Thanks to an 87% increase in fourth quarter operating revenues, Republic Airways Holdings posted USD20.1 million in net income in the quarter, slightly higher than the year-ago period when net income was USD19 million. The company doubled operating revenues from USD339.3 million to USD637.3 million, clearly boosted by its acquisitions of both Midwest and Frontier airlines last year. However, excluding special items, income before taxes was USD1.5 million and net income was USD0.9 million, or USD0.03 per diluted share for the quarter.
The company reported the fourth quarter results included a USD109.2 million goodwill and other impairments and a USD203.7 million gain on the bargain purchase related to the acquisition of Frontier. These two non-recurring items increased pre-tax income by USD94.5 million and net income by USD17.1 million for the quarter. Additionally, the company recorded a year-end tax adjustment, which increased net income by USD2.1 million for the quarter.
For the full year ended 31-Dec-2009, operating revenues were USD1.64 billion, an increase of 11% from 2008. Net income for the year was USD39.7 million, or USD1.13 per diluted share, compared to USD84.6 million of net income, or USD2.42 per diluted share, for 2008.
Mirroring the rest of the US regional airline industry, RJET experienced a decline in its capacity purchase agreement operations, the operating revenues for which declined for Republic, Shuttle America and Chautauqua USD67.8 million from the fourth quarter 2008 to USD266.7 million. However, said the company, excluding fuel reimbursement from partners, fixed-fee service revenues decreased USD35.8 million, or 12.5% for the fourth quarter of 2009 due to a reduction in block hours. The reduction came on the removal of 15 aircraft from fixed-fee operations in 2009 and reported all Midwest regional operations in the branded segment beginning in Aug-2009. Income before taxes on the fixed-fee operations, excluding a USD2.0 million impairment charge for intangible assets, was USD24.5 million for the quarter. Cost per ASM (CASM), including interest expense, but excluding fuel and the impairment charge decreased to 7.59 cents for 4Q2009, from 7.62 cents for the same quarter of 2008.
For the full year, fixed-fee service revenues were USD1.09 billion, a decline of USD282.0 million from the prior year's results. However, excluding fuel reimbursement from our partners, fixed-fee service revenues decreased USD46.4 million, or 4.1% for the year due to a reduction in block hour activity. Income before taxes on the fixed-fee operations, excluding impairment charges of USD15.3 million, was USD102.0 million. Cost per ASM (CASM), including interest expense, but excluding fuel and impairment charges, increased to 7.65 cents in 2009, from 7.50 cents in 2008.
The branded operations posted losses for the fourth quarter amounting USD18.5 million before taxes and excluding a USD96.5 million pre-tax gain from non-recurring items. Total revenues flown on branded airlines were USD364.9 million for the quarter. Load factor was 79.7% for the quarter and total revenue per ASM (TRASM) was 10.10 cents. Cost per ASM (CASM), including interest expense but excluding fuel and non-recurring items, was 7.31 cents for the fourth quarter of 2009.
It also took at USD3.2 million loss on the “deconsolidation” of Mokulele Airlines. Restructuring of for the integration of its branded operations as well as severance and other employee exit costs amounted to USD7.0 million.
In October, the company joined with Mesa Air Group to form Mo-Go LLC. Mesa now owns 75% of Mo-Go and the former Mokulele shareholders own the remaining 25%. Additionally, the partners agreed to capitalize the new business with up to USD6.0 million, USD1.5 million of which would be funded by Mokulele's former shareholders.
For the full year ended 31-Dec-2009, branded revenues totaled USD444.3 million. Load factor was 79.2% for the year and total revenue per ASM (TRASM) was 10.52 cents. The branded operations posted a loss before taxes and non-recurring items of USD38.5 million for 2009. Cost per ASM (CASM), including interest expense but excluding fuel and non-recurring items, was 8.01cents for 2009. Branded operations for 2009 included Mokulele Airlines between April and October 2009, Midwest Airlines starting in August 2009, and Frontier Airlines starting in October 2009.
The company also reported a pre-tax loss of USD4.5 million during the quarter, largely from parked aircraft. This was filed under its “other” business which also includes revenues from aircraft subleases, slot rentals and charter operations and expenses associated with those activities and any idle aircraft. The company reported a pre-tax loss of USD4.5 million in the fourth quarter on this segment related mostly to idle aircraft. The company reported a pre-tax loss of USD8.4 million for the year, related mostly to idle aircraft.
The company increased its operating fleet to 290 aircraft as of 31-Dec-2009, from 221 as of 31-Dec-2008. Twenty aircraft were placed into service during the year. This included three E175 aircraft that went into fixed-fee service and 11 ERJ 190s and six ERJ 135 aircraft that went into branded service. Its branded operations included 62 operational Frontier aircraft. It also removed 13 50-seat aircraft from service for Continental, 10 of which were returned to lessors with the balance subleased offshore. Its aircraft acquisitions included 10 Embraer 190AR jets from US Airways against which Republic applied the full balance of its USD35 million unsecured loan to US Airways and assumed the existing variable-rate debt on the aircraft. The aircraft began joining the fleet in November and will continue through the second quarter.
The company ended the year in a better liquidity position with USD350.2 million in cash, of which USD192.7 million was restricted. This compares to USD130.9 million in cash, of which USD1.2 million was restricted in the year-ago period. However, its debt increased to USD2.79 billion as of December 31, 2009, compared to USD2.28 billion at December 31, 2008. The debt came from aircraft purchases as well as the acquisition of Frontier Airlines and its aircraft debt. All but USD85 million of the debt is secured by debt with approximately 80% of the total debt is fixed-rate. It aso has USD1.17 million in long-term aircraft lease obligations which are not included in the balance sheet information. This increased from the USD685 million in the year-ago period.
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