Biggest CSeries customer files for Ch. 11

Republic cites pilot shortage’s effect on revenue

Bombardier Inc.’ s biggest CSeries customer has filed for bankruptcy protection in New York, citing a nationwide pilot shortage that has weighed on revenue.

Republic Airways Holdings Inc. said Thursday that it has filed for Chapter 11, which will protect it from creditors while it attempts to restructure its business. The airline operates regional flights for partner brands including Delta Air Lines Inc., United Continental Holdings Inc. and American Airlines Group Inc.

“We worked hard to avoid this step,” CEO Bryan Bedford said in a statement.

“Over the last several months, we’ve attempted to restructure the obligations on our out-of-favour aircraft — made so by a nationwide pilot shortage — and to increase our revenues. It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise.”

In 2010, Republic placed a firm order for 40 of Bombardier’s CS300 aircraft with options for 40 more, making it the CSeries’ largest firm order to date and its only firm order in North America. (Air Canada signed a letter of intent for up to 75 CS300s last week, but that order needs to meet various closing conditions before it can be firmed up.)

However, the likelihood of the Republic order ever being filled was considered small even before the bankruptcy filing. The aircraft were intended for a Republic subsidiary called Frontier Airlines, but that carrier was sold to a private- equity firm in 2013.

Bedford told Bloomberg News in 2014 that “there is no place to operate the CSeries” in Republic’s core business, and it was looking into whether it could sell its order slots.

Bombardiers pokeswoman Maria nell adela Barrera said the company is monitoring Republic’s situation closely but for now it’s “business as usual.”

“This is not unusual for us, we’ve worked with airlines that have gone through bankruptcy protection in the past,” she said.

“There have been cases where we’ve seen airlines emerge stronger and we have no reason to suspect that won’t be the case here.”

Republic resolved an eight- year labour dispute with its pilots in October. It was assumed that the new pilot contract would help Republic avoid bankruptcy court, but the airline company said Thursday it hasn’t been able to bounce back from the resulting labour shortage.

“Our filing today is a result of our loss of revenue during the past several quarters associated with grounding aircraft due to a lack of pilot resources,” Bedford said.