Republic Airways Holdings Inc. · NASDAQ:RJET
Republic Airways — Investor Presentation (September 2012)
28 slides from Republic Airways's investor presentation, Sep 6, 2012
Slide 1: Republic Airways Holdings Inc. Investor Presentation
Republic Airways Holdings Inc. Investor Presentation September 5, 2012
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure 2 © Republic Airways Holdings Inc. Statements in this presentation, as well as oral statements that may be made by officers or directors of Republic Airways Holdings Inc., its advisors, affiliates or subsidiaries (collectively or separately the “Company”), that are not histori
Slide 3: Agenda
Agenda I. Capacity and Fleet Trends II. 1 st Half 2012 results III. 2012, 2013 and the Future at RJET IV. Questions © Republic Airways Holdings Inc. 3
Slide 4: I. Capacity and Fleet Trends
I. CAPACITY AND FLEET TRENDS 4 © Republic Airways Holdings Inc.
Slide 5: Fleet and Capacity Allocations: Regional Aircraft
Fleet and Capacity Allocations: Regional Aircraft 5 © Republic Airways Holdings Inc. Operating Fleet Capacity 2010 2011 2012(E) 2013(E) 2010 2011 2012(E) 2013(E)
Slide 6: Domestic Large RJ Carriers (RJET 2013 Fleet Forecast)
Domestic Large RJ Carriers (RJET 2013 Fleet Forecast) 6 © Republic Airways Holdings Inc. *Operating in Chapter 11 Bankruptcy protection 556 70 142 156 26 29 35 6 171 170 47 19 67 58 14 28 0 100 200 300 400 500 600 700 800 Skywest Republic American Eagle* Pinnacle* Trans States Mesa PSA Comair 30 - 5
Slide 7: Pre-Tax Margin Trends
Pre - Tax Margin Trends ▪ Fixed - Fee profitability has come under pressure in recent years, due to lack of growth and benign CPI - related rate increases ▪ Republic’s profitability has been among the industry leaders through recent history, with pre - tax profitability higher than regional peers ▪
Slide 8: Our Fleet Plan
Our Fleet Plan 8 Frontier ► Frontier fleet will include Airbus only, with pro - rate flying on 5 E190 aircraft operated by Republic ► Shifting mix from A319 to A320 aircraft with more seats per aircraft, lower CASM © Republic Airways Holdings Inc. Republic ► Reduced pro - rate flying for Frontier ►
Slide 9: II. 1st Half 2012 Results
II. 1 ST HALF 2012 RESULTS ► Additional CPA flying announced on ERJs and Q400s with United ► Streamlining Frontier Network ► Separate Frontier management in Denver 9 © Republic Airways Holdings Inc.
Slide 10: 1st Half 2012 Republic Results
1 st Half 2012 Republic Results 10 © Republic Airways Holdings Inc. ► More aircraft under fixed - fee arrangements ► Significantly reduced pro - rate losses by grounding 50 - seat regional jets ► We continue to grow our Republic business with new CPA opportunities 13.1 31.9 27.6 (11.3) 2.5 - 10.0 20
Slide 11: Growth into 2012
Growth into 2012 ► Signed CPA for extended flying of twelve E145s for United - Continental through 2014 ► Executed an eight year CPA agreement for 32 Q400 aircraft flying with United - Continental, which includes our 4 owned aircraft previously parked ► Reduced parked aircraft by putting them to bac
Slide 12: 1st Half 2012 Frontier Results
1 st Half 2012 Frontier Results 12 © Republic Airways Holdings Inc. ► 2011 restructuring positioned Frontier for solid business improvement ► Significant Network Improvement (APAS drives TRASM gains) ► Lower fuel burn per ASM, but higher price per gallon ► New Management team focused on Transformati
Slide 13: 2011 Business Improvement Plan - Successful
2011 Business Improvement Plan - Successful ► Frontier restructuring scorecard shows significant turn around ► Continued efforts to optimize the network and reduce spending ► New management team engaged and on - site in Denver 13 © Republic Airways Holdings Inc. (a) Expect to obtain the remaining sa
Slide 14: 1st Half 2012 Consolidated Results
1 st Half 2012 Consolidated Results 14 © Republic Airways Holdings Inc. ► Significant improvement as a direct result of business improvements at Frontier in the second half of 2011 ► Utilization of EJet aircraft under fixed - fee agreements mitigated parked aircraft costs ► RJET management now focus
Slide 15: Five Quarter Liquidity Progression
Five Quarter Liquidity Progression 15 © Republic Airways Holdings Inc. ► Total cash at approximately 14% of trailing twelve month revenue, which is considered below adequate levels for an airline of our size. ► Remain in compliance with our debt covenants ► Cash is in line from previous quarter with
Slide 16: III. 2012, 2013 and the Future at RJET
III. 2012, 2013 AND THE FUTURE AT RJET 16 © Republic Airways Holdings Inc. ► Chautauqua Restructuring ► Pilot Negotiations ► Frontier Separation
Slide 17: Chautauqua Restructuring Update
Chautauqua Restructuring Update Assuming no CPA extensions, Chautauqua would lose approximately $325m in cash flow from 2013 to 2017. Restructuring was not an option. The only question was would it be consensual or non - consensual. ► Engaged Seabury Advisors to assist the management team in this ef
Slide 18: Republic Pilot Negotiations - Update
Republic Pilot Negotiations - update 18 © Republic Airways Holdings, Inc. ► Aug. 1, 2012 - Annual Shareholder meeting vote for proposal 4 (Chairman of Board of Directors be an independent director) was voted down by our Shareholders ► Aug. 1, 2012 - National Mediation Board (NMB) denied the request
Slide 19: Latest Pilot Compensation Proposal
Latest Pilot Compensation Proposal 2013 Annual Pilot Costs 19 © Republic Airways Holdings, Inc. (USD millions) 1.7 5.9 184 183 182 181 187 186 185 Previous FO Proposal Per diem Proposal 0.5 2013 Base Pilot Costs 178.8 180 179 0 +5% Revised 2013 Pilot Cost 187.0 Incremental FO rate proposal 0.1 CA Ra
Slide 20: Regional Airline Scope Opportunities: 2013 and Beyond
Regional Airline Scope Opportunities: 2013 and beyond ► Current American agreement for 15, 44 - seat E140 aircraft expires in February 2013 ► AMR bankruptcy process offers significant scope relief to allow larger aircraft to operate under CPA’s with regional carriers ► Perhaps as many as 250, 76 - 8
Slide 21: Frontier Transformation Continues
Frontier Transformation Continues 21 © Republic Airways Holdings Inc. Comparison Six months ended June 30, 2012 Six months ended June 30, 2011 Change Revenue RASM $713.1 $0.1180 $620.4 $0.1094 14.9% 7.9% CASM ex - fuel $0.0743 $0.0784 (5.2%) Fuel Price $3.37 $3.27 3.1% Operating Margin - 0.3% - 11.0
Slide 22: Frontier Separation - The Plan
Frontier Separation – The Plan ► Several options ► Spin - off - IPO ► Sale to another airline ► Sale to private equity ► Any combination of the above ► Hired advisors – Barclay’s Capital ► Designated management team to focus on Frontier Operations ► Transformation of Frontier into an ultra low cost
Slide 23: Guidance - Q3 2012
Guidance – Q3 2012 23 © Republic Airways Holdings Inc. Provided on Q2 2012 Earnings Call Current Update Consolidated EPS $0.45 - $0.55 Consolidated EPS $0.40 - $0.50 Unrestricted Cash $190 - $200 million Fuel cost per gallon (net of hedges) $3.05 - $3.15 Fuel cost per gallon (net of hedges) $3.25 -
Slide 24: IV. Questions
IV. QUESTIONS 24 © Republic Airways Holdings Inc.
Slide 25: RJET's Vision
RJET’s Vision 25 © Republic Airways Holdings Inc. ► Spin off Frontier Airlines while maintaining, where profitable, E190 flying on prorate basis ► Return full focus to CPA flying operations ► Restructure ~$600M of debt and lease obligations for 84 50 - seat or smaller aircraft ► Fully align timing o
Slide 26: V. Appendix
V. APPENDIX 26 © Republic Airways Holdings Inc. ► Reconciliations to GAAP basis accounting
Slide 27: Appendix A: Description of Items
Appendix A Description of items: 27 © Republic Airways Holdings Inc. 2010 Republic Frontier 2011 Integration and fleet transition expenses 56.4 13.3 40.0 53.3 Non-recurring impairment 11.5 191.1 - 191.1 Fuel excise tax and mark-to-market hedge adjustments 6.2 - (3.8) (3.8) Gain on sale of assets - (
Slide 28: Appendix B: Reconciliation of Republic Pre-tax Margins
Appendix B Reconciliation of Republic Pre - tax Margins: 28 © Republic Airways Holdings Inc. For the years ended December 31, (in millions) 2009 2010 2011 Total Operating Revenues 1,180.4$ 1,030.4$ 1,533.9$ Income (loss) before income taxes (GAAP) 86.7$ 77.3$ (147.1)$ Items 15.3 6.8 203.7 Ex-item in
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