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

Republic’s pre-tax income for the third quarter of 2015 was $8.3 million, compared to $30.5 million for the prior year’s third quarter. Republic’s net income for the third quarter of 2015 was $2.9 million, or $0.06 per diluted share compared to prior year net income of $18.5 million or $0.35 per diluted share. The effective tax rate of 65.1 percent for the quarter was higher than the normalized tax rate, primarily due to the impact of miscellaneous non-deductible expenses.

“The third quarter 2015 financial results continued to be negatively impacted by our inability to fully utilize our aircraft due to regulatory changes that created a national pilot shortage which has been uniquely amplified by our ongoing labor dispute. As a result of this pilot labor shortage we operated approximately 6 percent fewer block hours during the third quarter of 2015 as compared to the third quarter of 2014. The third quarter results were also negatively impacted by fleet transition costs and idled aircraft costs totaling $7.2 million associated with our removal of E190 and Q400 aircraft and surplus E145 aircraft, said Republic Airways Holdings Chairman, President and CEO Bryan Bedford. “The ratification of a new labor agreement with our pilots represents a significant positive step forward for our pilots and our airline, and I would like to thank the leadership of the IBT Local 357 for their support through the ratification process. We simply could not move forward without a consensual agreement with our pilots. However, we still face several challenges as we continue our work to rebuild our operation and work to achieve a consensual restructuring with our other stakeholders.”

Operating Revenue Highlights

Operating revenues decreased $9.2 million, or 2.6 percent, during the third quarter of 2015 to $340.5 million. Fixed-fee service revenue decreased $9.7 million, or 2.8 percent, to $334.0 million primarily due to a decrease in block hours flown and reduced revenues associated with the non-reimbursed aircraft ownership costs associated with aircraft temporarily removed from revenue service during the third quarter.

Operating Expense Highlights

Wages and benefits expenses decreased 1.6 percent, or $1.5 million, primarily due to lower employee expenses as a result of a decrease in flying levels.

Maintenance and repair expense increased 8.5 percent, or $5.6 million, due to an increase in engine limited life part events, coupled with an increase in other engine repair costs.

Depreciation and amortization expenses increased 6.9 percent, or $3.0 million, due primarily to the increase in the number of owned aircraft.

Other expenses increased 27.9 percent, or $10.2 million, primarily due to an increase in reorganization costs, coupled with an increase in costs for fleet transition, professional fees, crew hotels and increased crew training costs.

Balance Sheet and Liquidity Highlights

The Company’s unrestricted cash balance increased $8.9 million, to $232.8 million, from Dec. 31, 2014, due mainly to the $74.0 million draw on the Company’s revolving credit facility offset by the investment in new aircraft. 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 increased to $2.40 billion as of Sept. 30, 2015, compared to $2.34 billion at Dec. 31, 2014, primarily related to the Company purchasing 12 E175 aircraft offset by scheduled principal repayments.

Recent Business Developments

On Oct. 5, 2015, Delta Air Lines Inc. (“Delta”) filed suit against the Company alleging that the Company was in breach of its contractual obligations under both Delta Connection Agreements. Delta alleges among other things, that Shuttle America breached the Agreements by failing to operate all of Delta’s flights, and claims damages. We believe the allegations are unfounded and without merit.

On Oct. 22, 2015, Bombardier Commercial Aircraft (“Bombardier”) delivered a notice to the Company purporting to terminate, effective Oct. 31, 2015, the Smart Parts Q400 Agreement between the Company and Bombardier and the Q400 Onsite Inventory Agreement between the Company and an affiliate of Bombardier. The Company disputes Bombardier’s right to terminate and has filed an action against Bombardier in United States District Court for the Southern District of New York and its affiliate seeking a declaratory judgment that Bombardier’s termination is invalid and a permanent injunction enjoining Bombardier from terminating the agreements based on its Oct. 22, 2015, notice. The Company also moved for a temporary restraining order and preliminary injunction enjoining Bombardier from terminating the agreements pending resolution of such action. On Oct. 28, 2015, the Court in the action entered an order based on Bombardier’s stipulation which prohibits Bombardier from terminating the agreements and from removing any of the parts covered by the agreements pending the Court’s decision on the Company’s preliminary injunction motion. A hearing on the Company’s preliminary injunction motion is currently scheduled for Nov. 17, 2015.

On Oct. 27, 2015, the IBT Local 357 voted by a margin of 76 percent to ratify a new three-year contract, with approximately 90 percent of the eligible pilots voting. The three-year agreement became effective on its date of signing, Oct. 29, 2015. The agreement invests approximately $50 million per year on average over the three-year duration of the new agreement, including both the ratification bonus and the anniversary bonus. The ratification bonus of approximately $17.0 million will be paid during the fourth quarter of 2015; the anniversary bonus, currently estimated at approximately $14.0 million is expected to be paid during the fourth quarter of 2016. The new agreement includes significant improvements in work rules and pilot quality of life. Additionally, it establishes pay rates that recognize Republic’s pilots as leaders in the regional airline industry, including a transformational 74 percent increase in new hire first officer rates from $22.95 to $40.00 per hour.