Republic Airways Holdings Inc. (NASDAQ/NM: RJET) said its pre-tax income for the second quarter of 2015 was USD9.1 million, compared to USD33.3 million for the prior year´s second quarter.
Republic´s net income for the second quarter of 2015 was USD4.3 million, or USD0.08 per diluted share compared to prior year net income of USD20.1 million or USD0.38 per diluted share. The effective tax rate of 52.7 percent 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 USD10.8 million associated with our removal of E190 and Q400 aircraft and surplus E145 aircraft.
Operating revenues decreased USD5.4 million, or 1.6 percent, during the second quarter of 2015 to USD337.6 million. Fixed-fee service revenue decreased USD4.5 million, or 1.3 percent, to USD332.6 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.
Wages and benefits expenses increased 3.6 percent, or USD3.3 million, primarily due to an increase in pilot wages. The cost per block hour for pilot salaries increased by more than 15 percent, due to seniority related contract wage increases and pilot premium pay incentive programs such as vacation buy-back and pilot open-time pickup.
Republic Airways Holdings Inc., based in Indianapolis, Indiana, is an airline holding company that owns Republic Airlines and Shuttle America. As of June 30, 2015, the airlines operate a combined fleet of about 240 aircraft and offer scheduled passenger service on about 1,250 flights daily to about 100 cities in the US and Canada through fixed-fee flights operated under our major airline partner brands, including American Eagle, Delta Connection, United Express, and US Airways Express. The company currently employs about 6,500 aviation professionals.