Republic Airways files bankruptcy to restructure finances, contracts

By Caroline Salls

Pittsburgh, Feb. 25 – Republic Airways Holdings Inc. filed Chapter 11 bankruptcy on Thursday in the U.S. Bankruptcy Court for the Southern District of New York.

The company said the process allows Republic and its subsidiaries to continue normal business operations while restructuring its finances and contractual relationships.

“Over the last several months, we’ve attempted to restructure the obligations on our out-of-favor aircraft – made so by a national pilot shortage – and to increase our revenues,” chairman, president and chief executive officer Bryan Bedford said in a company news release.

“It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise.

“Our filing today is a result of our loss of revenue during the past several quarters associated with grounding aircraft due to a lack of pilot resources, combined with the reality that our negotiating effort with key stakeholders shows no apparent prospect of a near-term resolution.

“We filed with a strong core business and the liquidity resources necessary to carry out our restructuring plan.”

Republic said it has sufficient assets and liquidity to meet its working capital and operating expenses during the restructuring process.

Debt details

According to court documents, Republic had $3,561,491,520 of total assets and $2,971,485,269 of total debt as of Jan. 16.

The company’s largest unsecured creditors are as follows:

• GE Engine Services, LLC of Cincinnati, with a $20.61 million trade claim;

• NAC Aviation 21 of Henry St. Limerick, Ireland, with a contract claim in an unliquidated amount;

• NAC Aviation 23 of Henry St. Limerick, Ireland, with a contract claim in an unliquidated amount;

• GE Capital Aviation Services of Norwalk, Conn., with a contract claim in an unliquidated amount;

• Residco, based in Chicago, with a contract claim in an unliquidated amount;

• CitiBank NA of Long Island City, N.Y., with a bank loan claim in an unliquidated amount;

• Embraer Aircraft Customer Services, Inc. of Fort Lauderdale, Fla., with a $10.06 million trade claim;

• EAMS – Embraer Aircraft Maintenance Services, Inc. of Nashville, with a $6.35 million trade claim;

• Emery Air, Inc. of Rockford, Ill., with a $2.73 million trade claim; and

• Meggitt Aircraft Braking Systems of Akron, Ohio, with a $1.74 million trade claim.

Solus Alternative Asset Management LP, Solus GP LLC, Christopher Pucillo, Man GLG Select Opportunities Master Fund LP, GLG LLC, Man Group plc, Dimensional Fund Advisors LP, BlackRock, Inc., Axar Master Fund, Ltd., Axar Capital Management, LP, Axar GP, LLC, Andrew Axelrod and Manning & Napier Advisors, LLC all owed 5% or more of the company’s voting securities as of Dec. 31.

Arnell named CRO

In connection with the filing, the company has named Lars Arnell to the role of senior vice president and chief restructuring officer. In his new position, Arnell will be responsible for all restructuring activities at the airline and its subsidiaries during the pendency of the Chapter 11 proceeding. Arnell’s duties include implementing procedures designed to immediately improve the core business as well as cohesive strategies aimed at ensuring the long-term success of Republic.

Zirinsky Law Partners PLLC and Hughes Hubbard & Reed LLP are acting as Republic’s legal advisers in the restructuring. Seabury Group LLC is acting as financial adviser.

Republic Airways is an Indianapolis-based passenger and air freight service company. The Chapter 11 case number is 16-10429.

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