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Republic announces JV agreement with Mesa Air Group; American Airlines edges up

14-Oct-2009

The AMEX Airline Index (+0.1%) made another small gain on Tuesday (13-Oct-2009), as the majority of North American carriers' stocks rose. The gains came despite a drop in the wider market, with the Dow slipping 0.2%, and another rise in oil prices (+1.2%), to USD74.15.

Republic announced JV agreement with Mesa

Republic Airways (+2.1%) was up at the end of trade on Tuesday, following the carrier’s announcement that it had reached an agreement with Mesa Air Group to form a JV to combine the jet routes currently flown by both Mesa and Republic. Under the agreement, E170 routes currently operated by Republic Airways will be transitioned to jet service provided by Mesa. The three E170 aircraft will be returned by November and will operate in Republic Airways’ branded network.

Under the terms of the JV agreement, Mokulele shareholders will contribute their ownership of Mokulele to the JV and will own 25% of the new venture. Additionally, current Mokulele shareholders will be obligated to fund up to USD1.5 million to capitalise the JV. Republic, which is the majority shareholder of Mokulele, will forgive Mokulele’s USD3.1 million outstanding debt to Republic, net of surrendered aircraft deposits.

Republic President and CEO, Bryan Bedford, stated, “during this period of economic stress within our industry, it is especially important to closely match capacity with demand, and this arrangement allows Mokulele to right-size the aircraft within its network". He added, "the agreement allows Republic Airways to reallocate its E170 aircraft within its branded airline operations, where they will be able to contribute to our network rebuilding efforts.”

Southwest optimises schedule

Shares in Southwest Airlines (+0.4%) were also up, as the carrier released its Spring 2010 travel schedule (14-Mar-2010 to 07-May-2010).

US Senators express concerns over American Airlines/British Airways antitrust immunity application

American Airlines' stock (+0.1%) edged up only slightly, despite news during trading that US Senators, Herb Kohl and Orrin Hatch, have expressed concern regarding its trans-Atlantic antitrust immunity application, adding that such an agreement “raises significant competition issues” and merits close antitrust scrutiny by the US Justice Department.

The Senators expressed their concerns in a letter to Department of Transportation Secretary, Ray LaHood, and a Justice Department antitrust official, whose departments are reviewing the application that would allow American Airlines, British Airways and Iberia to expand cooperation within the oneworld alliance.

North & South America selected airlines daily share price movements (% change): 13-Oct-09


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