Frontier Airlines 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 Frontier Airlines annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

Morningstar® Document Research℠
FORM 10-K
REPUBLIC AIRWAYS HOLDINGS INC - RJET
Filed: February 27, 2006 (period: February 27, 2006)
Annual report which provides a comprehensive overview of the company for the past year

Table of contents

  • Page 1
    Morningstar Document Research ® ℠FORM 10-K REPUBLIC AIRWAYS HOLDINGS INC - RJET Filed: February 27, 2006 (period: February 27, 2006) Annual report which provides a comprehensive overview of the company for the past year

  • Page 2
    ... 12(g) of the Act: Common Stock, par value $.001 per share Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes No ⌧ Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15...

  • Page 3
    ... company (as defined in Rule 12b-2 of the Act). Yes � No ⌧ The aggregate market value of Common Stock held by non-affiliates (based upon the closing sale price of the Common Stock on the NASDAQ National Market System) June 30, 2005 was approximately $470,053,000. Indicate the number of shares...

  • Page 4
    ... and Executive Officers of the Registrant Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions Principal Accountant Fees and Services Part IV Exhibits and Financial Statements Schedules...

  • Page 5
    ... In addition to historical information, this Annual Report on Form 10-K contains forward-looking statements. Republic Airways Holdings Inc. (the "Company") may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of...

  • Page 6
    ... Airways Express, AmericanConnection, Delta Connection or United Express, including service out of their hubs and focus cities in Boston, Chicago, Columbus, Fort Lauderdale, Indianapolis, New York, Orlando, Philadelphia, Pittsburgh, Washington, D.C., ( Dulles and National ) and St. Louis. Chautauqua...

  • Page 7
    ... of hub operations in St. Louis with American, in New York, Boston, Indianapolis, Philadelphia, Pittsburgh and Washington, D.C. with US Airways in Orlando, Columbus and Fort Lauderdale with Delta and in Chicago and Washington D.C. with United has been a principal factor in the growth of our flight...

  • Page 8
    Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 9
    -5- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 10
    Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 11
    -6- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 12
    ...bargaining agreements and their respective amendable dates as of December 31, 2005: Employee Group Pilots Flight Attendants Customer Service Dispatchers Approximate Number of Full-Time Equivalent Employees 1,300 775 200 60 Representing Union International Brotherhood of Teamsters Airline Division...

  • Page 13
    ... Embraer regional jets required to meet our obligations under our code-share agreements and related expansion, we anticipate hiring approximately 670 additional employees, many of whom will be represented by a union in their employment. We have never experienced any work stoppages or other job...

  • Page 14
    ... in the regional airline industry. He has responsibility for financial accounting, treasury, public reporting, investor relations, human resources, information technology, purchasing and material control. Wayne C. Heller joined Chautauqua in August 1999 as Vice President-Flight Operations with...

  • Page 15
    ... Leasing Group, including Treasurer and Chief Financial Officer. He is a certified public accountant. Mark E. Landesman has been a director since June 2002. Mr. Landesman is President of ML Management Associates, Inc., an entertainment business management firm, which he founded in 1988. The firm is...

  • Page 16
    ... 31, 2005, we were providing 250 flights per day as US Airways Express between New York, Boston, Philadelphia, Pittsburgh, Indianapolis, Washington, D.C. and designated outlying cities. We have also entered into a fixed-fee code-share agreement with US Airways to operate 28 ERJ-170 aircraft on terms...

  • Page 17
    ..."Jets for Jobs" protocol; • if our FAA operating certificate is suspended or revoked; or • in the event that we or an affiliate of ours shall have commenced the provision of flight services under the code share between US Airways and Republic Airline and such agreement is subsequently terminated...

  • Page 18
    ... on actual flight activity. The code-share agreement requires US Airways to pay our fixed costs and per aircraft per day costs for a specified period of time in the event of a grounding of the Embraer regional jets as a result of a design or manufacturing defect or a strike by our employees. If we...

  • Page 19
    ... American Code-Share Agreement As of December 31, 2005, we operated 15 ERJ-140 regional jets for American under a fixed-fee code-share agreement and provided 90 flights per day between St. Louis and designated outlying cities. American provides reservation services, tickets, baggage handling, ticket...

  • Page 20
    ...party, those terms will govern all of the aircraft covered by the code-share agreement. If we reach an agreement in principle with a third party to provide service using an aircraft other than an ERJ-140 aircraft, we are required to offer the right of first refusal to American on a one time basis to...

  • Page 21
    ..., used at that time under the code-share agreement. If American exercises their call option, we are required to pay certain maintenance costs in transferring the aircraft to American's maintenance program. If American terminates the code-share agreement without cause, we have the right to put the...

  • Page 22
    ...October, 2004, in order to accommodate American with respect to its scope restrictions, we agreed to modify our Agreement with American to preclude the continued use of larger regional jets on our Chautauqua Airlines Air Carrier Operating Certificate. Between October 2004 and September 2005, we paid...

  • Page 23
    ... aircraft. The fixed rates payable to us by Delta under the code-share agreement have been determined through the term of the code-share agreement and are subject to annual escalation. Certain costs, including fuel costs, aircraft ownership and financing costs (subject to limitation), landing fees...

  • Page 24
    ... this right within a specified amount of time, we will be permitted to enter into the arrangement with the third party, but we will be prohibited during the term of the code-share agreement with Delta from flying more than a specified number of flights per day with such repositioned aircraft into...

  • Page 25
    ... the code-share agreement. Pursuant to the agreement, Delta must give us notice if it changes the location of the hub from which we fly for them from Orlando and Fort Lauderdale to another location, except that Delta cannot change the hub location to St. Louis, Memphis, Kansas City, Nashville or...

  • Page 26
    ...to accept, we have granted to Delta a right of first refusal to acquire the aircraft which we desire to dispose of on the same terms as those offered to us by the third party. At any time that we enter into an agreement in principle with a third party for a code-share (or similar) relationship using...

  • Page 27
    ... per day as United Express between Chicago, Washington D.C. and designated outlying cities. United provides reservation, check-in, ground-support and other passenger services and also controls seat inventories. Under the code-share agreements, United retains all air fares, cargo rates, mail charges...

  • Page 28
    • Our operating certificate is revoked or suspended by the FAA, for safety issues or concerns, for a period of four consecutive months. -15- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 29
    ...airline code-share partners remain financially strained by low ticket prices or high fuel prices, they will likely seek to reduce our fixed-fees or cancel a number of flights in order to reduce their costs. Government Regulation All interstate air carriers are subject to regulation by the Department...

  • Page 30
    ...Boston, Washington, D.C., Chicago, Los Angeles, San Diego, Orange County (California) and San Francisco, have established airport restrictions to limit noise, including restrictions on aircraft types to be used and limits on the number of hourly or daily operations or the time of such operations. In...

  • Page 31
    ... of the closing prices of our common stock for the 30 days prior to such aircraft being placed into service. Our code-share agreement with Delta will be terminated if Delta does not emerge from bankruptcy. Delta is attempting to reorganize its business under Chapter 11 of the bankruptcy code. Under...

  • Page 32
    under Chapter 7 of the bankruptcy code, then our code-share agreements will be terminated. If the agreements are terminated, we must still accept for delivery the aircraft which had not been delivered but that we would have flown for that airline. Although we are entitled to recoup certain expenses ...

  • Page 33
    ...adverse effect on our financial condition, results of operations and the price of our common stock. Under the terms of our jet code-share agreement with US Airways, if we are unable to provide scheduled flights as a result of a strike by our employees, it is only required to pay us for certain fixed...

  • Page 34
    ... Our code-share partners have the right to terminate their code-share agreements if we fail to meet these completion levels. Delta's pilots have threatened to strike if Delta is successful in rejecting the pilots' labor agreement. Such a strike would most likely cause Delta to suspend operations for...

  • Page 35
    ... code-share flying, we are prohibited from operating 50 seat or larger regional jets or turboprops from United's current hub airports. United's hub airports are Denver, Washington Dulles, Los Angeles, Chicago O'Hare, Seattle and San Francisco. Our code-share partners may be restricted in increasing...

  • Page 36
    ... assure you that these "scope" clauses will not become more restrictive in the future. Any additional limit on the number of regional jets we can fly for our code-share partners could have a material adverse effect on our expansion plans and the price of our common stock. -19- Source: REPUBLIC...

  • Page 37
    ... timely service our debt, the size of our long-term debt and lease obligations could negatively affect our financial condition, results of operations and the price of our common stock in many ways, including: • increasing the cost, or limiting the availability of, additional financing for working...

  • Page 38
    Any disruption or change in the delivery schedule of these Embraer regional jets would affect our overall operations and our ability to fulfill our obligations under our code-share agreements. Further, ERJ-170 aircraft began operating in the commercial airline market in February 2004. As a new ...

  • Page 39
    ... and dispatchers. Our customer service agents, pilots, dispatchers and flight attendant agreements are amendable in December 2005, October 2007, February 2007 and September 2009, respectively. We cannot assure you that future agreements with our employees' unions will be on terms in line with...

  • Page 40
    Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 41
    ...other airline companies that directly compete with us; • sales or distributions by the selling stockholder, WexAir LLC, of all or any portion of its ownership interest in us; and • two of our directors also are directors, managing members or general partners of Wexford Capital and its affiliates...

  • Page 42
    ... International Airport, which results in significant price competition in the Indianapolis market, one of our major markets. Competition in the eastern United States markets, which we service from US Airways' hubs in New York, Boston, Philadelphia and Washington, D.C. and from Delta's hub in Orlando...

  • Page 43
    ... recent developments include the domestic code-share alliance between United and US Airways, a similar new relationship among Delta, Continental and Northwest and the merger of America West and US Airways. We, as well as our code-share partners, routinely monitor changes in the competitive landscape...

  • Page 44
    ... code-share agreements and severely interrupt our business operations. Additional laws, regulations, taxes and airport rates and charges have been proposed from time to time that could significantly increase the cost of airline operations or reduce revenues. For instance, "passenger bill of rights...

  • Page 45
    ... our code-share partners, competitors, the airline industry or the economy in general; • strategic actions by us, our code-share partners or our competitors, such as acquisitions or restructurings; • media reports and publications about the safety of our aircraft or the aircraft types we operate...

  • Page 46
    ... to the Securities and Exchange Commission. The code of ethics, adopted by our Board of Directors, which applies to all our employees, can also be found on our website, rjet.com/Investment.asp. Our audit committee charter is also available on our website. -26- Source: REPUBLIC AIRWAYS HOLDINGS INC...

  • Page 47
    ITEM 1B. UNRESOLVED STAFF COMMENTS Not Applicable ITEM 2. PROPERTIES Flight Equipment As of December 31, 2005, we operated 142 Embraer regional jets as described in the following table: Type Total Aircraft Owned Leased Average Age (in years) 2.5 3.8 3.8 0.6 Firm Orders Option Aircraft Seats ...

  • Page 48
    ...aircraft handling in St. Louis for all AmericanConnection and American Eagle regional jet operations in that hub until March 5, 2006, when we will no longer provide these services and American is responsible. We also provide all US Airways Express airport gate and ground handling at the Indianapolis...

  • Page 49
    ITEM 3. LEGAL PROCEEDINGS We and an affiliate of Wexford Capital, among others including US Airways and the Airline Pilots Association, have been named as defendants in a lawsuit filed in October 2005 by certain US Airways pilots. The lawsuit was filed on October 7, 2005 in the United States ...

  • Page 50
    ... of our board of directors and will depend upon our future earnings, our capital requirements, bank financing, financial condition and other relevant factors. Chautauqua's credit facility with Bank of America Business Capital does not limit its ability to pay dividends to Republic Airways Holdings...

  • Page 51
    ... included in Item 8 of the Form 10-K. 2005 Statement of Operations Data: Total operating revenues Operating expenses: Wages and benefits Aircraft fuel(12) Passenger fees and commissions Years Ended December 31, 2004 2003 2002 (in thousands, except share, per share and airline operating data) $ 646...

  • Page 52
    Revenue passenger miles(4) Available seat miles(5) Passenger load factor(6) Revenue per available seat mile(7) Cost per available seat mile(8) EBITDA(9) Average passenger trip length(miles) Number of aircraft in service (end of period): Embraer Regional Jets: Owned Leased Saab Turboprops(10): Owned ...

  • Page 53
    ... board of directors declared a 200,000:1 stock split. All per share amounts, number of shares and options outstanding in the consolidated financial statements have been adjusted for the stock split. (4) Revenue passengers multiplied by miles flown. (5) Passenger seats available multiplied by miles...

  • Page 54
    ...Debt issue and other amortization Warrant amortization (Gain) loss on aircraft and other equipment disposals Impairment (gain) loss and accrued aircraft return costs Amortization of deferred credits Unrealized loss on fuel swaps Stock compensation expense Current income tax (expense) benefit Changes...

  • Page 55
    ...US Airways Express, AmericanConnection, Delta Connection or United Express, including service out of their hubs and focus cities in Boston, Chicago, Columbus, Fort Lauderdale, Indianapolis, New York, Orlando, Philadelphia, Pittsburgh, Washington, D.C. ( Dulles and National) and St. Louis. Chautauqua...

  • Page 56
    ...36% of our passenger revenues, American accounted for approximately 13% and 16% of our passenger revenues and United accounted for approximately 32% and 10% of our passenger revenues. We have a long operating history as a regional airline, having operated as a code-share partner of US Airways or its...

  • Page 57
    ... the Delta bankruptcy proceedings. Termination of any of our regional jet code-share agreements could have a material adverse effect on our financial position, results of operations and cash flows. Fleet Transition and Growth The following table sets forth the number and type of aircraft in service...

  • Page 58
    ... fuel prices, fare competition and passenger volumes. As of December 31, 2005, we operated 138 Embraer regional jets for four code-share partners under fixed-fee agreements. Revenue Under our fixed-fee arrangements with American, Delta, US Airways and United for regional jets, we receive a fixed-fee...

  • Page 59
    ...and changes in wage rates for contract and non-contract employees. Aircraft Fuel Fuel expense includes the cost of aircraft fuel, including fuel taxes and into-plane fees. Passenger Fees and Commissions This expense includes the costs of travel agent commissions, computer reservation system fees and...

  • Page 60
    ... training, crew travel, airport, passenger and ground handling related expenses, all other lease expense, professional fees and all other administrative, facilities and operational overhead expenses not included in other line items above. Deferred Warrant Charge Pursuant to our code-share agreements...

  • Page 61
    ... 2005, we reversed a $4.2 million reserve after an agreement to return all the Saab turboprop aircraft to lessors was executed and all liabilities were settled. (2) Beginning in May 2005, we do not record fuel expense and the related revenue for US Airways operations because US Airways pays for fuel...

  • Page 62
    ... passenger miles (1) Available seat miles (2) Passenger load factor (3) Cost per available seat mile (4) Average price per gallon of fuel (5) Fuel gallons consumed(6) Block hours (7) Average length of aircraft flight (miles) Average daily utilization of each aircraft (hours) (8) Aircraft in service...

  • Page 63
    ... 2004 due to a 23% increase in full time equivalent employees to support the increased 70-seat regional jet operations combined with normal wage increases. The cost per available seat mile decreased to 2.2¢ for 2005 compared to 2.4¢ in 2004. Aircraft fuel expense increased 60.1%, or $104.7 million...

  • Page 64
    ... of charges paid to American Airlines for having 70-seat aircraft on the Chautauqua operating certificate in 2005 and higher pilot training, crew-related and administrative expenses to support the growing 70-seat regional jet operations. The unit cost decreased to 0.9¢ in 2005 compared to 1.0¢ in...

  • Page 65
    ... for 2003 due to a 24.5% increase in full time equivalent employees to support the increased regional jet operations and an increase in the costs of providing employee benefits. The cost per available seat mile remained unchanged at 2.4¢. Aircraft fuel expense increased 63.1%, or $67.4 million, to...

  • Page 66
    ... in 2003, due to an increase in bad debt reserves (primarily attributable to obligations owed to us by US Airways), increased pilot training costs, and higher crew-related and administrative expenses to support the growing regional jet operations. The unit cost increased to 1.0¢ in 2004 compared to...

  • Page 67
    ... code-share agreements with US Airways and Delta., which require us to significantly increase our fleet of regional jets, we will significantly increase our cash requirements for debt service and lease payments. As of December 31, 2005, we had $162.0 million in cash and $14.9 million available under...

  • Page 68
    ... $68.6 million. Total minimum annual other rental payments for the next 12 months are approximately $7.3 million. Under the US Airways Aircraft Agreement, we will assume the leases of 15 ERJ-170 aircraft, which will be operated by Republic Airline. The transfer is expected to be completed by...

  • Page 69
    ... no assurance we will be able to do so. As of December 31, 2005, our code-share agreements required that we acquire from the aircraft manufacturer (subject to financing commitments) and place into service an additional seven regional jets over the next 9 months. Embraer's current list price of these...

  • Page 70
    .... We did not record a liability for this penalty provision because we did not believe the contract would be terminated prior to the expiration date. Total payments under these long-term maintenance agreements were $29.4 million, $40.0 and $53.6 million for the years ended December 31, 2003, 2004...

  • Page 71
    ... Revenue Code Section 382 ("IRC 382"). The annual limitation is based upon the enterprise value of the Company on the IRC 382 ownership change date multiplied by the applicable long-term tax exempt rate. If the utilization of pre July 2005 NOLs becomes uncertain in future years, we will be required...

  • Page 72
    ... Segments. The Company's only reportable segment is scheduled transportation of passengers and air freight under code-share agreements. In addition, the Company has charter service, aircraft leasing and commuter slot licensing fee revenues. These activities aggregated represent less than 10...

  • Page 73
    ...Accounting for Stock Issued to Employees, was rescinded. This statement requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based upon the grant date fair value...

  • Page 74
    ...-party leases or long-term borrowings. Changes in interest rates may impact the actual cost to us to acquire these aircraft. To the extent we place these aircraft in service under our code-share agreements with American, US Airways, Delta and United, our reimbursement rates will be adjusted higher...

  • Page 75
    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2005 and 2004 Consolidated Statements of ...

  • Page 76
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 77
    ...Shuttle America Corporation on May 6, 2005, which was accounted for in a manner similar to a pooling of interests, and substantially all revenues are derived from code-share agreements with US Airways, Inc., Delta Air Lines, Inc., AMR Corp., the parent of American Airlines, Inc. and United Air Lines...

  • Page 78
    ... rate hedge Accrued liabilities Total current liabilities Long-term debt-less current portion Deferred credits and other non current liabilities Deferred income taxes Total liabilities Commitments and contingencies Stockholders' Equity: Preferred stock, $.001 par value; 5,000,000 shares authorized...

  • Page 79
    See accompanying notes to consolidated financial statements. -48- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 80
    REPUBLIC AIRWAYS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2005, 2004, AND 2003 (In thousands, except per share amounts) 2005 OPERATING REVENUES: Passenger Contract termination fee Other Total operating revenues OPERATING EXPENSES: Wages and ...

  • Page 81
    -49- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 82
    ... 31, 2004 Stock compensation expense Common stock offerings net Exercise of employee stock options Capital contribution Distribution to WexAir LLC for Shuttle America merger Net income $ Unrealized losses on derivative instruments, net of tax Comprehensive income $ Balance at December 31, 2005 20...

  • Page 83
    ... disposals Impairment loss and accrued aircraft return costs Amortization of deferred credits Stock compensation expense Deferred income taxes Changes in certain assets and liabilities: Receivables Inventories Prepaid expenses and other current assets Accounts payable Accrued and other liabilities...

  • Page 84
    Net changes in cash and cash equivalents CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR $ 115,785 46,220 162,005 $ 23,685 22,535 46,220 $ 15,851 6,684 22,535 See accompanying notes to consolidated financial statements. -51- Source: REPUBLIC AIRWAYS ...

  • Page 85
    ... service from Delta's hub and focus airports in Orlando, Cincinnati and Fort Lauderdale. Under the code-share agreement with United, the Company offers passengers and air freight service from United's hub airports in Chicago and Washington D.C, (Dulles and National). In August 2005, Republic Airline...

  • Page 86
    ... Company a contract termination fee of $6,000 as the aircraft were taken out of service. The Company amended the Delta code-share agreement on February 7, 2003 to utilize these 12 aircraft. The Company's previous pro-rate code-share agreement with US Airways was terminated in October 2004. The code...

  • Page 87
    ... code-share partners. Termination of the US Airways, American, Delta or United regional code-share agreements could have a material adverse effect on the Company's financial position, results of operations and cash flows. On September 12, 2004, US Airways filed a petition for Chapter 11 bankruptcy...

  • Page 88
    ...the purchase of regional jet aircraft on firm order with the manufacturer, the Company entered into fourteen treasury lock agreements with notional amounts totaling $373,500 and a weighted average interest rate of 4.47% with expiration dates through June 2005. Management designated the treasury lock...

  • Page 89
    ... any, is measured based on estimated fair value or projected future cash flows using a discount rate reflecting the Company's average cost of funds. Deferred Credits consist of credits for parts and training from the aircraft and engine manufacturers and deferred gains from the sale and leaseback of...

  • Page 90
    ... and repair costs are subject to power-by-the-hour contracts with external vendors and are accrued as the aircraft are flown. Use of Estimates-The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to...

  • Page 91
    ... fair value on the measurement date as reductions to deferred warrant charges and stockholders' equity. The deferred charges for warrants are amortized as a reduction of passenger revenue over the terms of the code-share agreements. Stock Compensation-The Company applies Accounting Principles Board...

  • Page 92
    ... available for common stockholder per share. Segment Information-The Company has one reportable operating segment for the scheduled transportation of passengers and air freight under code-share agreements. The Company's charter service and aircraft leasing revenues are immaterial. New Accounting...

  • Page 93
    ... (see Note 11) Debt issue costs, net Commuter slots Other $ $ $ $ As part of the US Airways global aircraft transaction agreement, the Company purchased commuter slots at Ronald Reagan Washington National Airport and New York LaGuardia Airport. The New York LaGuardia Airport commuter slots are...

  • Page 94
    ... respectively. Fees are payable at 0.375% on the unused revolver amount. The credit facility expires on March 31, 2006 and is collateralized by all of Chautauqua's assets, excluding the owned aircraft and engines. The Company is currently negotiating to extend or replace this facility. Term loans...

  • Page 95
    ... year ended December 31, 2005, the Company acquired 34 aircraft through debt financing totaling $616,010. The debt was obtained from a bank and the aircraft manufacturer for fifteen year terms at interest rates ranging from 4.01% to 7.08%. -57- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February...

  • Page 96
    ... has long-term maintenance agreements with an avionics equipment manufacturer and maintenance provider that has a guaranteed minimum annual flight hour requirement. The minimum guaranteed amount based on the Company's current operations is $4,384 per year through January 2012. The Company did not...

  • Page 97
    ...,190 As of December 31, 2005, the Company's Delta and United code-share agreements require that the Company acquire and place in service an additional seven ERJ-170 regional jets and the Company has firm orders for 11 regional jets. The current list price of these 11 regional jets is $309,307. The...

  • Page 98
    ... at Chautauqua Airlines in violation of the scope restrictions of the code-share agreement. These payments terminated in September 2005 when the ERJ-170s were no longer operated by Chautauqua. As of December 31, 2005, approximately 76% of the Company's workforce is employed under union contracts. On...

  • Page 99
    ... Company's 75,000,000 authorized shares were reserved for issuances under the 2002 Equity Incentive Plan and warrants. At December 31, 2005, the number of securities remaining available for future issuance under equity compensation plans was 1,468,600 shares. -61- Source: REPUBLIC AIRWAYS HOLDINGS...

  • Page 100
    ...employees, Republic granted options to purchase shares of Republic's common stock. The stock options vest ratably over the term of the employment agreements (generally 48 months) and are exercisable for five years following the vesting dates. Generally, stock options are granted with exercise prices...

  • Page 101
    ... with the Delta code-share agreement, the Company has issued warrants to purchase shares of its common stock related to the code-share agreement. The warrants, net of amounts surrendered in December 2004, are fully vested and exercisable as follows: Number of Shares Exercise Price Exercise Period...

  • Page 102
    ... applicable federal statutory income tax rate to the tax provision as reported for the years ended December 31 are as follows: 2005...reserves Nondeductible accruals Treasury locks Stock option benefit Alternative minimum tax credit Net operating loss carryforward Prepaid rent Deferred credits and sale...

  • Page 103
    ... tax purposes Total noncurrent deferred tax liability Total deferred tax liability -64- (282,945) (89,671) $ (86,015) $ (213,864) (56,956) (50,528) Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 104
    ... AND ACCRUED AIRCRAFT RETURN COSTS In connection with the Company's plan to fly only regional jets under fixed fee code-share agreements and market conditions for turboprop aircraft in the air transportation industry, impairment losses of $2,931 in 2003 were recorded to reduce the carrying values of...

  • Page 105
    -65- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 106
    ... that material information relating to us is made known to the Chief Executive Officer and Chief Financial Officer by others within the Company during the period in which this report was being prepared. Management's Annual Report on Internal Control Over Financial Reporting Management is responsible...

  • Page 107
    ...with the participation of the Company's principal executive officer and principal financial officer, the Company's management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2005 using the criteria issued by the Committee of Sponsoring...

  • Page 108
    ... of the Company's common stock, to file initial reports of ownership and reports of changes in ownership with the SEC and the National Association of Securities Dealers, Inc. Executive officers, directors, and greater than ten percent beneficial owners are required by SEC regulations to furnish...

  • Page 109
    The information set forth under "Audit Matters" in the Company's definitive proxy statement to be used in connection with the 2006 Annual Meeting of Stockholders is incorporated herein by reference. -67- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® ...

  • Page 110
    ... Republic Airways Holdings Inc. 2002 Equity Incentive Plan, by and between Republic Airways Holdings Inc. and Wayne C. Heller, dated as of December 27, 2004.(v) Amended and Restated Regional Jet Air Services Agreement, dated as of June 12, 2002, by and between AMR Corporation and Chautauqua Airlines...

  • Page 111
    ... 2002.(i) Amended and Restated Chautauqua Jet Service Agreement between US Airways, Inc. and Chautauqua Airlines, Inc. dated April 26, 2005. (xiii) Agreement between Chautauqua Airlines, Inc. and Teamsters Airline Division Local 747 representing the Pilots of Chautauqua Airlines, dated as of October...

  • Page 112
    ... Agreement between Chautauqua Airlines, Inc. and the Passenger and Fleet Service Employees in the service of Chautauqua Airlines, Inc. as represented by the International Brotherhood of Teamsters, dated as of December 15, 1999.(i) Agreement among Republic Airways Holdings Inc., Chautauqua Airlines...

  • Page 113
    ... among Republic Airways Holdings Inc., Imprimis Investors, LLC, Wexford Spectrum Fund I, L.P., Wexford Offshore Spectrum Fund, Wexford Partners Investment Co. LLC, WexAir LLC, and Delta Air Lines, Inc.(i) Loan and Security Agreement, by and between Fleet Capital Corporation and Chautauqua Airlines...

  • Page 114
    ...and between Republic Airways Holdings Inc. and Delta Air Lines, Inc.(i) Amendment No. 1 to Agreement between Republic Airways Holdings Inc. and Delta Air Lines, Inc., dated October 1, 2003.(i) Warrant to purchase shares of common stock of Republic Airways Holdings Inc. issued to Delta Air Lines, Inc...

  • Page 115
    ... of Republic Airways Holdings Inc. issued to Delta Air Lines, Inc.(i) Form of warrant to purchase shares of common stock of Republic Airways Holdings Inc. issued to Delta Air Lines, Inc.(i) Delta Connection Agreement, dated as of June 7, 2002, by and among Delta Air Lines, Inc., Chautauqua Airlines...

  • Page 116
    ... Delta Connection Agreement by and among Delta Air Lines, Inc., Chautauqua Airlines, Inc. and Republic Airways Holdings Inc., dated as of August 12, 2004.(iii) Amendment Number Five to Delta Connection Agreement, as amended, among Delta Air Lines, Inc., Chautauqua Airlines, Inc. and Republic Airways...

  • Page 117
    ... de Aeronautica S.A. and Republic Airline, Inc., dated October 18, 2005. Amendment No. 14 to Purchase Agreement DCT-014/2004, by and between Embraer-Empresa Brasileira de Aeronautica S.A. and Republic Airline, Inc., dated November 9, 2005. -71- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February...

  • Page 118
    ... between Chautauqua Airlines, Inc. and the Indianapolis Airport Authority, dated as of December 17, 2004.(viii) Delta Connection Agreement, dated as of January 13, 2005, by and among Delta Air Lines, Inc., Republic Airline Inc. and Republic Airways Holdings Inc.(vi) Stock Purchase Agreement, dated...

  • Page 119
    Airways, Inc., dated as of September 21, 2005.(xv) -72- Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 120
    ... Slot Option Agreement, by and between Republic Airways Holdings Inc. and US Airways, Inc., dated as of September 22, 2005.(xv) 21.1 Subsidiaries of Republic Airways Holdings Inc.(i) 23.1 Consent of Deloitte & Touche LLP. 31.1 Certification by Bryan K. Bedford pursuant to Exchange Act Rules 13a-14...

  • Page 121
    ... this report to be signed on its behalf by the undersigned, thereunto duly authorized. REPUBLIC AIRWAYS HOLDINGS INC. (Registrant) Dated: February 27, 2006 By: /s/ Bryan K. Bedford Bryan K. Bedford Chairman of the Board, Chief Executive Officer and President (principal executive officer) -74...

  • Page 122
    ... /s/ Bryan K. Bedford Bryan K. Bedford Title Date Chairman of the Board, Chief Executive Officer and President (Principal Executive Officer) February 27, 2006 /s/ Robert H. Cooper Robert H. Cooper Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer...

  • Page 123
    Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 124
    ...successor by merger with Fleet Capital Corporation), a national banking association (the "Lender"); and CHAUTAUQUA AIRLINES, INC. , an Indiana corporation (successor by merger with Chautauqua Airlines, Inc., a New York corporation) (the "Borrower"), to the Loan and Security Agreement, dated December...

  • Page 125
    ... Expenses. The Borrower shall reimburse the Lender for all reasonable legal fees and expenses incurred by the Lender in connection with the preparation, negotiation, execution and delivery of this Amendment and all other agreements and documents or contemplated hereby. 4.5. Headings. The headings in...

  • Page 126
    ... LENDER EACH WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AMENDMENT, THE LOAN AGREEMENT OR THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO. Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February...

  • Page 127
    .... BORROWER: CHAUTAUQUA AIRLINES, INC By:/s/ Robert H. Cooper Title:Executive Vice President & Chief Financial Officer LENDER: BANK OF AMERICA, N.A. (successor by assignment to Fleet Capital Corporation) By: /s/ Robert J. Walker Title: Senior Vice President Source: REPUBLIC AIRWAYS HOLDINGS INC...

  • Page 128
    ... No. 12 sets forth additional agreements between Embraer and Buyer relative to Aircraft Basic Price increase due to inclusion of the new thermal/acoustic insulation materials and changes [*]. Except as otherwise provided for herein all terms of the Purchase Agreement shall remain in full force and...

  • Page 129
    ... to pay Embraer, subject to the terms and conditions of this Agreement, in United States dollars, the following amount per unit Basic Prices: Aircraft [*] [*] [*] Aircraft Basic Price [*] [*] [*] Economic Condition [*] [*] [*] 1.3 Notwithstanding the above, Aircraft [*] were [*]. In order to...

  • Page 130
    _____ * Confidential Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 131
    CONFIDENTIAL 3. Miscellaneous: All other provisions of the Agreement which have not been specifically amended or modified by this Amendment No. 12 shall remain valid in full force and effect without any change. Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar®...

  • Page 132
    ... /s/ Fernando Bueno Name: /s/ Fernando Bueno REPUBLIC AIRLINE INC. /s/ Lars-Erik Arnell Name: Lars-Erik Arnell Title: Vice President Date: October 7, 2005 Place: Indianapolis, IN, USA Witness: /s/ Jeffrey B. Jones Name: Jeffrey B. Jones Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006...

  • Page 133
    ... sets forth additional agreements between Embraer and Buyer relative to the confirmation of 5 Conditional Aircraft to 5 Firm Aircraft and changes on the Firm and Conditional Aircraft delivery schedules. Except as otherwise provided for herein all terms of the Purchase Agreement shall remain in full...

  • Page 134
    ... 22, the delivery schedule table and the first paragraph of Article 22.1 of the Purchase Agreement shall be deleted and replaced by the following: "Subject to confirmation by Buyer as described below, Buyer shall have the right to purchase up to sixteen (16) additional Aircraft (the "Conditional...

  • Page 135
    ...Oct 2006 Conditional A/C 9 10 11 12 13 14 15 16 Delivery Month Mar 2007 22.1 Buyer's right to purchase [*] shall be subject to Buyer giving notice to Embraer of its election to purchase [*] on or before [*]. Buyer shall be allowed to confirm the acquisition of all or part [*]." 4.2. The second...

  • Page 136
    ...: Horacio Aragones Forjaz Title: Executive Vice President Corporate Communication REPUBLIC AIRLINE INC. /s/ Bryan Bedford Name: Bryan Bedford Title: President /s/ Jose Luis D. Molina Name: Jose Luis D. Molina Title: Director of Contracts - Airline Market Date: October 20, 2005 Place: San Jose Dos...

  • Page 137
    ... sets forth additional agreements between Embraer and Buyer relative to the confirmation of 4 Conditional Aircraft to 4 Firm Aircraft and changes on the Firm and Conditional Aircraft delivery schedules. Except as otherwise provided for herein all terms of the Purchase Agreement shall remain in full...

  • Page 138
    ... 22, the delivery schedule table and the first paragraph of Article 22.1 of the Purchase Agreement shall be deleted and replaced by the following: "Subject to confirmation by Buyer as described below, Buyer shall have the right to purchase up to twelve (12) additional Aircraft (the "Conditional...

  • Page 139
    ... Month Oct 2006 Conditional A/C 7 8 9 10 11 12 Delivery Month Feb 2007 22.1 Buyer's right to purchase [*]shall be subject to Buyer giving notice to Embraer of its election to purchase [*] on or before [*]. Buyer shall be allowed to confirm the acquisition of all or part [*]." 3.2. The second...

  • Page 140
    ...of the date first written above. EMBRAER - Empresa Brasileira de Aeronáutica S.A. /s/ Illegible Name: Title: /s/ Name: Title: Date: Place: Witness: Name: REPUBLIC AIRLINE INC. /s/ Bryan Bedford Name: Bryan Bedford Title: President Date: November 9, 2005 Place: Indianapolis, IN /s/ Fernando Bueno...

  • Page 141
    ... Embraer to Buyer for such [*] credit(s). Such [*] credit(s) shall be applied [*]." 2. Aircraft 2.1 [*] 3. [*] 3.1 [*] 3.2 [*] 4. Schedule 5 4.1 Schedule 5 to the Letter Agreement is amended to [*] 4.2 Schedule 5 to the Letter Agreement is amended to [*] and to [*] Source: REPUBLIC AIRWAYS HOLDINGS...

  • Page 142
    ...), the term [*] shall mean [*] 6. [*] [*]. 7. Miscellaneous All other provisions of the Letter Agreement which have not been specifically amended or modified by this Amendment No. 6 shall remain valid in full force and effect without any change. _____ *Confidential Source: REPUBLIC AIRWAYS HOLDINGS...

  • Page 143
    ...: Executive Vice President Corporate Communication /s/ Jose Luis D. Molina Name: Jose Luis D. Molina Title: Director of Contracts - Airline Market Date: October 18, 2005 Place: San Jose Dos Campos, S.P. Witness: /s/ Fernando Bueno Name: Fernando Bueno REPUBLIC AIRLINE INC. /s/ Bryan Bedford Name...

  • Page 144
    Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 145
    ... credit shall be made available at such time thereafter [*]. Any portion of such credit which remains unused [*] shall be deemed to have been waived by Buyer, and no further compensation shall be due from Embraer to Buyer for such [*] credit(s). Such [*] credit(s) shall be applied [*]." 2. Aircraft...

  • Page 146
    ... first written above. EMBRAER - Empresa Brasileira de Aeronáutica S.A. /s/ Illegible Name: Title: REPUBLIC AIRLINE INC. /s/ Bryan Bedford Name: Bryan Bedford Title: President Date: Place: Witness: /s/ Fernando Bueno Name: Fernanco Bueno Date: November 9, 2005 Place: Indianapolis Witness: /s/ Lars...

  • Page 147
    ...code-share agreements with US Airways, Inc., Delta Air Lines, Inc., AMR Corp., the parent of American Airlines, Inc. and United Air Lines, Inc.) appearing in this Annual Report on Form 10-K of Republic Airways Holdings Inc. for the year ended December 31, 2005. /s/ DELOITTE & TOUCHE LLP Indianapolis...

  • Page 148
    ... report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. REPUBLIC AIRWAYS HOLDINGS INC. Date: February 27, 2006 By: /s/ Bryan K. Bedford Name: Bryan...

  • Page 149
    Title: President, Chief Executive Officer and Chairman of the Board Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 150
    ... Robert H. Cooper, the Chief Financial Officer of Republic Airways Holdings Inc., certify that: 1. I have reviewed this annual report on Form 10-K of Republic Airways Holdings Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state...

  • Page 151
    Name: Robert H. Cooper Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„

  • Page 152
    ... with the Annual Report of Republic Airways Holdings Inc. (the "Company") on Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bryan K. Bedford, President, Chief Executive Officer and Chairman of the Board of the...

  • Page 153
    ... with the Annual Report of Republic Airways Holdings, Inc. (the "Company") on Form 10-K for the year ended December 31, 2005, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert H. Cooper, Executive Vice President, Chief Financial Officer, Treasurer and...

  • Page 154
    _____ Created by Morningstar® Document Researchâ„ http://documentresearch.morningstar.com Source: REPUBLIC AIRWAYS HOLDINGS INC, 10-K, February 27, 2006 Powered by Morningstar® Document Researchâ„