When it filed for Chapter 11 bankruptcy protection in February 2016, Indianapolis-based Republic Airways Holdings Inc. blamed a national pilot shortage as a major reason.
The regional airline didnt have enough pilots to fly its contracted routes for American Airlines Group Inc., Delta Air Lines Inc. or United Airlines Inc., putting it at odds with the carriers and reducing the revenue it earned from those contracts.
The shortage hasnt let upand observers expect it to continue for the foreseeable future. But Republic, which emerged from bankruptcy as a privately held company on April 30, said its a slimmer, more streamlined organization that is strongly positioned to tackle that challenge and others.
During bankruptcy reorganization, the airline renegotiated its airline contracts and reduced the size of its fleet. Its flying larger planes and boosting its training and facilities.
At the same time, it worked to strengthen its ties to the nations aviation schools.
We dont believe that the solution to pilot supply is a single
solution, said Matt Koscal, Republics chief administrative officer.
The pilot shortage, which is affecting all regional airlines, has several roots.
Typically, pilots begin their careers at a regional carrier, then move up to a major airlineand a larger paycheckafter a few years of experience.
But the major airlines have been on a hiring spree in recent years, driven mostly by a wave of retirements, said Louis Smith, president of Nevada-based pilot advisory firm FAPA.aero. Pilots mandatory retirement age is 65.
The major airlines are decimating the regional airline pilot workforce, Smith told IBJ in an e-mail. The seven largest airlines in the U.S. will retire nearly 40,000 pilots in the next 15 years. That is more than twice the size of the entire regional airline pilot workforce.
As a point of comparison, Republic employs just more than 2,000 pilots.
A recent change in pilot training requirements has worsened the shortage. In 2013, following a 2009 Colgan Air crash in which 50 people died, the Federal Aviation Administration instituted whats popularly called the 1,500 rule.
Before they can become co-pilots for U.S. passenger and cargo airlines, aviators now must earn an Airline Transport Pilot certificate, which requires at least 1,500 hours of flight time. Previously, co-pilotsknown in the industry as first officersneeded only 250 hours of flight time, though airlines could impose their own stricter standards.
The 1,500 rule does include exceptions that allow pilots with an aviation degree or military aviation experience to qualify with fewer than 1,500 hours. But in general, it takes longer to land that first airline job, and young graduates end up working in non-airline aviation jobs for a year or two before they can fly for an airline.
Higher pay
The rule change created a temporary gap in new pilots just as the major airlines were revving up hiring.
For a few years, there was almost no such thing as a new pilot, said Seth Kaplan, managing partner of the aviation industry publication Airline Weekly.
That gap is easing as time passes, Kaplan said, but the stricter training standards will likely also reduce the pool of people who enter the profession.
Republic and other regional airlines have reacted to the pilot shortage by significantly increasing pay.
Republic increased its pay scale a few months before it entered bankruptcy. A union contract that went into effect in October 2015 raised first-year pilot pay from $22.95 per flight hour to $40.40.
Including base pay, bonuses and benefits, Republic says, new hires can now earn $64,400 in their first year. The average fifth-year salary for a Republic pilot who has been promoted from first officer to captain is $94,000.
But before the change, Republic lost many pilots who left for other regional carriers after a year or two in search of higher pay. Now, Koscal said, pilots stay at Republic about six years, and 80 percent of departing pilots move on to jobs at major airlines.
Even with the improved pay, the cloud of bankruptcy cast a pall over Republics hiring efforts. A higher percentage of the airlines job offers were declined during the period, and the bankruptcy was the top reason cited by applicants.
Getting out of bankruptcy was critical to our success in being able to retain and attract employees, Koscal said.
Other tactics
The company is attacking the pilot shortage from other fronts as well.
In late 2015, Republic started establishing pipeline agreements with U.S. aviation schools, interviewing students and giving them conditional offers of employment once their training was complete. Today, Republic has pipeline agreements with 22 aviation schools, including ones at Purdue, Vincennes and Indiana State universities.
Students at pipeline schools who commit to flying for Republic can also apply to have the company subsidize some of their required flight training. That training can cost several thousand dollars, Koscal said.
The company has also reduced its aviator needs by several hundred pilots by reducing the size of its fleet, he said. At the end of 2015, Republic had 242 planes. Today, the fleet stands at 170, which will grow to 188 by years end as Republic takes delivery of 18 new Embraer aircraft.
Were appropriately staffed on the pilot side for that fleet, Koscal said.
Republic streamlined its operations in a few other ways.
Previously, the airline flew a mix of 50- and 75-seat aircraft. As part of its renegotiated airline contracts, Republic shed its 50-seat planes, moving to a single fleet of Embraer E170 and E175 planes configured with 69 to 76 seats.
Republic also moved all its operations under a single operating certificate. Until the end of last year, Republic flew under two subsidiaries, each of which operated as a different airline. Republic Airline Inc. flew for American and United while Shuttle America Corp. flew for Delta and United. (A third subsidiary, Chautauqua Airlines, which flew for Delta, was consolidated into Shuttle America in January 2015.)
Now, all of Republics flights operate under the Republic Airline name and operating certificate.
Kaplan said those changes should be good for Republic.
When you have multiple operating certificates, it might look like one company from a financial perspective, but you are running differing airlines from an operations perspective, Kaplan said.
Because of federal regulations, he said, operating under multiple certificates is costlier. You do need to have certain people at each carrier who are somewhat redundant to each other.
Moving to a single-size fleet is also a smart move, Kaplan said. The 50-seat planes are not as fuel-efficient as larger aircraft, and regional airlines are abandoning them.
Their fleet now is a better match for where the industry is heading, he said. The broad trend in the airline industry is toward larger jets.
The larger jets might also be more appealing to recruits, Smith said. The 50-seat aircraft are seen to some prospective pilots as an indication that that airlines days are numbered.
Restructuring
Republic has also made some big corporate structural changes.
Pre-bankruptcy, Republic was a public company whose shares traded on the Nasdaq exchange. The company canceled those shares, which had dropped to 3 cents apiece on their last day of trading, April 28.
The reorganized company is owned by its former creditors, who were issued new common stock in exchange for their claims.
Between them, American, Delta, Embraer S.A. and United own about 75 percent of the company, with hedge funds and individual claimants owning the remainder, Koscal said. Exact ownership percentages are still in flux because claims from the bankruptcy are still being settled.
Right now, Republic is focusing on some projects it had to delay during bankruptcy, including technology and training upgrades. The airlines operating center, where staffers handle flight scheduling and dispatch, just got an upgrade with new workspaces and improved lighting. The company would also like to renovate the rest of its headquarters space, in an office park just south of the Pyramids, near West 86th Street and Michigan Road.
Republic also intends to amp up its community presence, Koscal said, with new initiatives to be announced in coming months.
Down the road, he said, the company wants to once again be publicly traded. But that wont happen for a while, he added, because Republic needs a period of inward focus to attend to more immediate goals.
To go public today would be a distraction from those efforts.
See more here:
Streamlined Republic Airways revamping after bankruptcy - Indianapolis Business Journal
- Boy Scouts' bankruptcy judge approves nearly $250 million in fees - Reuters - October 22nd, 2023 [October 22nd, 2023]
- What CARD's Clean Slate Post-Bankruptcy Could Mean For Autism ... - Behavioral Health Business - October 22nd, 2023 [October 22nd, 2023]
- 8 Senators Ask U.S. Treasury to Consider 'Going Concern' Bid to ... - International Brotherhood of Teamsters - October 22nd, 2023 [October 22nd, 2023]
- A Burger King franchisee gets sold out of bankruptcy, and a big buyer is Burger King - Restaurant Business Online - September 28th, 2023 [September 28th, 2023]
- Furniture-maker Noble House falls into bankruptcy, owes overseas ... - Retail Dive - September 28th, 2023 [September 28th, 2023]
- How to Get Your Own "Free" Private Investigator in Bankruptcy - Ward and Smith, PA - September 28th, 2023 [September 28th, 2023]
- Large Corporate Bankruptcy Filings Surged in First Half of 2023 ... - ABL Advisor - September 28th, 2023 [September 28th, 2023]
- MV Realty Files For Chapter 11 Bankruptcy - The Real Deal - September 28th, 2023 [September 28th, 2023]
- Vesttoo case: Time to "stop litigating and start cooperating" says ... - Artemis.bm - September 28th, 2023 [September 28th, 2023]
- BlockFi Bankruptcy Plan Receives Approval - Watcher Guru - September 28th, 2023 [September 28th, 2023]
- From Bank To Bankruptcy: How This Crypto Scam Toppled A US ... - Bitcoinist - September 28th, 2023 [September 28th, 2023]
- Mainstream Media Objects to Further Customer Data Redactions in ... - Cryptonews - September 28th, 2023 [September 28th, 2023]
- CARD's Founding CEO Returns to the Helm: What's Next for the ... - Behavioral Health Business - September 28th, 2023 [September 28th, 2023]
- "Calvin Klein was once on the verge of bankruptcy": BTS' Jungkook's ... - Sportskeeda - September 28th, 2023 [September 28th, 2023]
- Lerner Family Fight: Father's Actions led to Bankruptcy, son Says - The Real Deal - September 28th, 2023 [September 28th, 2023]
- Mercy Foundation asks court to clarify its role in bankruptcy - The Gazette - September 28th, 2023 [September 28th, 2023]
- Celsius bankruptcy auction nears end, with Fahrenheit in the lead - Reuters - May 18th, 2023 [May 18th, 2023]
- Surge in corporate bankruptcies just the start for debt-loaded firms - Business Insider - May 18th, 2023 [May 18th, 2023]
- 7 Companies Declare Bankruptcy Over Weekend in 15-Year Record - PYMNTS.com - May 18th, 2023 [May 18th, 2023]
- Credit Crunch Fuels 48-Hour Bankruptcy Rush With Seven Filings - Yahoo Finance - May 18th, 2023 [May 18th, 2023]
- Private equity-backed Envision Healthcare files for bankruptcy - Financial Times - May 18th, 2023 [May 18th, 2023]
- Drobo, having stopped sales and support, reportedly files Chapter 7 bankruptcy - Ars Technica - May 18th, 2023 [May 18th, 2023]
- Roxby Bankruptcy Cases Dismissed, Foreclosure Action Expected ... - Wheeling Intelligencer - May 18th, 2023 [May 18th, 2023]
- Voyager bankruptcy plan approved, customers may recover 35.7% of claims initially - Cointelegraph - May 18th, 2023 [May 18th, 2023]
- Bed Bath and Beyond's bankruptcy could help TJ Maxx owner TJX - Yahoo Finance - May 18th, 2023 [May 18th, 2023]
- IronNet: Near-Term Bankruptcy Filing Might Be In The Cards - Sell ... - Seeking Alpha - May 18th, 2023 [May 18th, 2023]
- Filing For Bankruptcy Protection Due To PFAS Litigation Costs - The National Law Review - May 18th, 2023 [May 18th, 2023]
- Full list of retailers that have filed for bankruptcy as shoppers go online to find deals... - The US Sun - May 18th, 2023 [May 18th, 2023]
- Quadriga CX Bankruptcy Claimants to Get 13% on the Dollar - CoinDesk - May 18th, 2023 [May 18th, 2023]
- Sorrento Therapeutics, Inc.'s Bankruptcy Court Orders Brokerage Firms to Credit Dividended Scilex Stock to Customers' Accounts and Sorrento Advises... - May 18th, 2023 [May 18th, 2023]
- Failing ventures and Twitter hiatus spark Tai Lopez bankruptcy ... - Protos - May 18th, 2023 [May 18th, 2023]
- Facing bankruptcy, Highland Park settles lawsuit over seized ... - WXYZ 7 Action News Detroit - May 18th, 2023 [May 18th, 2023]
- Judge in archdiocese bankruptcy case recuses himself over donations scandal - The Guardian US - April 30th, 2023 [April 30th, 2023]
- Revlon Taps New Directors as Lenders Take Control in Bankruptcy - The Wall Street Journal - April 30th, 2023 [April 30th, 2023]
- Opinion: Highland Park shouldn't declare bankruptcy over water debt - Detroit Free Press - April 30th, 2023 [April 30th, 2023]
- In Kolkata, India's new bankruptcy law is put to the test - Financial Times - April 30th, 2023 [April 30th, 2023]
- Judge in Catholic bankruptcy recuses over church donations - The Associated Press - April 30th, 2023 [April 30th, 2023]
- Judge in New Orleans Roman Catholic bankruptcy recuses himself over church donations - PBS NewsHour - April 30th, 2023 [April 30th, 2023]
- Four companies indirectly owned by Berkshire Hathaway file for bankruptcy (NYSE:BRK.B) - Seeking Alpha - April 30th, 2023 [April 30th, 2023]
- Pfizer Buys Lucira Health for $36.4M Through Bankruptcy Auction - GenomeWeb - April 30th, 2023 [April 30th, 2023]
- Bed Bath & Beyond shares drop after it files for bankruptcy protection - Detroit Free Press - April 30th, 2023 [April 30th, 2023]
- Bankruptcy Battle Breaks Out Over Greenwich Village Dev Site - The Real Deal - April 30th, 2023 [April 30th, 2023]
- US companies in distress turn to debt exchanges to dodge bankruptcy - Financial Times - April 30th, 2023 [April 30th, 2023]
- National retailer sold out of bankruptcy, will close remaining South ... - columbiabusinessreport.com - April 30th, 2023 [April 30th, 2023]
- Companies facing bankruptcy do this: Internet irate after Elon Musk led-Twitter reportedly slashed parental leaves - Business Today - April 30th, 2023 [April 30th, 2023]
- Tim Ziss Files For Bankruptcy To Extend Contract For Midtown Office - The Real Deal - April 30th, 2023 [April 30th, 2023]
- Future at Conway plant unclear after bankruptcy - Arkansas Online - April 30th, 2023 [April 30th, 2023]
- J&J Uses Cajoling, $9 Billion Offer to Sell New Talc Bankruptcy - Bloomberg Law - April 30th, 2023 [April 30th, 2023]
- Donald Trump and 5 Other Famous People Who Filed for Bankruptcy and What Happened Next - Yahoo Finance - April 30th, 2023 [April 30th, 2023]
- Beloved retailer and Michaels rival to close nine more stores amid bankruptcy fears see the full list of... - The US Sun - April 30th, 2023 [April 30th, 2023]
- Process - Bankruptcy Basics | United States Courts - March 31st, 2023 [March 31st, 2023]
- 10 years after bankruptcy scare, village is paying $2.5M in cash for new Village Hall - MLive.com - March 31st, 2023 [March 31st, 2023]
- Bankruptcy: What You Need to Know - NerdWallet - February 7th, 2023 [February 7th, 2023]
- DCG Creditor Pact Revealed With Plan to Sell Genesis Trading Unit as Part of Bankruptcy - CoinDesk - February 7th, 2023 [February 7th, 2023]
- Staring Down Bankruptcy, Bed Bath & Beyond Says It Will Sell Stock - The New York Times - February 7th, 2023 [February 7th, 2023]
- Pet store with several Mass. locations files for bankruptcy, will cease operations at end of month - Boston 25 News - February 7th, 2023 [February 7th, 2023]
- What Is Bankruptcy? Forbes Advisor - January 19th, 2023 [January 19th, 2023]
- Filing for Bankruptcy: What to Know | Consumer Advice - January 19th, 2023 [January 19th, 2023]
- Bankruptcy | California Courts | Self Help Guide - January 19th, 2023 [January 19th, 2023]
- Bed Bath & Beyond could file for bankruptcy 'as early as this weekend': Macco CEO - Yahoo Finance - January 6th, 2023 [January 6th, 2023]
- Bankruptcy Basics Glossary | United States Courts - October 23rd, 2022 [October 23rd, 2022]
- Cash crunch caused Thrifty Propane to file for bankruptcy: statement - WJW FOX 8 News Cleveland - October 19th, 2022 [October 19th, 2022]
- Chinese Steel Manufacturers On The Brink Of Bankruptcy - OilPrice.com - October 19th, 2022 [October 19th, 2022]
- Pennsylvania Bankruptcy Court Finds That Consent and Release Do Not Protect Against Wrongful Foreclosure Claim - JD Supra - October 19th, 2022 [October 19th, 2022]
- Congressional Candidate Critical of Loan Forgiveness Sought to Have Student Debt Cleared Via Bankruptcy - NBC4 Washington - October 19th, 2022 [October 19th, 2022]
- Bloomberg Tax Introduces New Portfolio Addressing Employee Benefits and Bankruptcy - PR Newswire - October 19th, 2022 [October 19th, 2022]
- Alex Jones claims bankruptcy: How will Sandy Hook families get paid? - Grid - October 19th, 2022 [October 19th, 2022]
- Bankruptcy - Michigan - October 17th, 2022 [October 17th, 2022]
- PFC to take RattanIndia plant to bankruptcy court this year | Mint - Mint - October 17th, 2022 [October 17th, 2022]
- Significant Fee increases for Bankruptcy and Winding-Up Petitions on the way - Lexology - October 17th, 2022 [October 17th, 2022]
- US Bankruptcy Court NJ - Live Database - October 15th, 2022 [October 15th, 2022]
- It Is Time To Change Bankruptcy Forum Laws - Patent - United States - Mondaq - October 13th, 2022 [October 13th, 2022]
- Judge in Archdiocese of Santa Fe bankruptcy sets proposed timeline to pay abuse victims - Yahoo News - October 13th, 2022 [October 13th, 2022]
- CMS Protests QHC Bankruptcy Plan Will Not Cover $1M Owed to Agency - Skilled Nursing News - October 13th, 2022 [October 13th, 2022]
- As Jury Deliberates In CT, Alex Jones And His Lawyers Are Setting Fire To Each Other In TX Bankruptcy Court - Above the Law - October 13th, 2022 [October 13th, 2022]
- Student loans are notoriously difficult to discharge in bankruptcy. A new bill could change that - Fortune - October 13th, 2022 [October 13th, 2022]
- Pioneering computer science alumnus battles bankruptcy and more on road to graduation - Oklahoma State University - October 13th, 2022 [October 13th, 2022]
- J&J Talc Bankruptcy 'Bad Faith' Claims Go Before Third Circuit - Bloomberg Law - September 20th, 2022 [September 20th, 2022]
- New amendments to bankruptcy code can maximise recovery of stressed assets - DNA India - September 20th, 2022 [September 20th, 2022]
- Judge reports threats, harassment over J&J talc bankruptcy - Reuters - September 17th, 2022 [September 17th, 2022]