During the third quarter, Republic Airways completed its acquisition of Milwaukee-based Midwest Airlines and was the winning bidder in an auction to acquire Colorado-based Frontier Airlines.

Press Release

Indianapolis, Ind. -- Republic Airways Holdings Inc. (NASDAQ: RJET) today reported operating revenues of $359.6 million for the quarter ended September 30, 2009, a 6.7% decrease, compared to $385.2 million for the same period last year. The Company reported net income of $3.3 million for the quarter ended September 30, 2009, compared to $17.0 million reported in the prior year’s third quarter. The Company also reported earnings per diluted share of $0.09, compared to $0.50 for the same period last year. The third quarter 2009 results include August and September results for Midwest Airlines, which was acquired on July 31, 2009.

Third Quarter Financial Highlights

Total fixed-fee service revenues declined $99.7 million from prior year’s third quarter. However, excluding fuel reimbursement from our partners, fixed-fee service revenues decreased $17.6 million, or 6.2% for the third quarter of 2009 due to a reduction in block hour activity, which is the result of removing 22 aircraft from operations under our fixed-fee agreement with Continental. Seventeen of the aircraft removed were returned to the lessor, three were subleased offshore and two are expected to be subleased offshore in the first quarter of 2010. Income before taxes on the fixed-fee operations was $20.4 million for the quarter. Fixed-fee operating cost per ASM (CASM), including interest expense but excluding fuel, increased to 7.61˘ for the third quarter of 2009, from 7.57˘ for the same quarter of 2008.

Total revenues flown on our branded airlines were $73.9 million for the quarter. Load factor was 78.2% for the quarter and total revenue per ASM (TRASM) was 12.83˘. The branded operations posted a loss before taxes of $15.9 million for the third quarter. Operating cost per ASM (CASM), excluding fuel, was 10.64˘ for the third quarter of 2009.

During the quarter, the Company added five E190 and five E135 aircraft on short-term leases. These aircraft will be operated in the Company’s branded business replacing B717 and CRJ aircraft. At September 30, 2009, the Company’s fleet consisted of 228 aircraft, including six B717 aircraft that are expected to be returned to the lessor by the end of 2009.

Balance Sheet Information

At September 30, 2009 the Company had $148.7 million in cash, of which $63.2 million was restricted. This compares to $130.9 million in cash, of which $1.2 million was restricted as of December 31, 2008. The Company’s long-term debt decreased to $2.23 billion as of September 30, 2009, compared to $2.28 billion at December 31, 2008. As of September 30, 2009 all of the Company’s aircraft-related debt is at fixed interest rates and is secured by the aircraft. 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 $690 million as of September 30, 2009 compared to approximately $685 million reported as of December 31, 2008.

Business Developments

On July 31, 2009 the Company completed its acquisition of Milwaukee-based Midwest Airlines from TPG Capital, a Ft. Worth, Texas-based private equity firm. Republic paid TPG $6 million in cash and has issued a $25 million five-year, interest-only note, which may be converted to RJET stock at $10 per share.

On August 13, 2009 the Company announced that it had been declared the winning bidder in the auction to acquire Frontier Airlines. Pursuant to the investment agreement, Republic agreed to purchase 100% of the stock of Frontier Holdings upon its emergence from bankruptcy for $108.75 million. On October 1, 2009 the Company completed its acquisition of Frontier.

On October 14, 2009 the Company announced that it will acquire 10 Embraer 190AR jets from US Airways. Republic applied the full balance of its $35 million unsecured loan to US Airways toward the purchase of the aircraft and assumed the existing variable-rate debt on the aircraft. The aircraft are expected to enter into branded service between November 2009 and the second quarter of 2010.

On October 16, 2009 the Company entered into an agreement with Mesa Air Group, Inc. ("Mesa") to form Mo-Go, LLC, a new business partnership that will provide inter-island commercial airlines services in Hawaii. Pursuant to the Agreement, Mesa now owns 75% of Mo-Go and the former Mokulele shareholders own the remaining 25%. Additionally, the partners have agreed to capitalize the new business with up to $6.0 million, $1.5 million of which would be funded by Mokulele’s former shareholders. Republic, which was the majority shareholder of Mokulele, cancelled Mokulele’s $3.1 million outstanding debt to Republic, net of surrendered aircraft deposits. The Company expects to record a non-cash charge of approximately $5-$6 million in the 4th quarter to deconsolidate its investment in Mokulele.

Corporate Information

Republic Airways Holdings, based in Indianapolis, Indiana is an airline holding company that owns Chautauqua Airlines, Frontier Airlines, Lynx Aviation, Midwest Airlines, Republic Airlines and Shuttle America, collectively “the airlines.” The airlines offer scheduled passenger service on approximately 1,600 flights daily to 118 cities in 43 states, Canada, and Mexico under branded operations at Frontier and Midwest, and through fixed-fee airline services agreements with five major U.S. airlines. The fixed-fee flights are operated under an airline partner brand, such as AmericanConnection, Continental Express, Delta Connection, United Express, and US Airways Express. The airlines currently employ over 11,000 aviation professionals and operate 286 aircraft.

Source: Republic Airways Holdings