For the full year ended December 31, 2006, Republic Airways Holdings (RJET) reported operating revenues increased 26.3 percent to $1.14 billion, compared to $0.91 billion for the same period last year. The company also reported net income of $79.5 million for 2006, or $1.82 per diluted share. Net income improved 31.1 percent compared to $60.7 million, or $1.66 per diluted share, in 2005.
Highlights for last year including increasing its partnerships from four to six including USAirways (LCC), which accounts for 24 percent of revenues, Delta (DALRQ), accounting for 30 percent, Continental (CAL) which contributes 14 percent, United (UAUA), contributing 20 percent and Frontier (FRNT) which adds another four percent to revenues when it begins in March. It also serves American (AMR) which contributes nine percent. It also expects the contract it won from Delta prior to its bankruptcy to be confirmed and only said that, while it could not pinpoint a date, it had to come before Delta emerged from bankruptcy, now scheduled for the second quarter. If the agreement were not confirmed, it would mean a significant settlement, perhaps more than the hundreds of millions of dollars won in similar cases with Northwest. RJET said, in response to investor questions, rejected opportunities to get into the turboprop field, saying that others were better suited to those operations.
President and CEO Bryan Bedford said Republic increased its estimate for total transition expenses for its new partnerships from $8 million to $9 million citing the Frontier operation for the increase. Transition expenses amounted to $3.5 million in the fourth quarter and will total $3.5 million in the first quarter and $2.5 million in the second quarter. Capital expenditures for the 2007/08 period are expected to rise to $90 million. However, its cash balance at the end of 2007 is expected to rise to $275 million which will be used for growth opportunities. On December 31, the company had $195.5 million in cash and marketable securities compared to $162 million as of December 31, 2005.
The carrier predicted ASM growth will total 12.3 billion this year. It expects to take delivery of 54 aircraft this year, destined for three different partnership, said Bedford, who added its Embraer (ERJ) 170 operation accounts for 61 percent of its capacity. The airline will likely continue the split between 170 operations and the rest of its network at the 60/40 mark this year. It grew its USAirways operation from 10 to 28 aircraft last year and added nine aircraft to its Delta Connection service for a total of 16 aircraft at year end. It also has four ERJ 170s destined for its new Frontier operation in March.
Total ASMs for 2006 increased 39.6% from 2005 to 9.2 billion and block hours increased 20 percent from 2005 to over 556,000 in 2006. During the year, the company placed into service twenty-nine 70-seat regional jets. In January, it took the first four of 24 CRJs for a 175-aircraft fleet total to date. These aircraft are destined for the Continental Express partnership. Operating cost per ASM (CASM), including interest expense but excluding fuel decreased to 7.60 cents in 2006 from 8.10 cents in 2005.
For the fourth quarter, RJET reported operating revenues of $295.3 million, a 17.3 percent increase, compared to $251.8 million for the same period last year. The company also reported net income of $20.4 million, or $0.46 per diluted share, for the quarter, compared to $18.5 million of net income, or $0.43 per diluted share, for the same period last year.
Excluding reimbursement for fuel expense, passenger revenues increased 31.7 percent for the fourth quarter of 2006 primarily as a result of a 25.3 percent increase in block hours, resulting from fleet additions. During the quarter, it took delivery of one 70-seat regional jet aircraft now devoted to short-term assignments, but ultimately destined for its new partnership with Frontier Airlines. It will operate 17 76-seat Embraer 170 regional jets for Frontier. Four of the 17 aircraft, which are currently in the Republic fleet will be transitioned to Frontier in March and April. The remaining 13 aircraft will be funded by delivery positions available from Embraer.
RJET will operate 44 50-seat aircraft by August 2007 for Continental. Six aircraft entered service in January, including two of the 20 ERJ 145 aircraft that will be transitioned from USAirways.
Total operating expenses for the fourth quarter, including interest expense but excluding fuel charges of $187 million, increased approximately 30.2 percent from $143.6 million for the year-ago period. Operating cost per ASM (CASM), including interest expense but excluding fuel decreased to 7.63 cents from 7.75 cents in the prior year's fourth quarter. For the quarter, RJET reported a 32.2 percent increase in available seat miles (ASMs) to 2.45 billion ASMs, up from 1.85 billion ASMs during the same period last year.
In separate news, RJET said it will begin twice-weekly flights between Houston and Loreto, Mexico, on June 7 under is new Continental Express program. Located in the southern part of Mexico's Baja California peninsula, Loreto is a popular eco-tourism destination. The new service will use the Embraer 145XR on the weekend service which departs Thursdays and Sundays during peak travel season (summer, winter and spring). In the fall, the service will operate once a week on Saturdays.