Republic Airways reported higher second-quarter revenue and block-hour production, citing strong demand from airline partners and improved operating conditions, while raising its full-year outlook despite severe weather disruptions early in the third quarter.
President and Chief Executive Officer Matt Koscal, who assumed the CEO role last month as David Grizzle returned to his position as non-executive chairman, said the company’s focus remains on safe and reliable operations, employee investment, and execution of its integration strategy with Mesa Air Group NASDAQ: RJET.
Republic reported adjusted net income of $41 million, or $0.89 per diluted share, for the second quarter. GAAP net income totaled $31.2 million, or $0.68 per diluted share, while pre-tax income was $43.4 million.
Production and Revenue Increase
Chief Financial Officer Joe Allman said block-hour production rose 7% sequentially from the first quarter, supported by a roughly 2% increase in scheduled block-hour utilization and improved weather for much of the period. Revenue increased 8% to approximately $571 million.
The company’s completion factor rose to 98% in the second quarter from just under 94% in the first quarter. Koscal said Republic and Mesa employees achieved 85 days of perfect controllable completion factor and a 99.99% controllable completion factor across nearly 120,000 completed flights during the quarter.
Adjusted pre-tax income was $57.4 million and adjusted EBITDA was $109.6 million. Allman said adjustments to reported results primarily included costs tied to the CEO transition, severance related to the Mesa integration, professional fees for integration work, and certain duplicative overhead expenses at Mesa. He said those costs are expected to decline as integration milestones are completed and the revision-cycle process concludes in early 2028.
Mesa Integration Advances
Republic said it remains ahead of schedule on the Mesa integration. During the quarter, the company received Federal Aviation Administration acceptance and approval for the first of five revision cycles needed to harmonize the airlines’ safety management systems.
Koscal said Republic expects to file its second revision cycle, covering pre-flight procedures and activities, during the third quarter. The remaining cycles are expected to be completed through 2027 and into early 2028.
The company is also consolidating back-office activities, integrating IT systems, harmonizing maintenance and fleet operations, and working toward a single operating certificate. Republic expects to move Mesa’s network and operations center to its aviation campus in Carmel, Indiana, during the third quarter.
On fleet maintenance, Koscal said the company has met its internal goals for reducing aircraft turnaround times within Mesa’s maintenance program. However, he said the broader operational benefit will not be realized until the fleet work is completed, with greater aircraft availability expected in the second half of 2027 and beyond.
In response to an analyst question, Koscal said Republic believes the Mesa fleet could see a more than 10% improvement in overall utilization once maintenance work is completed in the 2027-2028 period. Allman said scheduled available aircraft utilization is currently above 9.5 hours and closer to 9.8 hours.
Balance Sheet and Fleet
Republic ended the quarter with $278 million in unrestricted cash, up from $273 million at the end of March. Capital expenditures were approximately $21 million, while the company repaid $43 million of debt during the quarter.
Total debt and lease liabilities were $1.2 billion at quarter-end. The company received about $20 million in tariff refunds during the period, which reduced the basis in aircraft and did not materially affect financial results or guidance, according to Allman.
The fleet remained unchanged at 314 aircraft. Of those, 275 aircraft operate under capacity purchase agreements, 31 are leased to a partner, and eight remain unallocated. Republic said it is pursuing redeployment opportunities for the unallocated aircraft. The company also holds 26 delivery positions with Embraer, with its next scheduled delivery position in April 2028.
Outlook Raised Despite July Weather
Republic raised its full-year 2026 guidance, even as severe weather in July affected East Coast and Mid-Atlantic operations. Through July 28, the company’s completion factor stood at 91% for the month, below the level recorded during either January or February, which were affected by major winter storms.
Koscal said that while weather disruptions created third-quarter “noise,” the company continues to see strong demand from partners for its flying. Republic now expects:
- Approximately 880,000 block hours in 2026, up from prior guidance of at least 865,000 hours.
- Revenue greater than $2.1 billion, compared with its prior target of more than $2 billion.
- Adjusted EBITDAR of $395 million to $405 million, compared with previous guidance of more than $380 million.
The company left its prior capital expenditure and debt-reduction guidance unchanged. Koscal said Republic expects the integration efforts, maintenance improvements, and expanded fleet availability to support stronger financial performance as the company moves through 2027 and into 2028.
About Mesa Air Group (NASDAQ:RJET)
Mesa Air Group, Inc is a regional airline holding company headquartered in Phoenix, Arizona. The company provides feeder air transportation services under capacity purchase agreements with major carriers in the United States, operating as an affiliate of American Airlines and United Airlines. Mesa Air Group’s operations are conducted through two wholly owned subsidiaries, Mesa Airlines and Mokulele Airlines, which serve domestic markets on a scheduled basis.
Mesa Airlines is the company’s primary regional carrier.
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