requirements of the Bankruptcy Code and Bankruptcy Court. There can be no assurance that the Company will be able to secure approval for the Company’s proposed plan of reorganization from the Bankruptcy Court. Going Concern These Consolidated Financial Statements have also been prepared on a going concern basis, which contemplates continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business. Accordingly, the Consolidated Financial Statements do not include any adjustments relating to the recoverability of assets and classification of liabilities that might be necessary should the Debtors be unable to continue as a going concern. As a result of the Chapter 11 proceedings, the satisfaction of the Company’s liabilities and funding of ongoing operations are subject to uncertainty and, accordingly, there is a substantial doubt of the Company’s ability to continue as a going concern. There is no assurance that the Company will be able to emerge successfully from Chapter 11. Additionally, there is no assurance that long-term funding of any type would be available to the Company, or that it would be available at rates and on terms and conditions that would be financially acceptable and viable to the Company in the long term. If the Company is unable to generate additional working capital and or raise additional financing when needed, it may be required to suspend operations, sell assets or enter into a merger or other combination with a third party, any of which could adversely affect the value of the Company’s common stock, or render it worthless. If the Company issues additional debt or equity securities, such securities may enjoy rights, privileges and priorities superior to those enjoyed by holders of the Company’s common stock, thereby diluting the value of the Company’s common stock. Additionally, in connection with the Chapter 11 Filing, material modifications could be made to the Company’s fleet and capacity purchase agreements. These modifications could materially affect the Company’s financial results going forward, and could result in future impairment charges. |