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Republic Airways to end Hawaii flights...higher ticket prices to come
Oct. 14, 2009, 11:54 a.m. EDT
Republic Airways to end Hawaii flights
Forms joint venture with Mesa Air; higher ticket prices to come
By Christopher Hinton, MarketWatch
NEW YORK (MarketWatch) -- After a bruising year in Hawaii's fierce inter-island carrier market, Republic Airways Holdings Inc. is taking its jets and going home, leaving the Pacific state once again with just two airlines.
Late Tuesday, the Indianapolis-based carrier said its majority-owned Mokulele Airlines would combine its inter-island routes with Mesa Air Group's Go. In return, Republic will get a small stake in the new company and will be able to take back three Embraer E170 regional jets that were being used by Mokulele.
Further, Mokulele shareholders will provide $1.5 million to capitalize the joint venture and will forgive the carrier $3.1 million in outstanding debt.
Mesa shareholders will own 75% of the joint venture.
"During this period of economic stress within our industry, it is especially important to closely match capacity with demand, and this arrangement allows Mokulele to right-size the aircraft within its network," said Republic Chairman and Chief Executive Bryan Bedford, in a statement.
The move leaves Hawaii with a more stable market with inter-island capacity returning to 2008 levels, said Avondale Partners analyst Bob McAdoo. That will likely boost ticket prices and benefit the state's remaining carriers, Mesa and Hawaiian Holdings .
Shares of Mesa slipped a fraction most recently to 25 cents each. Shares of Hawaiian Holdings rose a penny to $8.23 and Republic Airways added 2% at $9.34.
Republic Airways entered Hawaii's inter-island service market last October when it purchased a stake in Mokulele, and eventually owned nearly 90% of the small carrier's shares.
Soon afterwards, Mokulele sued Go airlines for alleged anticompetitive behavior, which followed a separate lawsuit filed by Mesa accusing Mokulele of not paying more than $390,000 in fuel costs.
In August, Republic announced a deal to buy bankrupt Frontier Airways for about $109 million, expanding its Denver-based service.
Republic operates 228 planes and serves 98 destinations through agreements with larger airlines.
Republic Airways to exit Hawaii - MarketWatch
Republic Airways to end Hawaii flights
Forms joint venture with Mesa Air; higher ticket prices to come
By Christopher Hinton, MarketWatch
NEW YORK (MarketWatch) -- After a bruising year in Hawaii's fierce inter-island carrier market, Republic Airways Holdings Inc. is taking its jets and going home, leaving the Pacific state once again with just two airlines.
Late Tuesday, the Indianapolis-based carrier said its majority-owned Mokulele Airlines would combine its inter-island routes with Mesa Air Group's Go. In return, Republic will get a small stake in the new company and will be able to take back three Embraer E170 regional jets that were being used by Mokulele.
Further, Mokulele shareholders will provide $1.5 million to capitalize the joint venture and will forgive the carrier $3.1 million in outstanding debt.
Mesa shareholders will own 75% of the joint venture.
"During this period of economic stress within our industry, it is especially important to closely match capacity with demand, and this arrangement allows Mokulele to right-size the aircraft within its network," said Republic Chairman and Chief Executive Bryan Bedford, in a statement.
The move leaves Hawaii with a more stable market with inter-island capacity returning to 2008 levels, said Avondale Partners analyst Bob McAdoo. That will likely boost ticket prices and benefit the state's remaining carriers, Mesa and Hawaiian Holdings .
Shares of Mesa slipped a fraction most recently to 25 cents each. Shares of Hawaiian Holdings rose a penny to $8.23 and Republic Airways added 2% at $9.34.
Republic Airways entered Hawaii's inter-island service market last October when it purchased a stake in Mokulele, and eventually owned nearly 90% of the small carrier's shares.
Soon afterwards, Mokulele sued Go airlines for alleged anticompetitive behavior, which followed a separate lawsuit filed by Mesa accusing Mokulele of not paying more than $390,000 in fuel costs.
In August, Republic announced a deal to buy bankrupt Frontier Airways for about $109 million, expanding its Denver-based service.
Republic operates 228 planes and serves 98 destinations through agreements with larger airlines.
Republic Airways to exit Hawaii - MarketWatch