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Republic Airways Holdings Inc. (RJET) Makes Two Deals: Is It Missing the Big One?

This could put Republic at a disadvantage if other regional flying contracts go out for bid in the near future. While regional pilots tend to earn much less than mainline pilots, they still constitute the highest compensated labor group. Without a deal in place, Republic does not know what its future labor costs will be. Republic is rightly wary of locking itself into long-term fixed-fee agreements without this cost clarity; however, this may allow competitors like SkyWest to gain market share.

Work to be done
Republic has reached tentative agreements for two new labor contracts in the past two weeks. This is a positive step for the company in terms of achieving cost certainty. However, there is still a lot of work to be done. Not only does Republic still need to complete the Frontier separation, it also needs to wrap up a deal with its pilots. Only then will it be well-positioned to take advantage of the growth opportunities inherent in the industry shift toward large regional jets.

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The article Republic Airways Makes Two Deals: Is It Missing the Big One? originally appeared on Fool.com.

Adam Levine-Weinberg has the following options: Long Aug 2013 $10 Calls on Republic Airways Holdings (NASDAQ:RJET). The Motley Fool has no position in any of the stocks mentioned.

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