REPUBLIC AIRWAYS HOLDINGS INC. (OTCMKTS:RJETQ) Completes Long-Term Deal With American Airlines, Advancing Shares

Shares of REPUBLIC AIRWAYS HOLDINGS INC. (OTCMKTS:RJETQ)  advanced today following the news that their long-term deal with American Airlines had finally been completed.

As per media reports, American Airlines Group Inc. AAL has finalized a long-term deal with Republic Airways Holdings Inc. RJETQ. The deal pertains to provision of regional flights by the latter. Notably, American Airlines is the largest customer of Republic Airways. The agreement will be effective only if approved by the U.S. Bankruptcy Court for the Southern District of New York in a hearing scheduled for Sep 21, 2016.

Based in Indianapolis, Republic Airways has been facing operational issues in recent times. Owing to the difficulties encountered, the airlines company filed for Chapter 11 bankruptcy protection in February this year. In 2015, the company had signed a new contract with workers but had to opt for bankruptcy after it was unable to secure deals with leading carriers U.S. carriers to fund higher pay for its pilots.

Terms of the Deal

According to the terms of the latest agreement, Republic Airways will continue to provide regional flights to American Airlines. As part of the settlement, Republic Airways will pay $250 million to American Airlines as unsecured bankruptcy claim. Per reports, American Airlines will be paying for the reconfiguration of some of Embraer E175 aircraft operated by Republic Airways. The reconfiguration will result in 76 seats instead of 80 for the changed aircraft, thereby taking them to the same standard as the other aircraft in Republic Airways’ fleet. This change will also result in the aircrafts being compliant with pilot contracts of other large partners of Republic Airways, such as United Continental Holdings Inc. UAL and Delta Air Lines Inc. DAL. Republic Airwayshas reached an agreement with these airlines too.

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Diligent potential investors in REPUBLIC AIRWAYS HOLDINGS INC. (OTCMKTS:RJETQ) will be consulting the current and historical short data to make an informed idea of where the market believes the stock might be going.  The most recent information out there tells us that there are 944600 total short interest.  Considering the stock’s average daily volume of 784051, this results in 1.6 days to cover.  The total shares short in relation to the total outstanding share total of 50980000 yields a 0.01853% of total shares that are short.  Last month, this is a -7.56 change in total short interest.

When investors engage in short selling or “shorting a stock”, they are actually borrowing shares from an existing owner, then selling the borrowed shares at market price and taking in the cash.  The short sellers promise to replace the stock in the future while making dividend payments from their own pockets to cover the dividend income that no longer exists on the original, now borrowed and sold, shares.  The hope is that the stock price will fall or the company will crash and go bankrupt, forcing the equity holders into ruin.  The short sellers will then buy the stock back at a much lower price and replace the borrowed shares, pocketing the difference.

Shorting a stock can be very risky if the price doesn’t decline like planned and, in fact, increases.  It’s important for any investor to understand the dangers and potentially catastrophic financial losses of short selling.

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REPUBLIC AIRWAYS HOLDINGS INCORPORATED (RJETQ) shares closed the most recent session at 1.12 moving from the previous open or $0.06.  This is compared to the stock’s 52-week high of 6.8 and 52-week low of 0.2.  Is now the right time to take stake in the 57070000 market cap company?

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Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

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