Republic Airways Holdings Inc. Q4 FY2025 earnings call

Republic is a leader in operational excellence with a seasoned leadership team. The merger with Mesa expands scale. They have made targeted investments in training, technology, and fleet growth. Operate a diversified fleet across major airline partners with long-duration revenue visibility. Have a strong culture and vertically integrated workforce pipeline

Q4 2025 total revenue was $464 million, up 21% year-over-year. Full-year 2025 total operating revenues were $1.7 billion, up $200 million or 13% year-over-year. Adjusted EBITDAR for Q4 2025 was $83 million, up 27% over the same period. Full-year 2025 adjusted EBITDAR was $342 million, up 31% from $260 million in 2024. 2026 financial projections include revenue reaching a $2 billion run rate and adjusted EBITDAR strengthening to $380 million

2026 guidance: Block hours expected to grow to 865,000 or more. Revenues in range of $2 billion. Adjusted EBITDAR expected to expand to $380 million. CapEx about $90 million net of new financings. Disciplined debt extinguishment of $165 million

Aviation industry faces risks like regulatory changes, economic fluctuations, weather-related disruptions, market condition changes, operational and financial health of major airline partners, labor market conditions, aircraft availability

Q: I was wondering with the transition this year and next, if you could quantify either the drag that you expect as a result of it? Or maybe put it another way, how much you can unlock once the transition is completed on the other side?

A: Savi, it's Matt. Great to hear you on the call. Yes, we aren't breaking that out specifically in our guidance. I can tell you though, our guidance for 2026 includes what we anticipate the drag to be. Where it could be accelerated is if we're able to achieve some of the milestones more quickly than we have planned, we absolutely would do that just to unlock the benefits of the enhanced operations. So as we go through the year, what we've got baked into our model is what we anticipated based off the work streams that I outlined in the prepared remarks. And as we go through the year, we'll give you updates on how we're tracking towards those milestones. If we think we're going ahead of schedule, we'll let you know what we think that increased drag looks like.

Q: I just have two quick ones here. Joe, as I heard you talk about the future deliveries. I know you said that you have thee left for United and then there's another 26 that unallocated through 2029. Can you just -- I may have missed this, but can you give us a sense of what that CapEx is for 2026, maybe 2027, if you have to break it out between aircraft CapEx, non-aircraft CapEx?

A: Yes. So we have slightly higher CapEx in 2026 related to just some of the build-out of the integration with Mesa, some completion of the construction here at the Carmel campus and the three aircraft deliveries. We highlighted, I think, $90 million or so net of new financings on a gross basis, that's about $170 million. As we look into 2027 and beyond, I think we can -- I'll tell you, on a steady run rate basis, the business probably needs about $45 million of investment just in rotable spare parts, IT infrastructure systems, and that's probably a conservative number. I think when we look at the aircraft deliveries, I think it's a little premature at this stage. But I would tell you, we're working with the airline partners to identify placement opportunities and certainly refleeting or replacement aircraft is an option, but the realities are we're working with all three airline partners and the OEM on the timing of those deliveries and when they'll occur. The first delivery just to give you a sense, is really scheduled there in middle part of Q1 of 2027.

Q: I was just wondering, can you talk about how the conversations with partners on future growth opportunities have changed post merger, if at all? And then just in general, how would you characterize the demand for your product this year versus maybe the last couple, accelerating, stable, decelerating? Just trying to get a sense of the demand environment and how the merger might have changed on some of the tenor of those conversations?

A: Yes. No, thank you for the question. And the merger environment hasn't changed any of the conversation tone with our codeshare partners. We've got a long history of working with each one of our three codeshare partners. They've been incredibly supportive of our entire processes, both a private company and through the merger. As you know, we actually provide service, as we talked about in my prepared remarks, in some really difficult environments of operation for them. And we do that better than anybody else has done in the past or we believe can do today. So there continues to be strong demand for what we do, and in particular, where we operate. We see really bullish signals as we went into building our plan for 2026 on demand. You're seeing some of the same things we're seeing from our codeshare partners that they're building demand in different markets, in particular, Chicago this year, we're prepared to respond to the increased need there. But the tone hasn't changed at all as we transitioned from a private company into the public company sector