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Republic loans more money to Midwest

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dave_MKE

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Joined
Aug 5, 2007
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6
Republic ups loan to Midwest, adds small aircraft to the current deal
By Lori Ranson


Republic Airways Holdings has agreed to loan a further $6 million to Midwest airlines and add 12 37-50-seat jets to flying Republic current conducts on behalf of Midwest.
Prior to the latest loan, Republic has supplied $25 million in loans to Midwest. An original $15 million loan coincided with the two companies reaching a deal for Republic to fly 12 70-seat Embraer E-170s for Midwest.
Last month the agreement was broadened to include two extended range Embraer E-190 aircraft that are scheduled to start service in August and September.
Republic detailed the latest changes to its relationship with Midwest in a filing with US regulators. The 12 smaller jets are scheduled to enter service by January 2010. The company says all the aircraft will be sourced from its existing fleet or through a third party lessor.
 
Continental CRJ's? United ERJ's? I will say that I thought it was almost a sure thing the Republic was going to furlough more in September. Now I don't think they will.
 
Learn from SkyWest. I think we have basicly been flying for break even..I guess we finaly said enough.
 
Midwest Airlines getting $12 million in financing
By Tom Daykin of the Journal Sentinel
Posted: Jun. 8, 2009 5:22 p.m.

Midwest Airlines Inc. is getting additional financing from Indianapolis-based Republic Airways Holdings Inc., another sign of Republic's increasingly important role in the fate of the financially troubled carrier.

Republic has agreed to loan Midwest an additional $6 million, according to a filing Monday with the Securities and Exchange Commission.

The Republic loan is being match by $6 million in additional financing from TPG Capital, which holds a 53% stake in Midwest. That's according to a source who saw a memo about the Republic and TPG financing.

Also, Republic's contract to fly jets for Midwest Airlines and Midwest Connect is growing, the filing says.

Republic will add 12 Embraer regional jets, with 37 seats to 50 seats apiece, to the contract. All of those jets will begin flying for Midwest by January, the filing says.

Those Republic jets will replace the 12 50-seat CRJ200 regional jets now flown for Midwest by St. George, Utah-based SkyWest Inc.
 
Maybe if they throw some 37 seaters on some of those routes, they'll finally be able to achieve a 50% load factor
 
Come to think about it, the argument back in Jan 08 for getting rid of the 328's was that they could operate the CRJ, and get more seats, for the same cost.

So, now they want to back-peddle. Imagine that.
 
deadstick said:
Come to think about it, the argument back in Jan 08 for getting rid of the 328's was that they could operate the CRJ, and get more seats, for the same cost.

So, now they want to back-peddle. Imagine that.
Click to expand...
Looks like Skyway was a good idea
 
It is not about keeping MEH afloat. It is about making sure the can get Right of First Refusal, after TPG, and DAL.
It is a big game of chess.
 
ACL65PILOT said:
It is not about keeping MEH afloat. It is about making sure the can get Right of First Refusal, after TPG, and DAL.
It is a big game of chess.
Click to expand...

I guess if you want a ops certificate with 717's on it....Oh wait, there all going away and not allot of 717's on the market. all your getting is the name.
 
Looks like Midwest's blocking of the Airtran deal was the worst thing they could've done.
 
I hope Republic buys Midwest when they fail...It'll be interesting watching Southwest move in and flatten the Rev BB.
 
flyboyzz1 said:
I hope Republic buys Midwest when they fail...It'll be interesting watching Southwest move in and flatten the Rev BB.
Click to expand...

There are much bigger things going on here. Midwest is done at any time. Since it's private, your options are to put more money in or sell/bankrupt it. For reasons I can't fully understand myself, they keep putting money in. We don't know if Republic is paying for the cert., Delta is looking for scope relief, Delta is looking to shut down Comair then Midwest so Republic can stay in the game and Delta can downsize the RJ fleet, Midwest to be the next Compass owned by Republic. The real possibilities are almost endless. There are bad things coming as a result, that much you should be sure of.
 
That's another option as well. Short term it could seem like that, but like I said, who knows what the real end game is.
 
Yeah, I would tend to agree. I think we are just trying to keep our planes working and avert furloughs. Remember, we were going to lease some 145's to some Mexican operation but our CBA prohibits this so now we have to make money with them some other way. This is just my understanding, but someone more in the know, feel free to chime in.
 
Bedford, and any CEO for that matter, really doesn't care about furloughs. Sending workers home is more of a hit on his ego than a hit on his business. The name of the game at Republic since Frontier got blindsided by the credit card company and forced into bankruptcy has been to keep the airplanes employed. If the world market was better, he would have sold any airplane that did not have a home. The true test of value for an RJ (and everything for that matter) is in what someone will pay to purchase it. Very few people want to buy RJ's. Even the 170 is a hard sell. 50 seaters with a for sale sign make nearly everyone run the other way. For a company that "owns' their RJ's, like RAH, the only real option these days is to do whatever it takes to keep your planes employed. Bedford mentioned to us that the orignal Midwest investment would break even this June. I think that the fact that MIdwest has survived this long has encouraged him to throw a little more money that way. Right now, every million he lends tends to come back to him within a few months from the contract provider. Essentially, Bedford is giving his renters their first few months rent free.

Skywest is by far the better off of the two carriers (RAH being the other). Their stradegy is proven, and continues to work. Middle of the road pricing, reliable product, and diverse client list works. RAH is still like that, but the quality of our clients has slipped. Once we started to settle for uncertain income (Midwest), we took a big step in the wrong direction. Skywest has been fortunate enough to just extract themsselves from that same situation. The difference is, RAH is going to end up owning Midwest. That is not a good thing. There is no big sneaky end game to all of this. The big players want less competition, and they are going to get it. Midwest will cease to be, and RAH will be left with the baggage in one way or another. RAH does not need another certificate. RAH does not want to do stand alone flying. RAH will never take over the world. Bedford has been thrown off his track, and he is thrashing about to get back on.
 
Minimaniac said:
Bedford, and any CEO for that matter, really doesn't care about furloughs. Sending workers home is more of a hit on his ego than a hit on his business. The name of the game at Republic since Frontier got blindsided by the credit card company and forced into bankruptcy has been to keep the airplanes employed. If the world market was better, he would have sold any airplane that did not have a home. The true test of value for an RJ (and everything for that matter) is in what someone will pay to purchase it. Very few people want to buy RJ's. Even the 170 is a hard sell. 50 seaters with a for sale sign make nearly everyone run the other way. For a company that "owns' their RJ's, like RAH, the only real option these days is to do whatever it takes to keep your planes employed. Bedford mentioned to us that the orignal Midwest investment would break even this June. I think that the fact that MIdwest has survived this long has encouraged him to throw a little more money that way. Right now, every million he lends tends to come back to him within a few months from the contract provider. Essentially, Bedford is giving his renters their first few months rent free.

Skywest is by far the better off of the two carriers (RAH being the other). Their stradegy is proven, and continues to work. Middle of the road pricing, reliable product, and diverse client list works. RAH is still like that, but the quality of our clients has slipped. Once we started to settle for uncertain income (Midwest), we took a big step in the wrong direction. Skywest has been fortunate enough to just extract themsselves from that same situation. The difference is, RAH is going to end up owning Midwest. That is not a good thing. There is no big sneaky end game to all of this. The big players want less competition, and they are going to get it. Midwest will cease to be, and RAH will be left with the baggage in one way or another. RAH does not need another certificate. RAH does not want to do stand alone flying. RAH will never take over the world. Bedford has been thrown off his track, and he is thrashing about to get back on.
Click to expand...

Makes a lot sense. Thanks for the insight.
 
Minimaniac said:
Bedford, and any CEO for that matter, really doesn't care about furloughs. Sending workers home is more of a hit on his ego than a hit on his business. The name of the game at Republic since Frontier got blindsided by the credit card company and forced into bankruptcy has been to keep the airplanes employed. If the world market was better, he would have sold any airplane that did not have a home. The true test of value for an RJ (and everything for that matter) is in what someone will pay to purchase it. Very few people want to buy RJ's. Even the 170 is a hard sell. 50 seaters with a for sale sign make nearly everyone run the other way. For a company that "owns' their RJ's, like RAH, the only real option these days is to do whatever it takes to keep your planes employed. Bedford mentioned to us that the orignal Midwest investment would break even this June. I think that the fact that MIdwest has survived this long has encouraged him to throw a little more money that way. Right now, every million he lends tends to come back to him within a few months from the contract provider. Essentially, Bedford is giving his renters their first few months rent free.

Skywest is by far the better off of the two carriers (RAH being the other). Their stradegy is proven, and continues to work. Middle of the road pricing, reliable product, and diverse client list works. RAH is still like that, but the quality of our clients has slipped. Once we started to settle for uncertain income (Midwest), we took a big step in the wrong direction. Skywest has been fortunate enough to just extract themsselves from that same situation. The difference is, RAH is going to end up owning Midwest. That is not a good thing. There is no big sneaky end game to all of this. The big players want less competition, and they are going to get it. Midwest will cease to be, and RAH will be left with the baggage in one way or another. RAH does not need another certificate. RAH does not want to do stand alone flying. RAH will never take over the world. Bedford has been thrown off his track, and he is thrashing about to get back on.
Click to expand...

You RAH pilots feel like RAH will obtain this certificate somehow. Unless my math is correct, NWA/DAL and TPG has put up $250million in financing to obtain equity in the company while you have put up a lot less ($40 or so million) in "loans". They can obviously keep paying to play and hope DAL/TPG or a bankruptcy judge throws the certificate your way in a bankruptcy sale, if and when this happens.

The whole point of this is DAL's scope and avoiding it (in my opinion). Selling that certificate to you completely shows the sham of this operation and reveals their hand, something they do not want to do. I would imagine Midwest will continue to limp by and by as they try to further erode DAL's scope. DAL doesn't view a 170/190 operation out of Milwaukee as "competition", they are "allies" after the greater goal: DAL domestic flying.
 
Or RAH could buy the Midwest name sans certificate and keep all the flying on the Republic certificate. There are no scope restrictions on the Republic certificate other than what we fly for US Airways. Bedford has always had an interest in flying bigger aircraft and running a bigger operation, but he knows the path followed by ACA/Independence and Expressjet is suicidal. Don't be surprised by some kind of sale where RAH gets the name, but does not have to take the certificate and obligations that come with it.
 
The whole point of this is DAL's scope and avoiding it (in my opinion). Selling that certificate to you completely shows the sham of this operation and reveals their hand, something they do not want to do. I would imagine Midwest will continue to limp by and by as they try to further erode DAL's scope. DAL doesn't view a 170/190 operation out of Milwaukee as "competition", they are "allies" after the greater goal: DAL domestic flying.
Click to expand...

All the DL flying is on the Shuttle America and Chautauqua certificates. The Republic certificate has Midwest and US Airways flying. US Airways places no restrictions on aircraft we fly for other companies. Their scope only applies to US Airways flying, so RAH can place any kind of flying on the Republic certificate it wants.
 
Indy319FA said:
Or RAH could buy the Midwest name sans certificate and keep all the flying on the Republic certificate. There are no scope restrictions on the Republic certificate other than what we fly for US Airways. Bedford has always had an interest in flying bigger aircraft and running a bigger operation, but he knows the path followed by ACA/Independence and Expressjet is suicidal. Don't be surprised by some kind of sale where RAH gets the name, but does not have to take the certificate and obligations that come with it.
Click to expand...

So why would DAL sell a name brand to a future competitor in a market? It makes no sense whatsoever.
 
Indy319FA said:
All the DL flying is on the Shuttle America and Chautauqua certificates. The Republic certificate has Midwest and US Airways flying. US Airways places no restrictions on aircraft we fly for other companies. Their scope only applies to US Airways flying, so RAH can place any kind of flying on the Republic certificate it wants.
Click to expand...

See my above post. Will RAH shoot their bread and butter in the foot (SA and Chilltaco) with Delta by buying and operating a competitor operation in MKE (versus heavy Delta ops in MSP/ORD/DTW)?

The answer is no. I am sure BB is fine with taking orders from mainline and not putting up with the BS of RUNNING an airline. The Midwest brand has been clobbered thanks to TH and TPG's inept management. Buying the brand gets you nothing. The Milwaukee public is already shying away from the dumbed down Midwest.

Frankly, DAL and AA's MEC should wake up to the certificate shuttle going on and hold their scope clauses to the respective holding companies their management employs. Having 3 certificates is ridiculous. If only the APA can go back to fining RAH. This is why RAH and Mesa do not have the best name in the business with respect to "upholding" the profession.
 
Last edited:
The only thing that is for certain is our 25th anniversary as an air carrier providing exceptional service from Milwaukee is tomorrow, 11th, of June 2009! Unfortunately 3/4 of us are furloughed..... So why does it really matter!
 

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