We are a Delaware holding company organized in 1996 that offers scheduled passenger services through our wholly-owned operating subsidiaries: Chautauqua Airlines, Inc., (“Chautauqua Airlines”), Shuttle America Corporation (“Shuttle America”), Republic Airline Inc. (“Republic Airline”), Frontier Airlines, Inc., and Lynx Airlines, Inc. (“Lynx”). The Company acquired Midwest Air Group, Inc. (“Midwest”) and Frontier Airlines Holdings, Inc. (“Frontier”) on July 31, 2009 and October 1, 2009, respectively. On November 3, 2009, Midwest Airlines, Inc. ceased to exist as an actual operating airline and we allowed its Department of Transportation (“DOT”) air carrier operating certificate to lapse. Midwest’s branding, livery and route structure are all operated by our other operating subsidiaries. We plan to fully integrate the operations of Midwest and Frontier as promptly as is feasible, which we anticipate will be substantially completed by the end of 2010. Unless the context indicates otherwise, the terms “the Company,” “we,” “us,” or “our,” refer to Republic Airways Holdings Inc. and our subsidiaries.
As of December 31, 2009, our operating subsidiaries offered scheduled passenger service on approximately 1,600 flights daily to 121 cities in 44 states, Canada, Mexico, and Costa Rica under branded operations as Frontier and Midwest, and through fixed-fee code-share agreements with AMR Corp., the parent of American Airlines, Inc. (“American”), Continental Airlines, Inc. (“Continental”), Delta Air Lines, Inc. (“Delta”), United Air Lines, Inc. (“United”), and US Airways, Inc. (“US Airways”) (collectively referred to as our “Partners”). Currently, we provide our Partners with fixed-fee regional airline services, operating as AmericanConnection, Continental Express, Delta Connection, United Express, or US Airways Express, including service out of their hubs and focus cities.
We have long-term, fixed-fee regional jet code-share agreements with each of our Partners that are subject to our maintaining specified performance levels. Pursuant to these fixed-fee agreements, which provide for minimum aircraft utilization at fixed rates, we are authorized to use our Partners' two-character flight designation codes to identify our flights and fares in our Partners' computer reservation systems, to paint our aircraft in the style of our Partners, to use their service marks and to market ourselves as a carrier for our Partners. Our fixed-fee agreements have historically limited our exposure to fluctuations in fuel prices, fare competition and passenger volumes. Our development of relationships with multiple major airlines has enabled us to reduce our dependence on any single airline, allocate our overhead more efficiently among our Partners and reduce the cost of our services to our Partners.
Midwest has a regional focus in Milwaukee and Kansas City, and Frontier has a regional focus in Denver. Our branded operations expose us to changes in passenger demand, fare competition and fluctuations in fuel prices. Midwest is the largest carrier in Milwaukee, and Frontier is the second largest carrier in Denver. Each brand has a significant base of frequent flyer members and strong support in their local communities.
Since acquiring the branded carriers, we have rebuilt the Milwaukee network to reconnect Midwest passengers to the west coast and Florida destinations and we have expanded operations in Denver now offering select point to point flying on Frontier Airlines. In 2010, we will work to further integrate the two branded operations, which will allow for similar passenger experiences and lower the costs of our branded flying.
During 2009, our operational fleet increased from 221 to 290 aircraft. The acquisition of Frontier added 62 aircraft that are operated by Frontier and Lynx. Additionally, during 2009, we took delivery of 11 E190 aircraft, which have been placed into branded service, three E175 aircraft, which were placed into service with Delta and six E135 aircraft which were placed into branded service. We also returned 10 CRJ-200 aircraft to the lessor and subleased three E145 aircraft offshore. As of December 31, 2009, our operational fleet was comprised of 51 Airbus aircraft ranging from 120 to 162 seats, 141 EJet aircraft ranging from 70-99 seats, 11 Q400 aircraft with 74 seats, 80 Embraer aircraft ranging from 37 to 50 seats, and seven CRJ-200 aircraft with 50 seats.
In order to simplify our fleet and reduce expenses, we expect to remove our Q400 and CRJ-200 fleets in 2010. The remaining seven CRJ-200 aircraft will be removed from service for Continental and returned to the lessor by April 2010 and we expect to reduce the operations on the Q400 aircraft in April 2010 and eliminate all Q400 flying by September 2010.
Business Strategy
Our vision is to provide safe, clean, reliable and cost efficient service with highly engaged and motivated employees. We are focused on continuing to provide high quality performance as a fixed-fee operator with low-costs and a diverse number of partners. We are committed to improving our cost structure on all branded operations to compete and win in competitive markets and utilize our fleet flexibility to optimize our network connectivity and revenues. We believe the diversity in our operations provide us a platform for long-term sustainability, profitability, and growth.
Branded Operations
Our recent acquisitions of Midwest and Frontier provide us with route networks that are complimentary and present the opportunity to expand both networks beyond their historic capabilities. The Midwest brand has earned its reputation as “The best care in the air®” by providing travelers with impeccable service and onboard amenities at competitive fares. Our commitment to offering personal, attentive service both on the ground and in the air has earned Midwest national and international recognition from frequent travelers and the airline industry, including Condé Nast Traveler, Travel+Leisure and the Zagat Airline Survey. Frontier has created a widely recognized brand that distinguishes itself as a safe, reliable, low-fare airline focused on customer service and providing a high quality travel experience. On our Frontier branded flights we offer our customers a differentiated product, with new Airbus and Embraer aircraft, comfortable passenger cabins that we configure with one class of seating, ample leg room, affordable pricing, and in-seat LiveTV with 24 channels of live television entertainment and three additional channels of current-run pay-per-view movies on most of our routes We have implemented a full code-share between Midwest and Frontier providing a wider choice of travel destinations and additional flight options and connection possibilities, and our frequent flyer partnership allows members of the Midwest Miles and Frontier Early Rewards programs to earn and redeem miles on either airline. Our frequent flyer programs have minimal overlap and we now have access to more than 2.7 million frequent flyers.
We plan to fully integrate the operations of Midwest and Frontier as promptly as is feasible, which we anticipate will be substantially completed by the end of 2010. In addition, we are focused on harmonizing the best aspects of the Midwest and Frontier brands, which we believe will leverage our collective advantages and provide our customers with consistent product offerings, on-board experiences, and customer-facing touch points.