Firm Insights

Republic Airways files for Chapter 11 Bankruptcy Protection

Author: Joel R. Glucksman

Date: March 31, 2016

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Joel R. Glucksman

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201-896-7095 jglucksman@sh-law.com

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Republic Airways files Chapter 11

Republic Airways Holdings Inc., one of the largest U.S. regional carriers, announced that it had filed for Chapter 11 bankruptcy protection, according to The Wall Street Journal. The company, which holds partnerships with United Airlines, American Airlines and Delta Air Lines, stated in bankruptcy documents that it had fallen under pressure due to pilot shortages and a change in market demand as consumers found cheaper flights with major airlines.

Republic Airways spirals into debt

In its initial bankruptcy filings, Republic Airways cited a collapse in oil prices for its lost revenues. According to The Journal, larger U.S. airlines have generated record profits, which prompted these companies to reduce costs in partnerships with regional carriers. Following a five-year period of financial turbulence where it purchased Midwest Airlines and Frontier Airlines to expand its business, the company became insolvent with a significant drop in demand for regional carriers.

As a result of this precipitous drop in revenues, Republic Airways struggled with a pilot shortage because it could no longer offer competitive salaries. In turn, this led to a lawsuit by Delta Air Lines in which the airline claimed damages due to loss of service.

The company listed $3.56 billion in assets with $2.98 billion in debt in its court filings. Following the news of its bankruptcy petition, Republic Airways’ share price fell by 77 percent to 78 cents.

The restructuring plan

Republic Airways has been in negotiation with its senior creditors and airline partners for close to a year. As it has failed to reach an agreement with key stakeholders and creditors, Republic Airways negotiated a deal with Delta Air Lines to stay the outstanding lawsuit.

Currently, the company plans to maintain operations and pay employees throughout the bankruptcy process.

Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.

For related articles on airlines dealing with bankruptcy, check out:

American Airlines’ $388M Bankruptcy Price Tag Approved
Creditors Try to Force Evergreen International Airlines into Involuntary Chapter 7 Liquidation
American Airlines Merger Becomes Official

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