INDIANAPOLIS—(BUSINESS WIRE)—Republic Airways Holdings Inc. (NASDAQ/NM: RJET) today reported financial results for the second quarter of 2015.

Republic’s pre-tax income for the second quarter of 2015 was $9.1 million, compared to $33.3 million for the prior year’s second quarter. Republic’s net income for the second quarter of 2015 was $4.3 million, or $0.08 per diluted share compared to prior year net income of $20.1 million or $0.38 per diluted share. The effective tax rate of 52.7% for the quarter was higher than the normalized tax rate, primarily due to the impact of miscellaneous non-deductible expenses.

The second quarter 2015 financial results were negatively impacted by a significant reduction in operational reliability. The Company’s controllable completion factor and operating revenues were significantly lower than expected due to a high number of pilot related cancellations as a result of the growing national pilot labor shortage and our on-going labor dispute with International Brotherhood of Teamsters (IBT).

The second quarter results were also negatively impacted by fleet transition costs and idled aircraft costs totaling $10.8 million associated with our removal of E190 and Q400 aircraft and surplus E145 aircraft.

Operating Revenue Highlights
Operating revenues decreased $5.4 million, or 1.6%, during the second quarter of 2015 to $337.6 million. Fixed-fee service revenue decreased $4.5 million, or 1.3%, to $332.6 million primarily due to a decrease in block hours flown and reduced revenues related to reimbursed aircraft ownership costs associated with aircraft temporarily removed from revenue service during the second quarter.

Operating Expense Highlights
Wages and benefits expenses increased 3.6%, or $3.3 million, primarily due to an increase in pilot wages. The cost per block hour for pilot salaries increased by more than 15%, due to seniority related contract wage increases and pilot premium pay incentive programs such as vacation buy-back and pilot open-time pickup.

Depreciation and amortization expense increased 10.7%, or $4.5 million, due primarily to the increase in the number of owned E175 aircraft.

Other expenses increased 31.0%, or $11.3 million, primarily due to an increase in fleet transition costs primarily related to the removal of Q400 and E190 aircraft coupled with costs for increased professional fees.

Balance Sheet and Liquidity Highlights
The Company’s unrestricted cash balance decreased $32.3 million, to $191.6 million, from December 31, 2014, due mainly to scheduled principal repayments. A consolidated balance sheet and a condensed statement of cash flows have been included in the tables section of this release.

The Company’s debt decreased to $2.25 billion as of June 30, 2015, compared to $2.34 billion at December 31, 2014, primarily related to the Company’s scheduled principal repayments.

Recent Business Developments
On July 9, 2015, the IBT, representing Republic’s pilots, filed suit against the Company alleging that the Company unilaterally increased compensation for pilots and new hires in violation of the Railway Labor Act. We believe the suit is without merit, and the Company has filed a motion to dismiss. The motion is currently pending.

On July 24, 2015, the Company announced the engagement of Seabury Group as its advisor to restructure the Company’s operational and financial commitments and explore all options to maintain the Company’s enterprise value. The Company has initiated discussions with its CPA partners to further reduce flying schedules during the second half of 2015 and 2016. In light of the anticipated fleet reductions, the Company rescinded all previously issued financial and operational guidance on July 24, 2015.

On August 5, 2015, the Company announced that Tim Dooley resigned as Executive Vice President, Chief Financial Officer and appointed Joe Allman to Senior Vice President, Chief Financial Officer. Jason Secore assumed Mr. Allman’s prior role as Vice President Finance and Treasurer.

On August 6, 2015, the Company received notice from the National Mediation Board scheduling the next mediated session on August 20, 2015, with the IBT National Airline Division, IBT Local 357, and the Company.

Today, the Company is announcing Paul Kinstedt as acting Chief Operating Officer. Paul joined the Company in January 2002 as Director of Systems Operations Control. He was promoted to Vice President of System Operations Control in September 2006 and served in that capacity until January 2013, when he was named Vice President of Flight Operations. He has a Bachelor of Science degree in Aviation Science from Parks College of Saint Louis University in St. Louis Missouri and his Masters of Business Administration from Illinois Benedictine College.