Republic Airways priced shares in its initial public offering at $13, below the $14-16 range it had earlier hoped to get in the five-million share flotation, but still managed to raise $65 million.
The company, an Indianapolis-based holding controlled by the privately held Wexford investors group, operates regionals Chautauqua Airlines and Republic. Chautauqua offers 525 flights daily to 64 cities, all operated under fee-per-departure contracts as a US Airways Express, American or Delta Connection feeder.
Republic plans to begin service under a recent feeder agreement with United Airlines. The company claims that it is among the lowest cost producers of 37- to 50-seat regional jet service in part because it operates only the Embraer ERJ-135/145 family of aircraft. It takes the first of 16 Embraer 170s in late July.
The holding company is profitable and posted $421 million in revenues last year, up by a third. Republic is the first airline to go public since Pinnacle's offering took that Memphis-based Northwest Airlink feeder public last year. Pinnacle shares have remained in the $14 range. JP Morgan analyst Jamie Baker says that all code-sharing regionals will come under pressure to accept lower fee-per-departure rates as the majors seek more cost cuts.
Source: Airline Business
