Republic Airways Holdings (RAH) says it has reached a deal with American Airlines (AA, Dallas/Fort Worth) to amend their existing Capacity Purchase Agreement (CPA) as part of the former's Chapter 11 bankruptcy proceedings. In exchange for the amendment and settlement of American's asserted claims, RAH says AA will receive an unsecured pre-petition claim of USD250 million.
“American’s participation in our restructuring program is paramount to our ability to implement our strategy of consolidating our air carrier operating certificates," Bryan Bedford, Chairman, President and CEO of Republic, said. "American is a long-standing strategic partner of Republic and our relationship extends back to our initial capacity purchase agreement for regional jet operations at US Airways (Phoenix Sky Harbor).”
In terms of changes to the original CPA, Republic said in an SEC filing that certain aircraft types have been removed under the updated agreement while terms for other retained types have been extended. This, RAH said, will allow it "to favorably restructure the remaining aircraft financing obligations, and allowing for the potential restoration of service of a certain number of aircraft, subject to Republic’s ability to secure suitable financing of the aircraft."
The CPA will also provide for the reconfiguring of 80-seat aircraft to 76-seats thus facilitating RAH's transition to a single AOC. In addition, American will also have exclusive use of certain, unspecified airport slots.
Republic Airlines (Indianapolis International) currently operates American Eagle services on behalf of American Airlines using eighty-five E175s. Twenty E170s, that were also used for American Eagle, were withdrawn from service from April of this year.
The terms of the agreement are still subject to judicial approval.
