- Republic Airways files for creditor protection in New York
- Regional carrier is one of the biggest buyers of the jetliner
Bombardier Inc. fell the most in almost four months after one of the biggest buyers of its embattled C Series jetliners filed for bankruptcy.
Republic Airways Holdings Inc., which accounts for 16 percent of Bombardier’s 243 firm orders for the C Series, sought creditor protection in New York on Thursday. The Montreal-based planemaker, more than two years late with the transcontinental jet and about $2 billion over budget, is poised to receive a $1 billion cash injection from Quebec to keep the program going and has asked the federal Canadian government for aid.
Republic is “more likely to cancel the C Series order, especially when the airline did not apparently have a business plan for C Series jets,” Konark Gupta, a Macquarie Capital Markets analyst in Toronto, said Friday in a note to clients. The carrier “had raised doubts about the C Series order quite a few times in the past.”
Bombardier dropped 1.9 percent to C$1.06 at 12:10 p.m. in Toronto, after falling as much as 14 percent for the biggest intraday decline since Oct. 29.
The Chapter 11 bankruptcy filing by Republic Airways has “no immediate impact” on the carrier’s C Series order, said Marianella de la Barrera, a spokeswoman for Bombardier.
“For now, it’s business as usual, but we are monitoring the situation closely,” she said in an interview. “We’ve seen many customers go through restructuring and bankruptcy protection only to emerge strong and better equipped to deal with today’s challenges. We’re very familiar with the process.”
The Indianapolis-based carrier ordered CS300 planes in 2010, though Chief Executive Officer Bryan Bedford later cast doubt on the agreement after the carrier’s strategy changed.
In bankruptcy, the airline could ask a judge to cancel unprofitable contracts without the penalties that would be imposed outside court protection. The filing also will allow the company to escape leases for planes it’s not flying or that are too costly.
Republic Airways, which offers regional passenger service with more than 1,200 flights daily to more than 100 cities in 39 states and Canada, is the first large U.S. airline to file for bankruptcy since American Airlines went into Chapter 11 in 2011. Major U.S. carriers have reported record profits in the past two years.
“Republic has serious challenges that we must still address and several quarters of recovery and rebuilding ahead of us,” Bedford said on a November conference call. The company blamed a lack of pilots for the filing.