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Monday, February 7, 2005

Quick Takes

  • Republic Airways Holdings [RJET] last week completed a secondary stock offering by selling 6 million shares at $12.50 a share. The transaction underwritten by Merrill Lynch, Raymond James and UBS Securities generated $75 million prior to expenses. The company has previously said it would use the proceeds for "general corporate purposes" which could include the purchase of additional aircraft or strategic investments. In January, shortly after filing its stock circular Republic ordered 16 additional Embraer [ERJ] 170s (RAN, Jan. 24). Several analysts at the time suggested Republic may use the proceeds as a war chest to buy another regional airline and at the top on the list was the ailing Independence Air [FLYI]. However, that deal now seems less likely since Independence received a $19.5 million load to restructure its aircraft lease payments. When it first announced its intent to sell more stock, Republic said it expected to sell 5 million shares at $13.29 a share. With the decline of its stock price since that time, Republic has boosted the number of shares by 1 million.
  • Alpine Air Express [ALPE] will mark the first anniversary of its Hawaii mail contract by ending the service on April 24. The Provo-based cargo carrier gave the U.S. Postal Service 90 days' notice of its intent to terminate the contract. Alpine's contract for 21 routes in the Hawaiian Islands was to expire in 2007 and it has a two-year renewal option. In its recently released annual report, Alpine said that the Hawaiian contract generated $5.6 million in sales for the first six months. Alpine created a system in Hawaii geared to handle 50 tons of mail each night (CRAN, May 31, 2004). However, the company said the actual mail volume was off by "double- digit percentages" compared to the estimates the Postal Service circulated when Alpine made its bid. At one point, Alpine was flying 11 planes to service the new routes. The company said that because of the Hawaiian contract it was not able to compete for several other mainland opportunities. CEO Gene Mallette suggested that there will be new contracts to be announced, but just not now.
  • As Bombardier [BBD] continues to weigh the prospects of building a larger jetliner, it has selected Albuquerque, N.M., as the only U.S. location it will consider for the possible production facility for its CSeries, 135-passenger jet. Bombardier has stated its intent to have a cooperating government to pay about $700 million of its $2 billion development cost. New Mexico has put together an incentive package to qualify for the final site selection decision, the company said. In addition to the Canadian cities of Montreal and Toronto, a package is still being negotiated with the United Kingdom to expand an existing Bombardier plant in Belfast. The Bombardier board is slated to make a decision on the new aircraft in March.
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