Republic Airways: Flying High (For The Time Being)

| About: Republic Airways (RJETQ)
This article is now exclusive for PRO subscribers.

While the airports are still dominated by the big players, a company like Republic Airways Holdings Inc. (RJET) offers essential services that make this company a real winner for investors.

Republic is the fastest-growing regional airline in America, with its lines (Chautauqua, Republic, and Shuttle America) providing regional service to bring passengers to the bigger airlines' hubs. After a major downturn following 9/11, air travel is back up in a big way, and much of it is from the smaller regional airports that Republic serves.

More and more people are looking to the skies for their business travel, and the growing number of telecommuters may also create increased demand for once-a-week flights from smaller cities to larger ones, rather than the traditional daily commute by car or public transportation.

Whatever the reasons, you can see the results in Republic's steadily growing revenues. These revenues, combined with strong margins, have made Republic much more profitable than most of its competitors, and most of its contracts are fixed-price, long-term deals that should ensure steady revenues for the next few years.

There are risks, of course. Air travel could decline, especially if passengers get sick of ever-worsening delays. Republic is also dependent on the larger corporations for its business -- most of its routes are partnerships, especially with US Airways and Delta -- and there's always a possibility these larger airlines will try to handle the local routes themselves, or try to limit costs by negotiating lower fees for future contracts. But Republic looks solid for the next few years, and it's a good bet for steady if not spectacular growth.

Type of Stock: The fastest-growing regional airline in America.

Price Target: Republic is currently trading below its 52-week high of $24, after losing some ground in July and August. I'd try to buy this one in the low $20s. Quarterly results will be announced on October 24 so keep an eye on it then; a bad quarter may give you a chance to buy at a discount.