Indianapolis-based Republic Airways Holdings Inc. (Nasdaq: RJET) and some of its subsidiaries have filed for Chapter 11 reorganization. The company says normal business operations will continue while its finances and contractual relationships are restructured.
Republic says its board of directors unanimously determined the reorganization is in the best interest of the company and its stakeholders. Voluntary petitions for relief were filed in the U.S. Bankruptcy Court for the Southern District of New York.
"We worked hard to avoid this step," said Bryan Bedford, Republic’s chairman, president and chief executive officer. "Over the last several months, we’ve attempted to restructure the obligations on our out-of-favor aircraft, made so by a nationwide pilot shortage, and to increase our revenues. It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise."
Bedford said the filing is the result of a loss of revenue over the past several quarters. He said those losses are associated with grounding aircraft due to a lack of pilot resources.
"The airline, our associates, partners, passengers, creditors, shareholders and its other stakeholders, including the communities served by Republic, will be best served by an orderly, court-supervised restructuring," said Bedford. "We filed with a strong core business and the liquidity resources necessary to carry out our restructuring plan."
Republic says it has sufficient assets and liquidity to meet its working capital and operating expenses during this process. The company will continue to provide wages, benefits, 401(k) contributions and honor its collective bargaining agreements with unions without interruption.
The company also named Lars Arnell senior vice president and chief restructuring officer, effective immediately. He will be responsible for all restructuring activities for the airline and it subsidiaries during the process. He previously served as senior vice president of corporate development.