Skip to main content

NEW YORK (TheStreet) -- Republic Airways (RJET) stock is soaring by 76.98% to $5.15 in late afternoon trading on Monday, after reaching a tentative agreement with its pilots union regarding pilot-contract negotiations that began in 2007.

Republic Airways and pilots union Teamsters Local 357 are drafting a new three-year contract after reaching a tentative agreement in pilot-contract negotiations that began eight years ago, according to a statement released on Monday.

A pilot shortage affecting the airlines industry had been worsened by the prolonged pilot-contract negotiations, which had driven away potential new hires and caused the company to announce in July a decrease in its flying through 2016, The Wall Street Journal reported.

Earlier this month, Republic Airways stock tanked on bankruptcy concerns after the president of the pilots union refused to force a vote on what the airlines had deemed its final round of negotiations. 

"This is a positive outcome. This consensual agreement respects the role our pilots play in our airline's success and it puts them at the forefront of our industry," Republic Airways Vice President of Human Resources Matt Koscal said in a statement released today. "We are pleased that we could reach a consensual agreement with the leadership of Local 357 that allows us to make a significant investment in our pilots and our future."

TheStreet Recommends

Republic Airways, based in Indianapolis, provides fixed-fee regional airline services under United Express, Delta Connection and US Airways Express/American Eagle.

Separately, TheStreet Ratings team rates REPUBLIC AIRWAYS HLDGS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate REPUBLIC AIRWAYS HLDGS INC (RJET) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.3%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 39.19% is the gross profit margin for REPUBLIC AIRWAYS HLDGS INC which we consider to be strong. Regardless of RJET's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, RJET's net profit margin of 1.27% is significantly lower than the industry average.
  • The debt-to-equity ratio is very high at 3.54 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.49, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Airlines industry and the overall market, REPUBLIC AIRWAYS HLDGS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • You can view the full analysis from the report here: RJET