Republic shares tumble after union blocks contract vote
INDIANAPOLIS (AP) – Shares of regional airline operator Republic Airways tumbled Wednesday after the Teamsters union declined to let pilots vote on the company’s latest contract offer, raising the prospect of a bankruptcy filing.
Republic Airways Holdings Inc. shares were down 60 cents, or 19.8 percent, to $2.43 in mid-morning trading. The shares have plummeted 84 percent this year as the labor standoff intensified.
Republic pilots fly regional jets for American, United and Delta. The big airlines are hiring pilots away from regional operators like Republic, and the company has been unable to hire enough replacements, which it blames on the union stalemate.
Republic has threatened to seek a restructuring if its roughly 2,100 pilots don’t approve an offer it made in August, but union leaders think the company will return to the bargaining table.
On Wednesday, Cowen and Co. analyst Helane Becker downgraded the shares due to the “increased likelihood” of a bankruptcy filing.
“We believe the only option for the airline may be in renegotiating its contracts with its airline partners, and the only way to do that may be through the courts,” Becker said in a note to clients.
In a statement, Republic CEO Bryan Bedford called the Teamsters decision against holding a vote “deeply disappointing.” Because of the “gravity of the situation,” he said, the company would leave its offer on the table.
Republic says the offer would make pilots the best-paid among regional airlines. Jim Clark, president of the union local, has raised several objections about Republic’s offer, which he said is less generous than the contract at Alaska Airlines’ Horizon Air regional subsidiary.
The company appealed to Teamsters leaders to order a ratification vote on the offer. But late Tuesday, Teamsters President James P. Hoffa said he would not do that over the objections of local leaders.