Republic Airways Sets Ipo At 5 Mln Shares

[700UW]

700UW:

US Airways can sell assets regardless of the operating certificate.

Management has let it be known to ALPA that PSA will likely be sold and Allegheny/Piedmont too. The company told the MEC that they would like to keep MDA, but as LOA 91 permits, MDA can be sold and the new agreement provides for the transfer of MDA pilots to the acquiring carrier.

Respectfully,

USA320Pilot

Yep and 75% has to go to pay the loan and Johnny O gets richer and the US employees get poorer and screwed!

Dave Seigel at the roadshow "I will provide ALL my furloughed employees a job at MidAtlantic."

ANOTHER BOLD FACE LIE and ALPO helped in his lies!

 

[void]

Republic is set to fly 16 EMB-170's, they will most likely never fly Bombardier aircraft any time soom. I don't believe they were ever set to be delivered to US Airways. Also, the Republic IPO has been in the works since pre-9/11, and was already tried once before and failed. The new announcements at US Airways and the announcement at US Airways are most likely coincidental, but convenient.

 

[USA320Pilot]

LOA 91, Attachment B, Small Jets, is titled Authority in the Event of Sale or Lease of Participating Wholly Owned Carrier Aircraft or MDA Aircraft.

Attachment B in the event MDA is no longer a division of US Airways, Inc. or under the Control (as defined in Attachment B-2 “Change of Control of MDA and Fragmentationâ€) of US Airways Group, Inc. through a transaction or transactions in which MDA becomes an operating airline providing SJ service as US Airways Express (an “MDA Affiliate Eventâ€), such operating airline must comply with the provisions related to a change in control of MDA (as defined in Attachment B-2 “Change in Control of MDA and Fragmentationâ€) and may continue to operate as a US Airways Express carrier only if it agrees to be or become a Participating Affiliate Carrier (i.e. such airline must comply with the Jets for Jobs Protocol for New Vacancies and Backfill Vacancies as such terms are defined in Attachment B-3, subject to a minimum of 50% Jets for Jobs Percentage with respect to such New Vacancies or Backfill Vacancies not filled by MDA pilots, on aircraft operated as US Airways Express.

LOA 91, Attachment B-2, Authority to Operate MDA, Change in Control of MDA and Fragmentation states, US Airways Group, Inc. shall be deemed to “Control†MDA if MDA is an internal operating division of US Airways Group, Inc. or of one or more of its subsidiaries, or if any of them (a) owns 37.5% or more of MDA’s Denominator Common Stock, defined as MDA’s common stock then outstanding, voting securities that constitute or many at any time be exercised, exchanged or converted for or into MDA’s common stock, and the common stock issuable on exchange, exercise, and/or conversion of securities of MDA which are then currently exchangeable into, exercisable for, or convertible into such common stock; or (B) maintains the power, right or authority to appoint or prevent the appointment of a majority of MDA’s Board of Directors, or governing body having substantially the powers and duties of a board of directors, or similar governing body.

It’s unclear at this time how US Airways will proceed with its new RJ flexibility, but the company can now sell PSA (presumably to Mesa Air Group) and obtain a higher purchase price with the carrier now authorized to operate 60 CRJ-700s and 25 CRJ-200s, create an MDA IPO, or spin off part or all of MDA, if necessary. A likely MDA suitor could be Wexford Capital and Republic Airways, who earlier today announced a public offering of 5 million shares, which will be priced at about $15 per share and would net the company about $75 million. In addition, the company can also sell its new Allegheny/Piedmont Dash-8 turboprop operation.

On March 23, Republic Airways issued the following press release (excerpt):

Republic Airways Holdings Orders Up to Fifty Embraer 170 Aircraft

Indianapolis, IN (March 23, 2004) – Republic Airways Holdings Inc., the parent of Chautauqua Airlines and Republic Airlines announced today the order of up to fifty Embraer 170 aircraft. The order consists of thirteen firm aircraft, twelve conditionally firm aircraft and 25 option aircraft. Under the purchase agreement, delivery of the first thirteen aircraft will begin in July and continue through December 2004. All firm aircraft and three of the conditionally firm aircraft will be operated by Republic Airlines and placed into service with United Airlines as part of their United Express program. The total value of the firm contract is $325 million, with a potential value of more than $1.3 billion if all conditionally firm and option aircraft are converted to firm orders.

Separately, the revised ATSB loan guarantee covenants require the company to use 75% of the proceeds of any asset sale to pay down the guaranteed loans. 25% of the proceeds can be placed in the company’s treasury and used for general corporate purposes.

Respectfully,

USA320Pilot

 

[RWerksman]

It’s unclear at this time how US Airways will proceed with its new RJ flexibility, but the company can now sell PSA (presumably to Mesa Air Group) and obtain a higher purchase price with the carrier now authorized to operate 60 CRJ-700s and 25 CRJ-200s, create an MDA IPO, or spin off part or all of MDA, if necessary.

Wow, talk about connect the dots!

- LOA 91 passes freeing up PSA to be sold
- It appears that Mesa will purchase PSA from U.
- A story coming out about Mesa looking to establish a hub in PIT
- All express rampers in PIT are currently employed by PSA
- U announces it will downsize PIT


Does anyone else think this is tailor made? Can U make out any better?

Scale back @ PIT, but still remain in control, snag some cash to payback the ATSB loan, and dish off some employees to Mesa.

 

[Furloughedagain]

Interestingly Delta's deal with Chautauqua/Republic gives them a certain percentage of Republic stock for each airplane flown in the Delta Connection livery (i'm sorry I dont know the number, but i'm sure one of the chautauqua guys has it).

The larger Chautauqua/Republic's portion of DCI becomes, the more control Delta has over Republic.

 

[jack mama]

With some many balls up in the air, will US Airways have a chance to make their own choices, or will choices be made for them?

I wonder what is going to start the ball rolling, and when the next shoe is going to drop.


On a side note, does Republic have any connection with Mesa? For some reason I remember them being an alter ego (non ALPA) entity or something...or maybe that was Freedom?

 

[FLYAWAY]

As I said, in your scenerio at the top the 100% J4J's is gone.

Jim

Actually LOA91 PROTECTS J4Jobs. Without LOA91 we would have lost the financing for all remaining orders and the delivery positions would have gone to our competitors WITHOUT any positions for our furloughed pilots. I'll agree it's a double edged sword, but is was the only option at this time.

 

[BoeingBoy]

" Actually LOA91 PROTECTS J4Jobs."

We shall see, I guess.

"Without LOA91 we would have lost the financing for all remaining orders and the delivery positions would have gone to our competitors WITHOUT any positions for our furloughed pilots."

That was the argument of those in favor - we'll never know if it was true or not since LOA 91 passed.

Jim

 

[PropPiedmont]

Too bad that the US Air pilots didn't sign a P4J agreement with Piedmont. We're hurting really bad right now. Very, Very short on pilots. The pay is better than Mesa/PSA, the work rules are better, and none of our aircraft have any financing issues. Short upgrade time too, it's about 5 years right now.

 

[Furloughedagain]

I found the following in the IPO which can be viewed here:

http://www.sec.gov/Archives/edgar/data/115...135398zs-1a.htm

...excludes 4,500,000 shares of common stock reserved for issuance upon exercise of warrants granted to Delta (assuming it exercises all warrants under its code-share agreements) at an exercise price of $12.50 for 1,500,000 shares, 95% of the initial public offering price hereof for 1,500,000 shares, $12.50 or the initial public offering price hereof if exercised at or in connection with this offering for 720,000 shares and $18.00 or 95% of the initial public offering price hereof if exercised at or in connection with this offering for 780,000 shares.

also:

The code-share agreement with Delta gives Delta the right to purchase up to five percent of the common stock that we may offer for sale in connection with our IPO. To further induce Delta to enter into the code-share agreement with us, we paid Delta a contract rights fee in the form of a warrant to purchase shares of our common stock and will pay to Delta in the form of a contract rights fee, upon the closing of our IPO, another warrant to purchase shares of our common stock. In addition, for each additional aircraft put into service for Delta beyond the initial 22, Delta will receive a warrant to purchase 60,000 shares of our common stock. In accordance with this provision, on February 3, 2003 we granted Delta a warrant to purchase 720,000 shares of common stock, on October 1, 2003 we granted Delta a warrant to purchase an additional 300,000 shares of common stock and on March 10, 2004 we granted Delta a warrant to purchase an additional 480,000 shares of common stock. For a description of these warrants, see "Description of Capital Stock—Warrants."

For illustrative purposes only, we estimate that, should Delta acquire all of the common stock they are entitled to acquire under their warrants and assuming the warrant shares are 100% vested, Delta will own approximately 14.4% of our common stock.

 

[funguy2]

On a side note, does Republic have any connection with Mesa? For some reason I remember them being an alter ego (non ALPA) entity or something...or maybe that was Freedom?

Freedom is a subsiderary of Mesa Air Group, as is Mesa Airlines and Air Midwest. Freedom was created as a non-union shop, however, the unions had previously won a suit stating that all divisions of Mesa Air Group, at that time Mesa, Air Midwest, and CCAir, were considered one unified labor force. The unions sued again over Freedom, and I think they won.

Republic Airways is a sister company to Chautauqua Airlines, and I believe both airlines will be held by a holding company, Republic Holdings. I assume Shuttle America will also be folded into Republic Holdings. Currently, Chautauqua and Shuttle America are owned by Wexford Capitol, which acquired an independent Shuttle America out of BK and basically turned over all of Chautauqua's prop flying to Shuttle. They also own Republic Airways, whcih does not have a valid certificate (yet). I thought the original intention of starting Republic Airways by Wexford Capitol was to take advantage of Jets4Jobs when Chautauqua pilots union turned this down... Not sure if that is true or not, just my recollection.

 

[USA320Pilot]

LOA 91 allows SJ scope relief to the Company in the following areas:

1. The 315 total limit of Medium/Large SJs remains unchanged. The Company will be able to increase the authorized 70-seat SJ fleet outside of MDA from the current 80 to a maximum of 115 (not including EMB-170/175 limits). (This would allow PSA to increase its 70-seat SJs by 35 aircraft with staffing and bidding terms as we agree to, see Attachment C.)

2. If MDA is sold, 100% of its pilots (and their contract) will go with the sale to the new acquiring carrier/owner whether or not the purchaser operates as US Airways Express. If the acquiring carrier is an Affiliate (that is, operating as US Airways Express), at least 50% J4J will apply for all future vacancies.

3. If the EMB-170 aircraft positions now going to MDA are pulled by GECAS, or if MDA aircraft are sold, they can be bought and operated by our Affiliate carriers, keeping these aircraft in US Airways colors and providing revenue and feed, and requiring the acquiring Affiliate carrier to provide at least 50% J4J positions for APL pilots. These J4J job rights would not apply if the purchaser does not operate as an Affiliate.

4. If a US Airways Group wholly-owned is sold (PSA, for example), 100% of its pilots, including APL pilots at that carrier (and their contract) will go with the sale to the new acquiring carrier/owner, based on the terms of the wholly-owned pilot working agreements. Under Letter 91, if the acquiring carrier is an Affiliate, J4J will apply for all future vacancies.

5. If the CRJ-701s positions now going to PSA are pulled by GECAS, or if PSA airplanes are sold, they can be bought by our Affiliate carriers (Mesa, for example), thus keeping them in US Airways colors and providing revenue and feed, and requiring the Affiliate carrier to provide J4J positions for APL pilots. (This applies to any US Airways wholly-owned, which includes Piedmont and Allegheny, but they are not currently scheduled to receive SJs.)

6. If LOA 91 is ratified, MDA loses potential fragmentation rights associated with a sale of some of its airplanes, with those fragmentation rights (to the degree they exist) being replaced by the J4J program. There is no change in the Mainline fragmentation protections, and any sale of MDA assets will be used as credit towards the 15% trigger for fragmentation to apply to Mainline assets sales. This modification may protect financing for the Small Jets, since our financial source (GECAS) regards full fragmentation protection at MDA as an obstacle to the marketability of those airplanes, if US Airways has to sell them in the future to pay off its loans.

7. LOA 91 removes restrictions that limited certain SJs to Mesa only, so that the Company can “Shopâ€￾ those 30 70-seat SJs with various Participating Affiliate Carriers, to obtain the best terms for that contract flying.

Summary – Scope protections cannot prevent GECAS from pulling delivery positions of these CRJs or EMBs, nor can it guarantee that these planes, once pulled, will go to a affiliate carriers. Furthermore, scope protections cannot prevent the Company from selling PSA or MDA if it so desires. Scope changes in LOA 91 do allow our Affiliates to use these plans under US Airways’ colors, providing the company with a revenue stream from these SJs and a J4J program with jobs for our APL pilots

EMBs are more profitable at MDA with its lower costs than at an affiliate where US Airways has to pay and additional 8% rate of return. It makes sense for US Airways to place them somewhere else only if GE pulls the financing.

Regards,

USA320Pilot

 

[funguy2]

2. If MDA is sold, 100% of its pilots (and their contract) will go with the sale to the new acquiring carrier/owner whether or not the purchaser operates as US Airways Express. If the acquiring carrier is an Affiliate (that is, operating as US Airways Express), at least 50% J4J will apply for all future vacancies.

4. If a US Airways Group wholly-owned is sold (PSA, for example), 100% of its pilots, including APL pilots at that carrier (and their contract) will go with the sale to the new acquiring carrier/owner, based on the terms of the wholly-owned pilot working agreements. Under Letter 91, if the acquiring carrier is an Affiliate, J4J will apply for all future vacancies.

The provisions are

1) Subject to change if a carrier is sold. For example, Judges have ruled against Mesa and for ALPA in regards to all Mesa Air Group pilots being one work group, thus they bargain collectively. Thus, I would expect that if Mesa Air Group bought PSA, PSA would need to be brought under Mesa contract rules. This has been enforced twice I believe, once with CCAir and once with Freedom. Seems like this would be a conflict of LOA 91 and other upheld judgements.

2) Likely to be a contributing factor for potential investors or other airlines to avoid the purchase. For Example, Mesa is the lowest cost RJ provider in the nation. Why would Mesa buy PSA and inherit a higher pay-scale, when they could just go out and acquire more CRJ-700's?

Also, how is it that in point 4, US Airways ALPA gets to dictate the labor terms of a sale in which they have no stake (i.e. PSA sold to Mesa Air Group, no active US Airways ALPA members involved)? Do J4J pilots get dual representation (represented at PSA during J4J work and still represented at mainline)?

Something here seems fishy.

 

[USA320Pilot]

Funguy2:

The information in my last post was provided by ALPA MEC Chairman Captain Bill Pollock, was prepared by ALPA Legal, and was included in the LOA informational material.

Regards,

USA320Pilot

 

[funguy2]

Funguy2:

The information in my last post was provided by ALPA MEC Chairman Captain Bill Pollock, was prepared by ALPA Legal, and was included in the LOA informational material.

Regards,

USA320Pilot

Thank you for the source.

But what about the answers to the questions.