Republic Airways eyes OK of DIP loan, code-share assumption motions

By Caroline Salls

Pittsburgh, March 28 – Republic Airways Holdings Inc. requested court approval to obtain $75 million of debtor-in-possession financing from Delta Air Lines, Inc. and sought court approval of a code-share agreement assumption and lease agreement, according to a motion filed Thursday with the U.S. Bankruptcy Court for the Southern District of New York.

The 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 in the motion that the DIP financing request and the 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 is 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.

Under the code-share assumption agreement with Delta, Delta will have a $170 million general unsecured claim against Republic “as part of a global resolution between Delta and Republic that includes both a settlement of material outstanding claims and the new agreements that provide Republic with substantially enhanced economics.”

“The motions reflect that Delta is committed to supporting Republic’s restructuring process and will help set the bar for Republic’s other code-share partners,” the DIP financing motion said.

A hearing is scheduled for April 14.

Republic Airways, an Indianapolis-based passenger and air freight service company, filed bankruptcy on Feb. 25. The Chapter 11 case number is 16-10429.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.