Republic Airways Holdings Inc. Q1 FY2026 earnings call

Anticipated leadership changes with Matt becoming CEO, June 15. Q1 2026 marked first fiscal quarter after Mesa merger. Weather impacted operations but team delivered. Fleet transition at United concluded. Integration efforts on back office, IT, fleet, and regulatory areas ahead of plan. Progress with labor unions, including JCBA with flight attendants.

Revenues were $527 million in Q1 2026, with adjusted pre-tax income of $47 million (8.9% pre-tax margin). Operations were impacted by winter weather, but controllable completion rate remained strong. Fleet transition at United was concluded with new E-175s in place, and some E-170s redeployed.

Reaffirmed 2026 guidance issued on March 4th. Expect revenues over $2 billion, adjusted EBITDAR over $380 million, block hour production at least 865,000 hours. CapEx anticipated at $170 million. Confident in achieving targets despite market uncertainties.

Aviation industry faces dynamic environment with risks like regulatory changes, economic fluctuations, weather disruptions. Dependence on major airline partners' operational and financial health, labor market conditions, and aircraft availability.

Q: Hey, good afternoon everyone. I know it wasn't controllable factors, but I was kind of curious with the with the kind of severe weather impacts that you have this quarter was there kind of a notable impact on earnings that, you know, maybe is not normal that we should consider as we kind of think about kind of the earnings power here.

A: Hi, Savi, it's Matt. Thanks for the question. Thanks for joining the call. You're spot on. I mean, the impact was significant over what we saw last year, a little over three full points. That's not typical for us in a quarter. We didn't break out the impact. But in a more typical seasonal environment, we would expect the business to perform more robustly.

Q: Great question. So, you know, as you look at it, I think we have a history of being a solution provider for our partners. And that has evolved throughout the years. We are positioned incredibly well. We're sitting here today with a strong plan for 2026 going into 2027. It's fully focused on a successful and flawless MESA integration. Today, as you heard on our prepared remarks, the team is just performing exceptionally well in that regard. We're ahead of schedule on each of our work streams, and we could not be more proud of their efforts there. As we can continue to deliver on that and we strengthen our balance sheet, we believe that positions us incredibly well to continue to have flexibility to respond to our partners' needs. And we'll continue to have those conversations with them and be ready to respond to their needs as they evolve.

Q: Hey, thank you. Just wondering longer term, I appreciate the commentary on the deferrals, but how are you thinking about putting the order book to work? And would you think about those in terms of growth or do you expect them to be primarily for fleet replacement by your customers?

A: Hey, Dwayne. Thanks for the question. And if you look at our past deployment, I think it's been a combination of both, right? We've found opportunities to deploy certain aircraft in a purely growth positioning. And then we've also found ways to do fleet replacements and then redeployment of other aircraft to other partners, just as we've done in this completion of the E-175 order at United. The beauty of the order book that we've had, as we've had it for several years now, is we've got ultimate flexibility. We've got a great relationship with Embraer, and we continue to be in dialogue with our partners to find the best deployment of those assets, as opposed to just a deployment in the original order slots. And that's what we think that this deferral allows us to do, is it allows us to find that ultimate best solution with our co-chair partners on a future deployment for them.

Q: Hi, Duane. This is Joe speaking. It's a great question. Look, our focus right now is on just continuing to strengthen the balance sheet. We have a lot of unencumbered assets, though, as we referenced in the presentation. Seventy percent of the fleet today is free of financing. Now, some of those aircraft come from our partners, but we have a number of E-175s and E-170s that are debt-free at this stage. So we believe that flexibility as we move forward will put us in the best position to find unique and strategic ways to work with our airline partners and find the solutions that Matt referenced in his response just a second ago.

Q: Oh, yeah. Hey, good afternoon, everyone. Congrats, Matt, on your promotion. Question here just on the guidance for the year. When you look at sort of what you have for block hours and what you have for EBITDA, I mean, it looks like, you know, despite all the intensity and complexity of the March quarter with the weather, it looks like that you're actually running well ahead of plan. And so the question is, are you ahead of plan? Do you feel like you're ahead of track? Are there things that we need to consider in this year where maybe you take a temporary hit to block hours, or maybe there's some seasonality piece, even though I know historically you don't see as much seasonality with the regional carriers, um, something for us that, you know, maybe I'm not looking at, um, because it does seem like你're well ahead given, um, what was the challenging quarter for everybody.

A: Hey, Michael, this is Matt. Thank you very much. Appreciate the congratulations. And it is a great observation, a great question. And look, in any other environment that we're sitting here talking to you today after the quarter that we put together and what we're seeing in our block hour demand going into Q2, Q3, we would be taking up our guidance. Considering the macro uncertainty today, We just think it's prudent to get a little bit further into the year and see how things develop and go from there. But we had an incredibly strong quarter. You're right, a lot of challenges. And we'll provide你updates as we get further into the year.

Q: Thanks, Mike. This is Joe speaking. You're correct. We should see CapEx subside as we move throughout the year. I mean, the first quarter was our heaviest quarter, predominantly related to the aircraft deliveries. We'll come up on the conclusion of the construction in our Carmel Training Campus. And just general maintenance CapEx, and I should say, you know, the CapEx associated with the investment that we're making, at Mesa, and those opportunities will come and continue to present themselves as we progress throughout the year, but you're right, it's a downward slope from the first quarter.

Q: Hey, thanks for the follow-up. Just kind of curious, you know, I think a couple of months ago when you talked, you were expecting kind of normal levels of attrition versus kind of an abnormal year last year. And I was wondering, you know, what you've seen, especially as some of, you know, the mainline airlines are cutting capacity here and just related to that, just, you know, what your plan is for the Lyft Academy in terms of how much of your kind of needs that pipeline will deliver?

A: Great. Hey, sorry. Thanks. This is Matt. I'll answer the 2nd part. 1st, you know, lift Academy is positioned to. Satisfy about 20% 25% of our hiring needs in a normal hiring year. So nothing changes in the throughput that we're planning to put through lift this year. It's been a great program and the candidates to come through that. Justin Fields, M.D.: : perform exceptionally well are incredibly loyal, you know to the airline and their career path as we look at the attrition trend. Justin Fields, M.D.: : very much a status quo to the update we provided to you just a few weeks ago attrition remained through the quarter at normalized trends, you know going back to kind of a pre coven standard. healthy level of attrition, going to the career carriers that we would like to see, you know, healthy captains attriting on to our co-chair partners and the like. You know, we would expect to see, and we're seeing just a little bit of the beginning of a slowdown in the attrition, just a seasonal slowdown as we go into the summer months. So right on plan, you know, our attrition curve and our hiring curve have been right on plan for us.