With 2 deals, Republic Airways grows into big airline

meyers9163

Well-Known Member
Enlarge Republic Airways

Chautauqua Airlines, one of Republic's operating units, flies as American Connection, Continental Express, Delta Connection, United Express and US Airways Express.



Read more on RJET at


By Dan Reed, USA TODAY
Even Republic Airways CEO Bryan Bedford hasn't thought of his company as a real airline — until now.
Republic (RJET), one of the USA's most successful regional airline companies in the last decade, has flown other airlines' routes for them, for a fee. It provides 36- to 86-seat regional jets and crews to Delta (DAL), American (AMR), United (UAUA), Continental (CAL) and US Airways (LCC).

"We're a contractor, working for all the major airlines," Bedford says.

But that's changing quickly because of two big deals: On July 13, a federal bankruptcy judge approved Republic's takeover of Frontier Airlines for $108.8 million unless it is outbid. And last month, Republic agreed to pay $6 million to acquire Milwaukee-based Midwest Airlines.

The deals move Republic from the ranks of regional contractor to big airline. Republic will operate Midwest and Frontier under their respective names and on their routes to a combined 56 cities across the country initially.


The deals also put Republic in the awkward position of competing on many routes against the big carriers, such as Delta and United, that are contracting for Republic's regional jet service. And they put Republic in competition with two of the country's best-run discount airlines, Southwest (LUV) and AirTran (AAI), in Milwaukee and Denver.

"The good news is that Republic is buying Midwest and, to a lesser degree, Frontier on the cheap," says Vaughn Cordle, an analyst at AirlineForecasts. "The bad news is that AirTran, Southwest, United and the others are going to gang up on them."

Protecting its investment

Bedford justifies the deals by saying they make Republic less dependent on its five big, conventional airline partners.

"The foundation of our business model is revenue diversity," he says. "If we can draw revenue from a wide variety of sources, regardless what the broader industry conditions are, we'll likely do better."

But protecting Republic's existing financial stake in Frontier and Midwest also was a big part. Republic has been a regional airline partner and major creditor of both airlines.

Frontier, which has been in Chapter 11 bankruptcy protection since April 2008, canceled its regional contract with Republic last fall. That triggered a Republic claim against Frontier in bankruptcy court and forced Republic to scramble to find new homes for those planes and crews.

Midwest has been in rapid decline for the past 18 months, and its potential collapse threatened to leave Republic with more regional jets and crewmembers with no place to fly.

Acquiring the carriers protects Republic's regional service as well as provides new revenue.

"What they're trying to do makes sense," industry analyst Bob McAdoo at Avondale Partners says of Republic's strategy.

Learning to run an airline

What Republic is doing comes with risks.

Not the least of which is competing against the big, traditional airlines that now contract with three of Republic's subsidiaries —Chautauqua Airlines, Republic Airlines and Shuttle America— for their regional service. None of the contracts are up any time soon. But if the big guys aren't comfortable competing with one of their supposed partners, it could cost Republic regional outsourcing contracts in the future.

Republic, as the operator of Frontier and Midwest, will have to learn how to manage all aspects of an airline for the first time. As a contractor, Republic has just flown the planes. It's left routes, marketing, sales and ground operations to its partners.

As a result, McAdoo says, "There might be a quarter or two of down performance."

Republic will be learning in the face of intense competition. In Denver, Frontier's hub, Republic will be competing against Southwest and United. In Milwaukee, Midwest's home, it faces a big push from AirTran and, beginning in November, Southwest.

CEO Bedford is confident, however. "We feel comfortable that we have the resources to compete and win in those markets," he says.

http://www.usatoday.com/money/industries/travel/2009-07-20-republic-frontier-midwest-airlines_N.htm
 
SWA figured out a long time ago that more revenue ≠ more profit...

BUT Republic knows what it has been doing for the past decade so we need to give the benefit of the doubt. I for one am jealous; I wish my company was expanding and not tied to a single, flailing (US Air) partner.
 
All I'm going to say is good luck to Bedford and hope you won't be the next Independence Air. And good luck competing with Southwest and AirTran in MKE!
 
Republic will be learning in the face of intense competition. In Denver, Frontier's hub, Republic will be competing against Southwest and United. In Milwaukee, Midwest's home, it faces a big push from AirTran and, beginning in November, Southwest.

CEO Bedford is confident, however. "We feel comfortable that we have the resources to compete and win in those markets," he says.

http://www.usatoday.com/money/industries/travel/2009-07-20-republic-frontier-midwest-airlines_N.htm

Isn't DEN a Republic domicile for UAX? (My friend brought up a good point about conflict of interest).
 
Isn't DEN a Republic domicile for UAX? (My friend brought up a good point about conflict of interest).

This article, although reference that its the news and media speaking about aviation, implied that the contracts arent up for a while and made it seem as if they wont be voided because of a conflict of interest. Now again, the media knows about as much about aviation as I do flying to the moon.
 
Independence and XJET were complete startups. With Frontier and Midwest, Republic inc. has established brands with somewhat of a consumer base. Its going to be very interesting though battling UAL, AirTran, and SWA. This one is a toss up. All we can do is get the popcorn ready.
 
I cant see Republic being in good relations with ual while at the same time offering low-cost service out of den, making ual lower prices on domestic fares out of den:dunno:

if they lose contracts with ual, trouble america would be...... in trouble!:bandit:
 
With Frontier and Midwest, Republic inc. has established brands with somewhat of a consumer base.

more so frontier than midwest, midwests consumer base is questionable at this point considering how small the airline is compared to just one year ago, and of course southwest's planned service in mke.
 
more so frontier than midwest, midwests consumer base is questionable at this point considering how small the airline is compared to just one year ago, and of course southwest's planned service in mke.

I'd have to agree with that. If Midwest had a stable consumer base, they wouldn't have been in trouble as badly as they found themselves. People would have continued to pay extra for that level of service rather than the lowest cost. Apparently, the almighty dollar's customer base is a bit bigger.
 
Independence and XJET were complete startups. With Frontier and Midwest, Republic inc. has established brands with somewhat of a consumer base. Its going to be very interesting though battling UAL, AirTran, and SWA. This one is a toss up. All we can do is get the popcorn ready.

:yeahthat:

Bedford has one foot in one arena and one foot in the other. He's not doing this cold turkey. If it doesn't work, it's x amount of aircraft that lose flying. The whole airline won't necessarily fail. When the fee for departure contracts with the Legacies start going away without any other good revenue, that would be a good time to :panic:
 
If they do lose some regional flying, woudn't it be a good thing that they own two airlines? I would think it would be easy for them to find homes for planes without work. Also, I have to guess the major they are flying for also knows this and may not give up a contract that means more flying will go to a competitor. Dunno...just me looking in from the outside all uninformed and all.
 
If they do lose some regional flying, woudn't it be a good thing that they own two airlines?

That depends on what you mean by a good thing? Good for Republic? Sure. Good for aspiring young airline pilots? Not at all. I can't wait to see the pay scale of the Airbus once republic gets its "scope". And as soon as they see pilots are working for pennies, the rest will follow. I suppose it was only a matter of time...
 
Back
Top