Republic Airways to buy 10 jets from US Airways

[Justme]

Reuters' Story Here

CHICAGO, Oct 14 (Reuters) - Republic Airways Holdings on Wednesday said it would acquire 10 Embraer (EMBR3.SA) 190AR jets from US Airways Group (LCC.N), applying the full balance of its $35 million loan from US Airways to the purchase.

The carrier said four of the 99-seat planes would enter service in November and December, replacing Boeing Co (BA.N) 717 aircraft. The remaining six aircraft are to enter service during the first half of 2010.

 

[YVINTERN]

And the spiraling race to the bottom officially starts...

 

[USA320Pilot]

Republic Airways to buy 10 Embraer regional jets from US Airways

Republic spokesman Carlo Bertolini said US Airways is using the planes to repay the $35 million it borrowed from Republic last year, plus interest. Republic will also assume the remaining debt on the 99-seat Embraer 190AR aircraft, an amount it didn't disclose.

See Story

Regards,

USA320Pilot

 

[flybynite]

How much does an Embraer cost?

 

[redheadtempe33]

How much does an Embraer cost?

About 30 million new.

 

[flybynite]

So they're getting ten for about the price of one???

 

[USFlyer]

So they're getting ten for about the price of one???

No. US is using what equity it has in the 190s to repay its loan from Republic. From what I understand, US still had quite a bit of debt owed on the 190s, so Republic is in effect taking ownership of that debt and will make future debt payments.

 

[Poug Darker]

Merger preparations...clean up the balance sheet, and mirror image your partner. The only other reason for getting rid of the cheapest a/c in the fleet to operate is one we don't want to think about.

 

[flybynite]

Did we have options to buy more of them?

 

[HottootrotNyc]

Could it really possibly be that they are just doing this to pay down debt and reduce capacity till the economy recovers? I thought US Airways had options for more 190's? I understand this is less fly and less planes but it does help by paying down a large amount of debt and only losing a very small amount of planes. Doesn't US has a bunch of 321's and 330-200's coming online in 2010?

 

[BoeingBoy]

Could it really possibly be that they are just doing this to pay down debt and reduce capacity till the economy recovers?

Given that the 190's were the only place US could reduce mainline capacity, that's a likely reason. As for paying down a "large amount of debt" - $35 million is only a drop in the dept bucket. The Citi loan alone is over $1.1 billion. Add in the other debt and the total is over $4 billion.

Jim

 

[etops1]

I think it's just positioning us for another merger. Who ever it is ,the e-190 is clearly not needed in the fleet . I guess we just have to wait and see.

 

[cynic]

Given that the 190's were the only place US could reduce mainline capacity, that's a likely reason. As for paying down a "large amount of debt" - $35 million is only a drop in the dept bucket. The Citi loan alone is over $1.1 billion. Add in the other debt and the total is over $4 billion.

Jim

Reduce capacity and not have to make payments on them are why the 190s are gone.

 

[BoeingBoy]

Not having to make payments is a short term gain (saves cash) but a long term wash (saved cash is offset by loss of depreciation and equity buildup in the planes).

Jim

 

[V1cut]

Could it really possibly be that they are just doing this to pay down debt and reduce capacity till the economy recovers? I thought US Airways had options for more 190's? I understand this is less fly and less planes but it does help by paying down a large amount of debt and only losing a very small amount of planes. Doesn't US has a bunch of 321's and 330-200's coming online in 2010?

There is no reduction of capacity taking place...not the type Parker touts. Total national capacity reductions are the only way to drive ticket prices up...by removing seats from the whole national system. These 190's aren't going to the desert...they're going to Republic to fly around as a low cost (cheaper than us). So there is no capacity reduction rationale taking place here. When you park planes, temporarily or permanently, or replaced larger planes with smaller ones of fewer seats, THEN and only then has "capacity" been reduced to affect tickets. This is posturing for debt retirement, and potential merger position.

USAirways shrinking it's mainline fleet only to have those same aircraft flown by another airline has a zero impact on industry capacity and pricing power...period.