Republic Airways merges with Mesa Air Group

Republic Airways Holdings Inc. and Mesa Air Group, Inc. introduced that they’ve entered right into a definitive settlement to merge and create a number one publicly-traded regional airline firm in an all-stock transaction. Upon closing, the mixed firm will probably be renamed Republic Airways Holdings Inc. and is predicted to stay NASDAQ-listed beneath the brand new ticker image “RJET”.

“The announcement is an thrilling subsequent step in Mesa’s greater than 40-year historical past, one which represents the most effective consequence for our shareholders, workers, and all of our stakeholders,” stated Jonathan Ornstein, Mesa’s Chairman and Chief Government Officer. “By bringing the most effective of our organizations collectively, we are going to create a regional service that continues to attach communities throughout America whereas offering development alternatives to our workers.”

“We’re thrilled to mix the Republic and Mesa groups to create one of many world’s main Embraer Jet operators,” stated Bryan Bedford, Republic’s President and Chief Government Officer. “Republic and Mesa share a typical mission to attach communities throughout America, and we imagine that we are able to higher obtain that mission collectively. With this mixture, we’re establishing a single, well-capitalized, public firm that can profit from the deep experience of Republic and Mesa associates, creating worth for all stakeholders properly into the long run.”

Republic Airways Overview

Republic Airways has been a number one regional airline since its inception in 1974 and is now one of many largest regional airways in the US. Republic has a fleet of greater than 240 Embraer 170/175 plane and carried roughly 17.5 million passengers on greater than 300,000 flights and 591,000 block hours in 2024. The airline primarily serves Northeast and Mid-Atlantic hubs and operates completely beneath long-term capability buy agreements with American Airways, Delta Air Traces and United Airways. In 2024, Republic delivered robust monetary efficiency, producing web earnings of roughly $65 million on complete revenues of roughly $1.5 billion. Throughout the yr then ended, Republic generated complete working bills of roughly $1.3 billion, of which roughly $117 million is non-cash depreciation and amortization expense, different web non-operating bills (primarily curiosity expense) of roughly $50 million, and earnings tax expense of roughly $22 million, leading to EBITDA efficiency of roughly $254 million and pre-tax earnings of roughly $87 million. As of December 31, 2024, Republic’s money and debt balances had been $323 million and $1 billion, respectively, leading to web leverage of roughly 2.7x. Republic expects to take supply of 15 new E175 plane throughout 2025 and the entire deliveries are anticipated to be debt financed.

Compelling Strategic Rationale

Economies of Scale: The proposed mixture represents a transformational alternative to considerably improve the dimensions of the mixed airways, each financially, and operationally, with a bigger, unified fleet. This can allow extra environment friendly and productive regional flying and crew useful resource administration. The improved platform is properly positioned for a valuation uplift, supported by a stronger monetary profile, elevated relevance amongst world institutional traders, and improved entry to capital markets.

Enhanced Capital and Liquidity Place: Professional forma web leverage at shut is predicted to be roughly 2.5x and liquidity as a % of professional forma revenues is predicted to be larger than 15%. Collectively, the mixed firm can have the monetary power and suppleness to make crucial investments, drive sustained profitability, and proceed delivering best-in-class customer support beneath a unified model. A stronger steadiness sheet for the mixed airline will bolster the Firm’s potential to navigate market cycles, reply to strategic alternatives, and preserve a versatile capital allocation technique that optimizes returns for all stakeholders.

Complementary Networks and Operations: The proposed mixture represents a singular alternative to carry collectively Mesa’s and Republic’s networks to determine America’s regional airline of selection. The post-merger firm will preserve a single fleet of roughly 310 Embraer 170/175 (“E-Jet”) plane, with over 1,250 each day departures, throughout each airways’ current flying networks and can function inside Mesa’s and Republic’s present basing constructions and routes. Mesa and Republic will proceed to function beneath their current Federal Aviation Administration (FAA) working certificates till securing a single-operating certificates for the mixed airline.

Synergistic Cultures Rooted in Security and Reliability: Mesa and Republic share frequent values and ideas, which embrace an uncompromising give attention to offering protected and dependable companies for passengers, operational excellence, and a tradition which offers profession progress and development alternatives for associates. Each Mesa and Republic are included within the Worldwide Air Transport Affiliation’s Operational Security Audit (IOSA) registry, the internationally acknowledged commonplace for airline security and operational excellence. These ideas will probably be maintained and enhanced by the merger.

Proficient Crew Positioned for Thrilling Progress Alternatives: The mixed firm will proceed serving key companions, together with American Airways, Delta Air Traces, and United Airways. The events count on to retain all flight crews, technicians, and different operational workers inside the post-merger entity, which will probably be led by an skilled and seasoned administration crew.