Republic Airways DIP financing, Delta code-share agreements approved

By Caroline Salls

Pittsburgh, May 3 – Republic Airways Holdings Inc. received court approval to amend its agreements with Delta Air Lines, Inc., according to a company news release.

Delta will have an allowed $170 million unsecured pre-bankruptcy claim against Republic in connection with a code-share agreement.

In addition, the court’s ruling approved a debtor-in-possession credit agreement with Delta, which will provide $75 million in liquidity to Republic in support of its restructuring plan.

As previously reported, the DIP facility will mature on the earliest of one year from the date of entry of the DIP financing order, the closing of a sale of all of the company’s assets and the effective date of a plan of reorganization.

The interest rate will be 5¾%.

Republic said the amended agreements also provide substantial and interrelated operational and economic benefits, including a consensual wind-down of a single class 50-seat aircraft agreement, the full settlement of litigation between Delta and Republic, the return to full flying of 30 E170 and E175 aircraft subject, an increase in reimbursement rates under a dual-class agreement, compensation for slot lease agreements and modifications to the parties’ ground handling agreement.

Republic said in March that the DIP financing request and the Delta code-share agreement assumption and lease motion “reflect a settlement that represents a comprehensive change in the circumstances, transactions and business relationships between the parties.”

Specifically, the company said the relief sought in the motions represents a comprehensive resolution with code-share partner and lessee Delta and will enhance Republic’s profitability.

The company said the goals of its Chapter 11 case are to obtain modified agreements from its code-share partners to reimburse the increased costs from a new pilot labor agreement and allow an orderly restoration of service, to agree to an early return/settlement of claims relating to out-of-favor aircraft, to streamline its operations by operating a single aircraft type under a single operating certificate and to secure additional liquidity to fund future operations and growth.

The court’s approval is expected to become effective on May 6.

Zirinsky Law Partners PLLC and Hughes Hubbard & Reed LLP are serving as Republic’s legal advisers in the restructuring, and Norton Rose Fulbright is serving as Republic’s legal adviser in the DIP transaction. Seabury Securities LLC is serving as Republic’s financial adviser.

Republic Airways, an Indianapolis-based passenger and air freight service company, filed bankruptcy on Feb. 25 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 16-10429.

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