Judge Approves Republic Airways Settlement With Delta
May 03 2016 - 3:10PM
Dow Jones News
A bankruptcy judge has approved a settlement between Republic
Airways Holdings Inc. and Delta Air Lines Inc. that includes a
crucial code-share agreement, according to people with knowledge of
the matter.
Judge Sean Lane of the U.S. Bankruptcy Court in New York
approved the settlement as well as the $75 million bankruptcy
financing provided by Delta, the people told The Wall Street
Journal.
Representatives for Delta and Republic didn't respond to
requests for comment.
The decision comes less than two weeks after the settlement was
put before Judge Lane, who needed additional time to decide on it
and the financing, which were met with objections from a group of
shareholders.
The code-share deal and financing also received objections from
the U.S. attorney and unsecured creditors, but these were resolved
before the April 21 hearing.
Still, the shareholders group wouldn't budge in negotiations
before the hearing.
At a hearing last month, Republic's lawyer said the code-share
deal with Delta was vital to the survival of the carrier and would
pave the way for negotiations over similar agreements with American
Airlines Group Inc. and United Continental Holdings Inc.
The code-share agreements allow Republic to operate flights for
Delta and other large carriers.
The settlement with Delta was tied to the $75 million in
financing, and the rejection of one would have doomed the other.
Republic's bankruptcy lawyer said last month that the Delta loan
had the most favorable terms. The shareholder group opposed the
pact with Delta.
The shareholders, who own more than 40% of Republic's equity,
had asked the court to deny the financing package and settlement,
saying would give Delta enormous power in Republic's bankruptcy
proceedings.
Tension between Republic and the shareholders arose shortly
after the carrier filed for bankruptcy protection in late February.
The airline says shareholders are out of the money and likely won't
see any recovery on their claims.
The Indianapolis-based Republic's woes stem from a pilot
shortage brought on by relatively low starting salaries and new
U.S. regulators' rules requiring aviators to have additional
training.
Republic, in particular, suffered because of an outdated pilot
contract that made it less attractive than its rivals to
prospective hires.
Because of the pilot shortage, Republic was forced to ground
some of its planes, leading to a lawsuit from Delta that claimed
damages because of the loss of service for some Delta flights that
had been operated by Republic.
Republic and Delta reached a settlement in March, which resulted
in the code-share agreement and bankruptcy loan.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
(END) Dow Jones Newswires
May 03, 2016 14:55 ET (18:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
American Airlines (NASDAQ:AAL)
Historical Stock Chart
From Aug 2024 to Sep 2024
American Airlines (NASDAQ:AAL)
Historical Stock Chart
From Sep 2023 to Sep 2024