Republic Airways Shares Erase Drop on Quarterly Forecast

Republic Airways Holdings Inc. (RJET), the parent of Frontier Airlines, erased an earlier decline to climb 4.8 percent after forecasting a third-quarter profit topping analysts’ estimates.

The stock closed at $4.77 in New York trading to bring its year-to-date gain to 39 percent.

Earnings will be 45 cents to 55 cents a share, Chief Financial Officer Tim Dooley said today on a conference call after Indianapolis-based Republic released second-quarter results yesterday. That compared with an average estimate for adjusted profit of 43 cents a share, according to data compiled by Bloomberg.

Republic is restructuring its Chautauqua unit, an operator of 50-seat regional jets that have fallen out of favor with the industry. The company, which also acts as a regional-flight partner for bigger carriers, continues to rework Frontier after returning that division to a profit last year. Republic eventually plans to separate Frontier.

“We don’t believe the regional space is broken,” Chief Executive Officer Bryan Bedford said on the call. “It’s just going through the reset process which all of our legacy partners endured in the last decade. We believe we’ve formulated a responsible plan to return most of our small jets back to work, but it’s not done.”

Chautauqua

Republic said its regional-jet unit should have a third- quarter pretax margin up 4 percent to 5 percent from a year earlier, while Frontier’s margin should rise in a range of 7 percent to 9 percent.

The company has made “very encouraging progress with key stakeholders” as it seeks to reduce rates from aircraft lessors and vendors to cut expenses at Chautauqua, Bedford said.

“Our ongoing restructuring effort for the Chautauqua platform is going to be key as to whether or not we can restore that segment to economic viability,” he said.

Delta Air Lines Inc. will close its Comair commuter unit, which flies 50-seat jets, on Sept. 29 as higher fuel prices make the small planes too costly to operate. Regional carrier Pinnacle Airlines Corp. (PNCLQ) filed for bankruptcy protection in April, and American Eagle was included in the November 2011 Chapter 11 filing by its parent AMR Corp.

Republic reported second-quarter net income of $20 million, or 40 cents a share, compared with a loss of $14.9 million, or 31 cents, a year earlier. The results exceeded an average prediction of 25 cents from five analysts’ estimates compiled by Bloomberg. Sales slipped 1.6 percent to $728.1 million after a decrease in capacity, according to the statement.

To contact the reporter on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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