INDIANAPOLIS—(BUSINESS WIRE)—Republic Airways Holdings Inc. (NASDAQ/NM: RJET) today reported fourth quarter 2013 income from continuing operations of $16.5 million, or $0.30 per diluted share, compared to $8.8 million, or $0.17 per diluted share from continuing operations in the prior year. Net income, which includes the results of discontinued operations at Frontier, increased 23.8% to $15.6 million for the fourth quarter of 2013, compared to $12.6 million in the same period in the prior year. Operating revenues for the quarter increased 5.8% to $346.5, million compared to $327.4 million for the fourth quarter of 2012.

“This was a transformational year for Republic”

Full year income from continuing operations increased 54.3% to $48.3 million, or $0.92 per diluted share, compared to $31.3 million, or $0.63 per diluted share for the full year 2012. For the full year 2013, the loss from discontinued operations was $21.6 million, compared to income of $20.0 million for 2012. The decrease in income from discontinued operations, net of tax, is primarily attributable to the loss on the disposal of Frontier.

“This was a transformational year for Republic,” said Republic Airways Holdings Chairman, President and CEO Bryan Bedford. “The improved operating results are a reflection of our renewed focus on our core, fixed-fee operation and the expansion of flying under capacity purchase agreements with American, Delta and United.” Bedford added, “With the successful sale of Frontier behind us, we can now give our full attention to the pressing challenges facing the regional airline industry.”

Operating Revenue Highlights

Operating revenues increased $19.1 million, or 5.8%, from the fourth quarter of 2012 to $346.5 million in the fourth quarter of 2013. Fixed-fee service revenue increased $61.5 million, or 22.5%, to $334.9 million due to increased Q400 flying with United Airlines and new E175 flying with American Airlines. Passenger service revenue decreased $42.8 million due to the reduced number of E190 aircraft operating under pro-rate agreement with Frontier Airlines. That agreement terminated in February 2014.

Total operating revenues for 2013 decreased by 2.2% to $1,346.5 million compared to $1,377.4 million for 2012. Fixed-fee service revenues increased $174.0 million, or 15.8%, to $1,276.1 million due to increased Q400 flying with United Airlines, and the company’s new E175 flying with American Airlines. Passenger service revenue decreased $201.6 million due to the removal of E190 aircraft operating under a pro-rate agreement with Frontier, which terminated in February 2014.

Operating Expense Highlights

Fuel expense for the fourth quarter of 2013 decreased $14.0 million, or 64.2%, to $7.8 million due to a 4.1 million gallon reduction in gallons consumed as a result of reduced E190 aircraft operations for Frontier. The fuel cost per gallon, including into-plane taxes and fees, increased to $3.62 per gallon in the fourth quarter of 2013, compared to $3.48 per gallon in the prior year’s fourth quarter.

Fuel expense for the full year 2013 decreased $116.5 million, or 72.2%, to $44.9 million compared to $161.4 million for the prior year. Gallons consumed decreased 74.4% because of reductions in E190 aircraft under pro-rate operations at Frontier, and United paying for fuel directly beginning in June 2012. The fuel cost per gallon, including into-plane taxes and fees, increased to $3.60 per gallon during 2013, compared to $3.30 per gallon in the prior year.

Landing fees and airport rents decreased $6.5 million to $8.1 million for the quarter and $15.1 million to $46.4 million for the full year 2013. Beginning in June 2013, landing fee expense and the related pass-through reimbursement revenue from United fixed-fee operations were no longer incurred as United began paying airports directly for its landing fee costs.

Discontinued Operations

The company classified its Frontier business as discontinued operations effective November 30, 2013, due to the sale of the airline to Indigo Partners LLC (Indigo). The transaction closed in early December 2013. The company received net cash proceeds of approximately $76.6 million.

The impact of discontinued operations, net of tax decreased $4.7 million, from income of $3.8 million during the fourth quarter of the prior year, to a loss of $0.9 million in the fourth quarter of 2013. For the full year 2013, the loss from discontinued operations was $21.6 million. The decrease in income from discontinued operations, net of tax, is primarily attributable to the company’s loss on the disposal of Frontier.

Fleet Highlights

As of December 31, 2013, Republic operated a fleet of 258 aircraft. Within our fixed-fee and charter agreements, we operated 72 aircraft with 44-50 seats and 184 aircraft with 69-99 seats.

In addition, we operated two 99-seat aircraft under the pro-rate agreement with Frontier, down from twelve 99-seat aircraft operated in pro-rate service during the fourth quarter of 2012. The E190 pro-rate agreement with Frontier terminated in February 2014. Five E190s previously operating under pro-rate operations at Frontier will be subleased off-shore to another airline. The remaining five E190s will continue to operate under a fixed-fee charter service agreement.

During the fourth quarter of 2013, the company took delivery of ten E175 aircraft related to its American Airlines E175 fixed-fee agreement. The company took delivery of 19 E175 aircraft during the year and 16 of those aircraft were operating by December 31, 2013. The company expects to take delivery of the remaining 28 E175 aircraft through the first quarter of 2015.

The company added one Q400 aircraft into operation during the fourth quarter of 2013. For the full year 2013, the company took delivery and placed into operation ten Q400 aircraft and currently has a total of 28 Q400 aircraft in operation.

Balance Sheet and Liquidity

The company’s total cash balance increased $70.3 million to $300.7 million as of December 31, 2013, compared to December 31, 2012. Restricted cash increased $4.4 million, to $24.0 million, from December 31, 2012, due to the escrow requirements under our fixed-fee charter agreements. The Company’s unrestricted cash balance increased $65.9 million, to $276.7 million, from December 31, 2012 due primarily to the net cash proceeds from the sale of Frontier. A consolidated balance sheet and summary cash flow statement have been included in the tables section of this release.

The Company’s debt increased to $2.17 billion as of December 31, 2013, compared to $1.97 billion at December 31, 2012, primarily related to the financing of 19, new E175 aircraft purchased for our American Airlines fixed-fee agreement. As of December 31, 2013, approximately 96% of our debt is at a fixed interest rate. The Company has significant long-term lease obligations for aircraft that are classified as operating leases and are not reflected as liabilities on the Company’s consolidated balance sheet. At a 6% discount factor, the present value of these lease obligations was approximately $0.59 billion and $0.70 billion as of December 31, 2013, and December 31, 2012, respectively.

Recent Developments

On February 11, 2014, the company updated its 2014 operating fleet plans to reflect its intent to reduce its operating fleet by up to 27 ERJ aircraft which the company anticipates will be removed from service by the end of the third quarter.

On February 14, 2014, the company announced that it reached a Tentative Agreement (TA) on a new four-year contract with the International Brotherhood of Teamsters (IBT) Local 357. Local 357 represents all of the company’s pilots. The proposed contract includes increases in pay that will place Republic pilots at or near the top of its airline peers. It also includes improvements in work rules, quality of life enhancements and more flexibility in scheduling, as well as a significant signing bonus if ratified. The TA still must be presented to union members for review and a formal ratification vote, which, if it occurs, is expected to be completed in April 2014.