Republic Airways held its annual meeting last Thursday and announced $100m in spending cuts. There were other items from the meeting that don't bode well – the market is hyper competitive and the airline has no pricing power. Its competitors are too big and strong. Moreover its pilots are irritable. So the idea of cutting costs by $100m has to make any vendor antsy. Especially if you are Airbus, Embraer and Bombardier.
The airline's CEO admitted they will be reviewing some E190 deliveries ("tentative"). But there was word the airline is looking at A320neos – well that should look like a long shot now. Also, it would be a nervous time for Bombardier as Republic's order was the one that got everyone to take the CS seriously. But if Republic is going a bit shaky then a whole lot of other things are going to possibly fall off, too.
The airline is fighting in Denver with Southwest and United. In Milwaukee its up against AirTran (Southwest soon). They don't really have a market where they are stronger than anyone else. Plus much of their business is as a regional jet contractor. These are tough times. When Republic bought Frontier (and Midwest) most observers thought this was a great move because the company had the money and seemed poised to reduce its reliance on contract flying. But then came a weak economy, tougher competitors and horrible fuel costs. Whatever margin of error was in their favor evaporated.
It will be interesting to watch what comes next – if the airline actually does go forward with the Airbus neo deal you know its a deal that Airbus bought to hurt Bombardier and has nothing to do with being nice to Republic. Moreover, if Republic does this deal it is because they are on hard times. A win for Airbus in the short term but they buy a lot of risk doing the deal.
In other news:
- Thai's fleet update close
- IATA cuts back profit expectations
- Traffic numbers
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