INDIANAPOLIS – Republic Airways Holdings Inc., which operates regional flights for the major airlines, on Thursday filed for bankruptcy protection as it struggles with plunging profits and a pilot shortage.
The Indianapolis-based company said the move will allow it continue normal flight schedules while it restructures its finances and contracts. It said it will retain its collective bargaining agreements with its unions.
The holding company’s airline subsidiaries fly regional flights under the American Eagle, United Express and Delta Connection names using planes with fewer than 100 seats. Last year, it cited a pilot shortage in cutting back those flights, which led Delta to sue Republic for failing to fly some Delta Connection flights.
The major airlines have been hiring pilots away from regional operators, leaving Republic and others with a shortage.
Republic’s problems were compounded by a labour dispute with its pilots, who are represented by the Teamsters. The union delayed a vote on a contract offer because, the Teamsters said, the proposal would have limited communication between the union and pilots. Eventually the dispute was settled and pilots ratified a three-year contract.
Regional carriers operate about half of all domestic flights under contracts with the three biggest U.S. airlines. Many passengers are unaware that the pilots and flight attendants on their plane work for a regional airline and not American, United or Delta.
Republic filed for Chapter 11 protection in federal bankruptcy court in New York. It was the largest U.S. airline operator to seek bankruptcy protection since American Airlines in 2011. Since then, the major airlines have returned to record-break profits but their regional-flying contractors have not fared as well.
The company reported assets totalling $3.56 billion and liabilities of $2.97 billion. Its subsidiaries operate more than 1,200 daily flights to more than 100 cities in the United States and Canada.
The move to file for bankruptcy protection was bad news for Republic’s shareholders. The company’s stock fell more than $2.60, or 75 per cent, to 84 cents in after-market trading following the announcement.