While most major airlines are seeing record profits, the success does not seem to be trickling down to the smaller carriers. On Thursday, Republic Airways Holdings filed for Chapter 11 Bankruptcy protection. As is usually the case, there are several reasons behind the filing.
Republic is mainly composed of smaller planes that are utilized by some of the larger companies such as Delta, American Airlines, United Airlines, and US Airways. Although it offers around 1,000 flights a day, the decision had to be made due to several bad quarters. The filing appears to be the result of a labor dispute with pilots, which left several planes grounded, and close to $3 billion of debt. Another factor could be change of in the industry. Republic plans to reduce the number of 50-seat planes, a size that some believe will soon be gone for good.
While investors see this as a bad omen (Republic’s stock plunged once the news of the filing broke), the future is not bleak. Republic has the funds to pay employees wages and benefits and will honor their collective bargaining agreements. It seems Republic will use the restructuring as an opportunity to reinvigorate the company and launch it into a new, and hopefully upward, direction.
I meet with people everyday that find themselves in a similar position as Republic Airways. It could be that they have problems maintaining a steady income or their debt is insurmountable without some sort of formal debt relief. Whatever the cause, we are able to put them on a path out of hardship and into financial freedom.
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