Republic Airways Holdings Inc. rose the most since June 2009 after reaching agreements that cut lease payments on some planes, defer deliveries of others and let it return two to lessors in an expanded restructuring of its Frontier Airlines unit.
Republic is evaluating selling some unidentified assets and issuing new debt secured by spare parts, according to a statement from the Indianapolis-based airline. Republic said that absent additional action, its unrestricted cash balance may fall as low as $150 million by the end of this quarter.
The company said it achieved “substantially” all of an initial $120 million restructuring of Frontier that included concessions from employees, vendors and aircraft lessors. Republic bought Frontier out of bankruptcy in 2009, breaking from its traditional role of providing regional flights for carriers such as Delta Air Lines Inc.
Republic gained 21 percent to $3.25 at 10:05 a.m. in New York, after climbing 23 percent for its biggest intraday gain since June 23, 2009. The shares fell 63 percent this year through yesterday.
The company also reported that third-quarter profit excluding some items fell to $20.4 million, or 40 cents a share, from $25.9 million, or 70 cents, a year earlier. On that basis, Republic beat the 24-cent average of seven analyst estimates compiled by Bloomberg.
Net Income Including $10 million in pretax costs related to a storm in Denver and expenses linked to fuel-purchase contracts and fleet changes, net income declined 58 percent to $9 million, or 18 cents, from $21.2 million, or 58 cents. Revenue increased 7.9 percent to $767.9 million.
The profit followed three consecutive quarterly losses.
The company earlier said it would maintain a minimum unrestricted cash balance of $200 million, a goal it fell short of last quarter.
Concessions from lessors will reduce the company’s Airbus SAS A319 lease payments by $26 million in 2012. Republic will return four A319s in 2012’s first quarter. While Republic will accept of two Embraer SA E190 planes this quarter, it deferred delivery of four more E190s for an unspecified time and will end leases early on two additional E190s, returning them to lessors in late 2012.
Bedford told employees in a memo last month that an agreement with Embraer on deferring new planes would make about $20 million in cash available to Republic.
Airbus Agreement Republic said it completed a previously announced agreement to buy 80 planes from Airbus that it expects will enter Frontier’s fleet in 2016’s second. It also finished up an accord with engine maker CFM International Inc. for a fuel-burn guarantee on the new Airbus planes that sets future spare engine pricing and reduced overhaul costs for existing Airbus engines.
Steps under study in a second round of restructuring at Frontier, totaling about $113 million, include selling flight slots at Ronald Reagan Washington National Airport valued at almost $50 million, and 10 Embraer E190 jets, for about $40 million, according to Bedford’s memo.
